Jefferson's Blog

where is all the good inventory?

Thu, 03 May 2012 13:47:54 -0700

A recent article in the Wall Street Journal declared that "bidding wars are back!" And speaking from experience, let me be the first to add, they aren't kidding. I have written offers on several properties over the past few weeks and there have been multiple offers on every single one. Great if you're a listing agent, not so much if you're representing buyers! As the article points out, it's not such much a re-inflation of the bubble, or buyers frothing at the mouth to buy, but more a lack of inventory. That too, I can attest to. If I could get every one of my currently active buyers into what they're looking for in the next 30 days, I could take the rest of the year off.

The Journal ponders possible reasons for this firing up of the market. As Curbed LA points out, they attribute to either a) sellers holding off on listing til they can get more money, b) investors flush with cash swooping in and snatching these hot properties out from underneath legit owner/occupiers or c) a large (potentially hundreds of thousands), as yet unlisted shadow inventory of foreclosures.

may the force be with you...

Wed, 30 Mar 2011 19:51:26 -0700

I've often told friends that part of what makes me love real estate is the Los Angeles real estate market. There's nothing else like it. You never know what kind of house you're going to see, who's house you're going see, or what you're going to find in a house once you're there.

Just yesterday on caravan, we saw a listing in a fairly non-descript house, but the owner obviously had led sooooome kinda life, because there were framed photograph's of him with everyone who has been anyone during the past 30 years. He and Liz Taylor, he and Al Pacino, he and Matt Damon, he and Cher, and many dozens more. The walls were covered with them, many of them autographed to him. I love going into homes and just being able to feel old Hollywood. So yesterday the hot new listing on everyone's agenda was that of actor Billy Dee Williams, of Star Wars fame.

The property is located in tony Trousdale Estates, which is where, outside of Palm Springs, you can find the biggest concentration of utterly breathtaking mid-century modern homes. The property is 6 bedrooms and 6 baths in about 5,300 square feet. To put it kindly, the house would certainly be considered a fixer, with a lot of sort of sub-par additions seemingly added over the 25 years or so he's owned it, but the location, and the bones of the house were fantastic. It will take a buyer with an eye and some money to put into it, but it definitely had potential.

Ben Stiller's Outpost Estates compound was also open yesterday, unfortunately I didn't make it over there. Maybe next time...

rent or buy??

Thu, 17 Mar 2011 16:27:03 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on February 1st, 2011.

I’ve been considering the possibility of putting my days as a renter behind me and joining the ranks of the homeowner, though I’m trying to figure out which makes more sense. I currently pay about $2,000/mo in rent (soon to go up). At what point is it more logical to quit renting and buy?

—Ryan K., Santa Monica

··········

Hi Ryan,

I get this question a lot. There’s no quick answer, and I would need some more information to give you a solid response. But I can tell you this. Real estate website Trulia.com recently released the results of a study of 50 U.S. cities, asking if it made more sense to rent or to buy in each city. When the housing market tanked and the recession began a few years ago, the answer in many cities flipped from one side to the other. According to the report, with massive foreclosures and homeowners unable to stay in their homes, the rental market became flooded with new customers. On the flip side, the sheer volume of homes saturating the market dragged prices down and created an opening for many who thought they would never be able to afford a home.

The rule of thumb Trulia offers in calculating whether renting is more affordable than buying is to divide the purchase price of a home by the annual rent of a similar property. If you come up with anything over a 15, it’s generally considered that renting is cheaper. Anything below, it’s a good market to become a buyer in. Of course this is a very general equation. Not for nothing, but L.A. came in with a 20 (using a median purchase price of $489,700 and an median annual rent of $24,900). That said, I still believe that given the deals out there right now that fall under that price range, it is a great time to buy. Renting, you spend your money to fatten someone else’s kitty. It’s money you will never see or hear from again.

There are many factors that have to be taken into consideration. First, do you have a down payment available, and do you qualify for a loan? Let’s assume for the sake of argument, yes and yes. Great! But there are other questions that address what your actual needs as an individual are. Maybe home ownership doesn’t make sense for you right now. If you plan to relocate in the next two to three years, renting is probably best. Also, some people don’t want to be responsible for any maintenance or upkeep. As a renter, all of that falls on someone else’s shoulders. Also, for renters, there are no homeowners dues, no property taxes and no major repairs. Maybe you’ve been in the same place for 10 years and pay $900 for a two-bedroom top-floor unit in West Hollywood. God bless rent control. It can be hard to give that up.

However, if you are looking to stay put for a while, you may be best served by purchasing something and begining to lay the foundation to build wealth. Over the long-term, real estate is an excellent investment and will build equity. And that equity is what will help you afford to move up to that second home when the time comes. There are many financial benefits that come with home ownership too. For over half of the period you’ll be paying your mortgage, most of that payment will be interest, which is tax-deductible. You can also deduct your property taxes (always consult with a tax preparer or CPA on these things). When you rent, that money is gone forever, just helping to pay someone else’s mortgage.

Home ownership brings with it a certain sense of accomplishment and pride of ownership. The property is yours to do whatever you want with (almost), and you can make improvements and upgrades over time to increase its value. There are significant tax breaks on the profit you make when you sell your home as well. The flip side of this is that some might choose to invest their savings into equities or the stock market or mutual funds rather than tying them up in the down payment on a home. To that, I say “to each his own.” I definitely don’t claim to be an investment professional. You have to do what’s right for you, but what I can say is that there has not been a better time to buy in Los Angeles in many years.

Jefferson Hendrick is an L.A.-based Realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at jefferson@kw.com or facebook.com/jeffersonhendrickrealtor.

what to expect when you're expecting (to buy a home) [pt 3 of 3]

Mon, 07 Mar 2011 18:17:33 -0800

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on January 19th, 2011

The question I’ve spent the last two issues addressing is, what exactly does the process of buying a home look like? What should one expect? I’ve tried to really break it down for you in as much detail as possible while still keeping it somewhat brief.

8. Disclosures. In the last column, while on the subject of inspections and repairs, I briefly mentioned disclosures. The first week of the escrow period is also when you will receive, via your agent, a stack of state-mandated disclosures that the seller is required to provide (all on forms provided by California Association of Realtors) regarding the property. This is the seller’s opportunity to disclose to you anything and everything they know regarding the condition of the property, the neighborhood, the land, the structure itself—anything—that they know that might affect the salability of the property. Failure to disclose is one of the leading causes of lawsuits between buyers and sellers. When I’m working with sellers, especially on high-end properties, my advice is “when in doubt, disclose.” In other words, if you have to ask, just disclose it. By law, you as the buyer have three days after receiving any new information about the property to decide whether it’s acceptable to you before moving on.

9. Getting your loan approved. Over the next couple of weeks, your mortgage broker will be working furiously to get all of the required documentation from you in order to get your loan approved, and will send an appraiser to the property to make sure it’s worth at least what they’re lending on it. Don’t be surprised if the lender requires you to sign away your first-born child. It happens. Aside from being on standby for anything the lender needs, the next couple of weeks you’re basically in a holding pattern, beginning the fun stuff like making arrangements to move into your new home. On a side note, here’s a strong word of advice. Do not make the mistake of obligating yourself to be out of your current residence on the date you expect to close escrow on your new home. Delays can and will happen, and there is nothing more stressful than finding out two days before you are supposed to close that it’s been pushed back by a few days. Even worse is having a moving van scheduled for that day. Give yourself some leeway if at all possible.

10. Wrapping it up. It’s a few days before you are scheduled to close escrow. Your agent will schedule a final walk-through of the property with you, so that you have the opportunity to make sure everything is in the same condition it was when you agreed to purchase, and that any repairs the seller agreed to make have been completed. At this point, your loan should have been fully approved and your lender should have ordered loan docs. About two to three days before the scheduled close date, you will wire the remainder of your down payment and any other funds due. Typically, you will go to the escrow company’s office, where you will sign loan docs. This will entail signing your name about 800 million times. Depending on a few things, your loan should be funded by the lender the next day. The following business day, the property changes hands legally and officially, and that change is recorded with the county.

Congratulations. You just bought a home in 10 easy steps! If you think you might want to try this process out for yourself, give me a call and I’ll hold your hand the entire way. Likewise, if you or anyone you know is planning to sell a home, give me a call and let’s talk about how I can help.

Jefferson Hendrick is an L.A.-based Realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at jefferson@kw.com or facebook.com/jeffersonhendrickrealtor.

what to expect when you're expecting (to buy a home) [pt 2 of 3]

Wed, 09 Feb 2011 16:31:56 -0800

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on January 3rd, 2011

First, Happy New Year. I hope you had an amazing holiday. When we left off last time, we were taking a casual stroll through the home-buying process, and what exactly one can expect when purchasing a home. As of the last issue, we’ve found you a mortgage broker, got you pre-approved, found you a buyers agent you love, zeroed in on the home of your dreams and negotiated price and terms. This is where it all starts to get real! Now it’s time to open escrow.

5. Escrow opens. The escrow period is the time during which all the business of the actual transaction takes place. At this point, you will be required to submit your three percent good faith deposit to escrow—usually either by wire transfer or personal check. It will be cashed almost immediately and held in an escrow account. This three percent is part of whatever down payment you agreed to make on the property during the negotiation process. If you offered to put 20 percent down, you will have 17 percent due to close the deal. This three percent is what says “I’m serious about purchasing this property.” Provided you negotiate in good faith and perform as required by the purchase agreement, it is fully refundable should you decide to back out of the transaction (to a point). The escrow company—often selected by the seller, but not always—generates “escrow instructions,” which is the official direction they take based on all of the terms agreed upon in the purchase agreement between seller and buyer. They hold all funds, and no monies received by them can be released without mutual agreement from both sides of the sale. The typical escrow period is 30 days long, but that can vary, especially in today’s market where it can take much longer to get a loan locked in.

6. Inspections. This is also known as doing your due diligence. There are various inspections that you will want to do, at your cost, during your inspection period. At a minimum, you should have a general inspection done by a licensed and reputable inspector. You should always, always, always opt for a general inspection. This is not the time to cut corners. The inspector will do an overall top-to-bottom inspection of the property, and you can expect to pay anywhere from around $300 up to $500 or more depending on the size of the property. You’ll do well to remember that the inspector is not there to tell you what an amazing house you’re getting, or what great condition it’s in. Their job is to point out every little flaw or defect they see—it’s what you’re paying them for. Often, a lot of what they will note in their report is of little or no consequence, but there is always the chance that something major will come up.

Depending on what the general inspection turns up, you may need to call in specialists to further investigate potential issues, such as a mold inspector, a plumber, an electrician, etc. Doing proper inspections can save you huge money down the road, and it’s up to you to do your investigations into the condition of the house to your satisfaction. Most every home sale is intended to be “as-is,” meaning you shouldn’t expect the seller to deliver the property to you in like-new condition. It does not, however, preclude you from taking what you learned and attempting to negotiate repairs or credits based on the inspection reports.

7. Negotiating Credits/Repairs. You thought you were done when you negotiated your purchase price, didn’t you? Not so fast! Now’s the time when we take what we learned about the house during your inspections and decide what you can live with and what’s not acceptable. As I mentioned above, often during inspections, some expensive issues can be uncovered that someone is going to be on the hook for. Ideally, it’s not you. However, depending on a lot of things, you may have to accept the fact that you will be making at least some repairs on your new home. After all, it’s (most likely) not new construction. Let’s say, for example, your chimney inspection uncovers major damage to the chimney, and you have an estimate for $8,000 to repair it. Unless that defect was disclosed to you up front, you made your offer assuming the chimney was in good working condition (it’s possible the seller didn’t even know about the issue when they priced the house). Now you have grounds to issue a request for the seller to give you a credit for some or all of the cost to repair it (or request that they have it repaired themselves).

One of a few things will come of this request. First, they might agree to credit you the entire amount you requested for the repair. Or they might tell you to take a long walk off a short pier—that the home is in fact being sold “as is.” Finally, they might respond with an agreement to give you partial credit. This is the most likely scenario in my experience.

At this point, you’ll decide whether you’re satisfied with the outcome of your request and whether you want to move on and commit to closing the sale. From here on, there’s pretty much no looking back, and you’re all in. Next issue, I’ll wrap it up and take you through the closing, and we’ll have the keys in your hands by the time I’m done! Til then, if you or anyone you know are considering buying or selling a home, please don’t hesitate to call me for a free consultation and/or market value analysis of your home.

Jefferson Hendrick is an L.A.-based Realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at jefferson@kw.com or facebook.com/jeffersonhendrickrealtor.

what to expect when you're expecting (to buy a home) [pt 1 of 3]

Sun, 30 Jan 2011 18:31:10 -0800

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on December 20th, 2010.

This is typically that time of year when many of us sit down, assess where we are, where we’re going and where we hope to be in another 365 days. As a Realtor, I know a lot of people who are really starting to get that this is the time to get into the market. And from an investment standpoint, I’m getting a lot of first-time buyers who are deciding that it’s now safe to park your money in the real estate market again. Many have $10, $20, $30,000 they’ve saved up for a down payment, and they’re ready for their piece of the pie. They have not, however, been through the process of a real estate purchase before and have no idea what to expect. It can seem a bit daunting to many, but it’s really not. As someone who works frequently with first-time buyers, I make every effort to spell out from the very beginning what the process looks like.

1. Get pre-approved. Nothing happens without pre-approval. It’s very simple, fairly quick and largely painless. You’ll need to find a mortgage broker or direct lender. This can either be by referral from friends who have purchased before, or your Realtor can make some recommendations. If anyone knows who ‘gets it done’ and who doesn’t, it’s them. Don’t be afraid to shop around, though. For the most part you’ll get the same rate from one to the next, but see who can give you the best deal, offer free appraisal, etc. It’s also important for you to see who you jive with best. You might get a better feeling from one than another. To get started, all they’ll need from you is some basic information like name, address, date of birth, social security number (to pull your credit), employer, years employed, your salary and some information on your assets. You’ll talk about how much you are able to put down, how much you can afford a month, etc. Once this is done, you and your agent will have an idea of what price range you should be looking in. Until that’s done, viewing property is kind of pointless. You won’t be able to make an offer on something til you’re pre-approved, and the last thing you want is to find the home of your dreams and lose it because you haven’t gotten your ducks in a row.

2. Find yourself a buyer’s agent. Sometimes you may have done this step first, which is fine. But whatever you do, get yourself a buyer’s agent. It doesn’t cost you a dime (they are paid by the seller of the home you will eventually purchase). You will have much better access to new listings, pocket listings (homes being marketed privately and quietly) and upcoming listings not yet on the market. It’s not the best idea to try to deal directly with listing agents, as they have already signed a contract to work in the best interest of the seller. Though it’s legal and can be done ethically and fairly, it can still present a conflict of interest. Get your own agent whose sole job is to fight for your interests and your interests only. Again, friends or co-workers are a great source of referrals. And as with lenders, don’t be afraid to interview a few people. They’ll be interviewing you too (indirectly), and the hope is that you mesh well and feel you can work as a team to achieve your goals.

3. Ready, set, go! Now’s the fun part—looking for the property. It can get exhausting after a while, especially if you aren’t finding anything you like. Thankfully your agent and the internet are both useful tools for weeding out the junk and finding homes that have real potential. A list of priorities is always helpful. What is a must in your new home? What can you live without? Be flexible—that list should be fluid and dynamic as you begin to educate yourself on what your money will get you. A good buyers agent will have previewed many of the listings currently on the market as well. Your agent won’t always be available to go with you, though, and Sundays are the best day for you to get out and see what’s out there and get some perspective on what you can expect to get in your price range.

4. Time to make an offer. Once you find the house or condo you love, it’s time to make an offer. What you’ll offer depends on many things—how long it’s been listed, what the comparable sales are in the area, how much interest there currently is in the property, etc. What the value of the property does not depend on is how you “feel” it should be priced or how much you like it. Your agent will help you formulate the best plan of attack. A standard purchase agreement is eight pages long and—for a first-time buyer—should take between 30-60 minutes to go through, depending on how in depth you’d like it explained. I like to give my buyers a blank purchase agreement as soon as we start working together so they can read over it, get an idea what they’re signing and know in advance what questions they might have. Once your agent submits your offer to the listing agent, you can probably expect a round or two of counter offers before everyone feels like they got what they wanted. There might be some negotiation of terms, escrow period (customarily escrow is 30 days, though that certainly can vary depending on many things) and contingency periods.

Once your offer is accepted, you “open escrow.” In the next issue, I’ll discuss what happens during the escrow period.

Jefferson Hendrick is an L.A.-based Realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at jefferson@kw.com or facebook.com/jeffersonhendrickrealtor.

holiday shopping tips!

Mon, 13 Dec 2010 17:49:11 -0800

The following is a reprint of my column that appears in the current issue of Frontiers In L.A. magazine.

With the holidays here and everyone offering up their own gift ideas, I thought I would do the same right here in my column. Why not, right? If you haven’t rounded up a sugar daddy, or someone equally capable of wrapping a big giant bow around a house, you best get to steppin’, because I have something for you in several price ranges.

For the one you have a mild crush on

Were you all excited about Hancock Lofts but weren’t falling for the $900-per-square-foot price (don’t feel bad, few did). Well, after almost two years of sitting vacant, West Hollywood’s favorite ghost town has finally gone rental. The building originally came onto the market with prices ranging from $895,000 for a 1,037 square foot unit all the way up to $1,459,000 for a 1,459 square foot unit back in mid-2009. The developer eventually took about half the units to auction this past April, ostensibly to get them up to 50 percent sold so they could begin closing escrow. Even the auction was a failure and did not net them the results they had hoped for. So, for the boy who simply must be smack in the middle of everything, now’s your chance to live there. Though no official pricing has been released yet, rumors and speculation point to one-bedrooms ranging from $2,800-$3,400, with two-bedroom units ranging from $3,500-$5,800. I attempted to confirm those numbers with the people at Hancock Lofts but did not get a return call before press time. The complex has a great pool area with secluded cabanas, and who doesn’t love Tender Greens, which is located on the ground level.

For the one who loves pink

Have you ever dreamed of living the life of timeless Hollywood icon Angelyne? Then this is your lucky day. It just so happens that the original pink lady has put her Malibu condo on the market at the low, low price of $575,000. As I’m sure everyone is aware, Miss Angelyne was the pioneer of self-promotion and being famous simply for being famous, and she did it so well! No doubt you’ve seen her zipping around town in her pink Corvette with her “ANGELYNE” license plate. The condo has three bedrooms and four bathrooms in 1,810 square feet. Now let me tell you, $575,000 seems pretty reasonable for a condo in the ‘Bu, but this one is gonna need some work (so says the listing). The building was constructed in 1987 and the unit looks fairly original, only pinker.

For the one with a Saudi prince or Warren Buffett for a sugar daddy

You’ve driven by it a hundred times if at all—9577 Sunset Blvd. in Beverly Hills. It’s a gargantuan mansion that “reflects a rigorous adherence to French Palladian and American Beaux Arts architecture that is unmatched today” (according to the home’s website, 9577sunsetblvd.com). The home measures an astounding 35,000 square feet of living space, which includes nine bedrooms and 13 baths. Inside, imported french chandeliers and sconces, 24-karat gold gilding, hand-picked marble flooring and double-marble staircase. The master suite consists of a 1,000-square-foot bedroom plus his and hers dressing areas, his and hers baths, his and hers offices and separate sitting rooms that open to an outdoor terrace overlooking the pool and tennis court. The home also includes an elevator, motor court and subterranean parking for eight vehicles. On the lower, underground level, there are staff quarters, a large craft room and a gym with steam shower, sauna and Jacuzzi. The gold-plated front doorknobs weigh 15 pounds each.

The home had been custom built by businessman C. Frederick Webha Sr. for himself and his family over a period of four years. The couple recently told the Los Angeles Times Business Journal that they felt it no longer made sense to live in such an ostentatious house in the kind of recession the U.S. is currently in. When the home was built, they had planned to host major political fundraising and charity events there.

For those of you—shall we way—of a certain age, you may recognize the address from back in the 1970s. The parcel this home sits on was part of a larger plot of land owned by a Saudi Sheik named Mohammed al-Fassi. Al-Fassi purchased the home that used to occupy that lot for $2.4 million cash in 1978. He immediately became a thorn in the side of his neighbors when he painted the house a shade of green that had been referred to by one critic as the color of rotting limes. To make matters worse, he painted all of the nude statues on the property in natural skin tones, and painted the hair and pubic areas as well to look more lifelike. The mansion became a stop for sightseers and caused traffic jams along Sunset Boulevard. It mysteriously burned in 1980.

There are three options for your holiday gift giving. If your price range falls somewhere in between that $575,000 and $68 million, please give me a call and I will be happy to help you find the perfect home at the right price. Enjoy the holidays.

Jefferson Hendrick is an L.A.-based Realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at jefferson@kw.com or facebook.com/jeffersonhendrickrealtor.

Close It Down!

Fri, 10 Dec 2010 14:08:39 -0800

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on September 28th, 2010

I’m about to make my first real estate purchase in the next couple of months in the South Bay. Aside from the actual purchase price of the home, what costs and expenses should I be prepared for in closing costs? —Rebecca, Manhattan Beach

Good question, Rebecca. Often buyers go into a purchase a bit blind to what they can expect as far as associated costs with purchasing a home. First, I’ll tell you what you don’t pay, which is your agent’s commission. That is a cost that comes from the Seller. Now on to what you can expect to pay on your side.

As a rule of thumb, you can usually count on closing costs of around two to three percent of the purchase price of the property, give or take. The majority of your costs come from one of two sources—the lender or the escrow company—and you’ll see all of the costs broken down on a form that the lender provides at the end of the transaction called a HUD-1 (or Settlement Statement). When you first enter escrow, the lender should provide you with a Good Faith Estimate (GFE) of your closing costs.

Sometimes you can request a credit from the seller to be applied to your closing costs, reducing the amount you have to bring to the table. This is especially helpful to first time buyers working with limited funds. Some of the major expenses you will be expected to cover include:

• Lender Fees. These are fees the lender charges for their services, including processing the loan, underwriting, generating loan docs, appraisal, tax service, etc. Expect fees of anywhere from $1,500 to $2,500. Most often, this is where you might be able to do some negotiating to get some fees reduced or dropped altogether. It never hurts to try.

• Loan Origination Fee (or “Points”). This is what the lender makes on the loan. It can also refer to a fee you can pay upfront to buy your rate down to a lower percentage (one point equals one percent of the loan amount).

• Lender’s Title Insurance. This is insurance usually paid for by the buyer that protects the lender against any future claims and losses that might arise if the title to the property is found to be defective (in other words, someone other than the person who sold it to you is suddenly laying claim to it). This cost can range from a few hundred to a couple thousand dollars, depending on the value of the property. Be sure to inquire about a “short-term rate” if the property’s last sale was within the last five years.

• Property Taxes. Assuming the seller is current on their property taxes, you as the buyer will reimburse them a pro-rated amount of property taxes for the period from which you close escrow to the end of the tax period. This amount will depend on what time of the year you close escrow.

• Interest on your new loan. Running from the day you take ownership to 30 days prior to the first mortgage payment due date (for example, if you closed escrow on October 7, you’ll pay interest on your loan from that day through the end of the month).

• Homeowner’s Insurance. For a single-family home, homeowners insurance is required, which usually covers fire, tornado, hurricane, etc. For a condo, lenders require the borrower to purchase an insurance policy called HO-6. While the condo association should be carrying a master policy that insures the structure, you will be required to carry this policy which covers “walls in,” or anything within the unit that is a fixture, such as wiring, plumbing, carpets, cabinetry, etc.

• Escrow Fees. These are fees charged by the escrow service for their efforts. The seller will have their own fees, and the buyer theirs. Typically, escrow fees are equal to a $200-250 base, and $2 per $1,000 of the purchase price.

There will be a lot of other little charges that you’ll want to watch out for and monitor on your Good Faith Estimate. Things like messenger services, reimbursements for wire services, notary services, etc. These items are often estimates that you’ll do well to verify and question. There is often an additional pad of around $500 added into the GFE as well to cover any unexpected costs or shortfalls, that you will usually end up getting back at the close of escrow. Be sure to request a revised GFE as you approach your closing date, and don’t just accept any charges that pop up on the GFE. A good agent will help you go through each item and can explain which ones might be questionable.

With new construction, there can be other significant charges that can add up pretty quickly, so be sure you’re in the know on those before entering into a deal, or get in touch with me and I can go into more detail with you. There are always some ways around them and tricks for bringing some of them down as well.

Happy home hunting!

Jefferson Hendrick is an L.A.-based Realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at jefferson@kw.com or facebook.com/jeffersonhendrickrealtor.

You're Gonna Make It On Your Own—Maybe

Sun, 14 Nov 2010 20:07:26 -0800

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on September 14th, 2010

I’ve been thinking about listing my house for about a year now. I’ve considered several different options, from ‘For Sale By Owner’ to a discount brokerage that just lists it in the MLS, to full-service brokerage that will handle everything for me. With your being an agent, I feel like I know which way you’ll point me, but can you give me, in your opinion, the pros and cons of each?
—Hunter, West Hollywood

Hi, Hunter. As an agent, when I’m giving a listing presentation, I’m often asked this question. Let me say first, of course I get why someone would want to sell their home off the grid and save the commission money that would ordinarily go to an agent, I really do. And when I’m asked, I lay the facts out and let the seller decide. I do occasionally lose a seller who decides to FSBO. However, of those, many end up calling me after they’ve tried it and not gotten desired results.

First, let’s break down the duties and benefits of a real estate agent (or Realtor if they are a member of the Realtor trade organization). An agent goes through extensive training and ongoing education to be able to sell your home or represent you in a purchase. Your Realtor will help you set an asking price, market the property thoroughly and will help you prepare the home for sale. They’ll also make recommendations for minor improvements and repairs, screen buyers, prepare all paperwork and disclosures and handle negotiations both during the offer process and the inspection process.

The typical fee for a listing agent with a full-service brokerage is between five and six percent of the home’s final sales price. There are discount brokerages that will do it for anywhere from two to four percent. Typically these companies don’t perform all the marketing and other services of full-service brokerage (but it varies from one company to another). When the market was white hot a few years ago and things were selling as soon as they hit the market, these companies were popping up everywhere. Now that we’ve transitioned into more of a buyer’s market, the pendulum has begun to swing more towards full service.

The pros of a FSBO should be obvious. No commissions to pay. If you can successfully get the home sold, that’s a lot of money you’ve saved. Statistically speaking, about 15 percent of the homes sold in the U.S. are sold by the owner. That said though, nine out of 10 owners who attempt a FSBO ultimately end up calling in an agent, usually for one of the following reasons: either it didn’t sell in the amount of time they’d hoped, they didn’t price it right so they got little activity or once they got started they realized they didn’t know all they needed to know about selling a home. There are a lot of disclosures that have to be provided, and a seller is put in a very vulnerable position legally by attempting to take this part on without professional help. Do you know how to pre-qualify a buyer?

Many sellers doing FSBOs do choose to open up their buyer pool significantly by paying a service to have their listing uploaded into the Multiple Listing Service, and do offer a commission to the agent who brings the buyer. Bear in mind that in that situation, you have a buyer who is being represented by a professional, leaving you to fend for and negotiate on your own behalf.

If you are considering a FSBO, you should be committed to the time it will take to get the home sold. Successfully selling a home is a full-time job. There will be the necessary marketing and advertising, fielding calls, facilitating showings, holding open houses, etc. And that’s before you’ve even seen an offer. By hiring a professional, you get to go about your daily routine and live your life while the agent handles everything. Very rarely is a homeowner savvy enough to know the value range for their home, and they often either underprice, leaving money on the table, give away the store in negotiating repairs or overprice, resulting in no offers.

There are several great websites that serve as valuable resources for those considering doing a ‘For Sale By Owner.’ The most popular ones are forsalebyowner.com, fsbo.com, homesbyowner.com. Those offer great assistance and community for those looking to go it on their own.

The bottom line is that often (not always), you will come out equally or possibly ahead by letting a professional price the property for you, handle the marketing, showings, etc., letting them negotiate on your behalf and letting them take on the legal responsibilities that you would have taken on. It really depends on how much you’re willing to take on, and your level of commitment to getting your home sold.

Jefferson Hendrick is an L.A.-based realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at jefferson@kw.com or facebook.com/jeffersonhendrickrealtor.

Should I Consider Buying A Short-Sale?

Thu, 04 Nov 2010 15:14:44 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on August 30th, 2010

I’ve been looking for a home to buy for a few months now, with no luck. For now I’m looking on my own, but will hire a buyer’s agent when I get closer to finding what I want. A friend told me that I should check out short sales. What exactly is a short sale, and should I open myself up to considering them? —Sasha, Silver Lake

Oh Sasha. Sasha, Sasha, Sasha. Let me first address something you said in the first part of your question—that you aren’t working with a buyer’s agent. If you are serious about buying, that needs to change now. You do know that the services of a buyer’s agent are free to you, right? They are working on a basis contingent upon your finding a home and going through with the purchase. Their commission is paid by the seller of the property. Do yourself a huge favor and find a buyer’s agent (I can think of one!) to take some of the weight off of you. You have a job. You have a life. You have better things to do than sift through every junky listing that hits the MLS. Find yourself an agent you click with, educate them on what you’re looking for and let them do the grunt work. That way you’re getting 90 percent of the crap filtered out and only getting the cream of the crop. Plus, a good agent who keeps their ear to the ground has lots of contacts and gets information on upcoming listings from fellow agents before they hit the MLS.

Now, on to your actual question. To put it as succinctly as possible, a short sale is when the owner (or “borrower”) owes more on a property than it is actually worth. This is a very common situation that a lot of homeowners have unfortunately found themselves in over the last few years. Let’s say you purchased a home in 2006 for $1.5 million, but now that same house is worth about $1.1 million, rendering you, as we say in the business, “upside down.” Though it’s not always a simple or straightforward process, eventually what one hopes is that the bank (or banks) that holds the note on the property will agree to allow the property to be sold at its current market value. Obviously, the seller loses whatever they have invested in the property, and the bank agrees to absorb the difference between the sales price and what was owed. It’s not ideal. It can be a huge negative on your credit rating and there can be tax implications that I won’t go into here.

For buyers, short sales can be a good resource to find good deals on properties. They are typically (not always) priced roughly 10-20 percent below what comparable standard sales are going for. Believe me when I tell you, more often than not, you will earn that discount. Short sales can be absolutely gut-wrenching. Usually, a home is listed as a short-sale before any effort has been made to get the approval of the bank that holds the note. Once an offer is accepted by the seller of the home, it is then submitted to the bank, beginning an often long, slow process by banks that have no real interest in making decisions in a timely manner. It can and often does drag on for months and months. This is not always the case, and sometimes you’ll luck into a listing agent who specializes in short sales and knows all the tricks to expedite them. Likewise, sometimes the short sale will have already been approved when you are making your offer. The most important thing to remember is that there’s a chance the bank might not accept your offer or allow the short sale to happen.

If you do make a play for a short sale, make your offer contingent on the lender’s acceptance, and give a time frame during which they have to accept or reject the offer. If you are not in a hurry to buy property and have the stomach to wait as long as it takes, then short sales may be for you. The upside is, if you find something else you like while you’re playing the waiting game, you may be able to jump ship and move on to the one that’s ready and available to close.

West Hollywood Stats (single-family homes) as of Aug. 28, 2010*:

Homes for sale: 50
Price range: $489,000—2,495,000
Average price: $1,126,220
Average square footage: 1,662
Average days on market: 80
Single family homes currently in escrow: 17

*Statistics obtained from Multiple Listing Service. Information deemed reliable but not guaranteed.

You can visit my website at jeffersonhendrick.com and search for any properties in the L.A. area.

Home In The Range

Wed, 06 Oct 2010 12:20:13 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on August 4th, 2010

I work with a lot of first-time buyers, in every price range. Some who can barely afford to get into the market, some who’ve suddenly hit it big and are dropping $2 million on their first home purchase. Regardless of price range though, I’m often faced with buyers who have unreal expectations of what they’re going to get for their money. “I thought it was a buyer’s market,” I’m often told by forlorn buyers with sad puppy dog eyes. Well, it is. That’s why this house is only $850,000. It was $1,250,000 four years ago.

The most common thing I’m faced with is a buyer who has all their ducks in a row, has a pre-approval with a reputable lender, has their down payment safely socked away, and is bright-eyed and bushy-tailed, ready to find that perfect home. Quite often, they find out quickly that the pool of properties on the market isn’t going to quite measure up to what they’d envisioned for themselves. They hoped to walk right into a two-bedroom, two-bath, top-floor unit in a three-year-old building in West Hollywood with a balcony (city views, please), laundry in the unit, hardwood floors, stainless steel appliances and walk-in closets, and snatch it right up, all for the low, low price of $375,000.

Here’s the thing you have to know though, especially entering the market at the lower end of the price range. First and foremost, the most wonderful, magical, incredible, pride inducing thing about purchasing a home is exactly that—you are purchasing a home! You are becoming a homeowner! You’re getting in the game (at a time better than any in the last decade almost) and realizing the American dream. The most important function this great feat will provide—after the roof over your head, of course—is as a stepping stone to the next, bigger, more fabulous purchase. Just as that one will be the stepping stone to the next one. Do you think everyone you know who lives in a big beautiful house just stepped right into it? Most likely not.

When you purchase a property, over the years it increases in value—more so if you make improvements. When you go to sell that one, you’re able to take the profit from that one and use it to make a bigger down payment on the next one. Obviously the last few years have not been ideal for those who’d hoped for that, but fingers crossed and god willing, we are returning to the days of property value increases, slowly but surely.

Don’t necessarily look at this first purchase as the place you’re going to spend the rest of your life. And don’t be afraid to do a little cosmetic work, especially on a condo. Find something in an area you like that hasn’t been updated for a while. Have some vision. Ask your realtor for advice on upgrades and improvements. About a year ago, my boyfriend decided that he was ready to take the plunge and buy a condo. We looked for months for him, and found nothing. We looked at some really bad places. Finally we found a little crapshack. But this crapshack was in an amazing building, on a fantastic street. It had awful navy blue carpet throughout (including the bathroom), ‘70s linoleum in the kitchen, ancient appliances, peach walls, popcorn ceilings, mirrors all over the place and reeked of something I don’t have words for. But the second he walked in—the second—he said (and I thought to myself) “This is it. This is the one.” We spent the three weeks after he bought it tearing it apart and putting it back together again. For about $3,000 we did what would have cost him $10,000-$12,000 if he’d hired someone to do it. Not only does he now have a sleek, modern pad he adores, but the place is worth a good $20,000 more than he paid for it. He just remodeled the bathroom, which certainly increased the value another chunk.

Whether it’s a condo or a single family residence, don’t be afraid of a little work. It’s infinitely better to fix a place up yourself, finish it exactly how you want it and reap the financial benefits yourself. It gives you instant equity. Keep in mind there are things you can do down the road once you bounce back from the initial expenses associated with the purchase. Think the kitchen’s ugly? So what? Does everything work? Does the house have good bones? It can wait.

Now that I’ve broken you down, let me build you back up, stronger, better, faster, smarter. I said it before and I’ll say it again. The fact that you are getting into the market means you’ve made it. You’re on your way. You’re building your future! Congratulations of the highest order to you. Just don’t feel like you have to have it all now. You might only get some of it right off the bat. You can make the rest happen!

Real Estate Q&A: Houses vs. Condos

Mon, 27 Sep 2010 15:56:48 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on August 4th, 2010

I’ve been approved for a purchase of up to $700,000. I’m torn between purchasing a condo or a house. One of the main things that I find attractive about condo living is the lack of upkeep as compared to a house, which I’m worried will always need something done to it. Also, though I like the idea of living in a house, in this neck of the woods I think I can get a nicer condo than I could a house. What, in your opinion, are the pros and cons of each? —Lance, Santa Monica

Great question, and one that I’m often asked by buyers who are either first timers, or who have just relocated and aren’t yet that familiar with the area. Once I start to break it down for them, it usually becomes pretty clear to them which route is best for their needs. At its core, a condo is community living. You are becoming a co-investor with every other owner in your building, and a member of a homeowners association. With that comes a set of rules and restrictions to live by, as well as monthly fees that keep the building maintained and tended to.

These rules are intended for the betterment of life for all the tenants of the complex, and many are meant to maintain the value and integrity of the complex as a whole. There may be restrictions on pets, such as a weight limit or number you can have. There may be rules about leasing your unit out should you ever decide to move and rent it out.

On the plus side though, with a condo, there is far less maintenance than with a single-family home. For starters, there’s no yard. That alone is worth the price of the HOA for many buyers. When anything goes wrong with the building, it’s typically the HOA’s responsibility to get the repair done. Condos are very common choices for empty nesters looking to downsize, as well as people who desire the amenities that a condo building offers (security, pool, gym, etc.) that they may not be able to afford in a house of their own. For many condo owners, the sense of community that comes with condo living is appealing as well.

For those drawn more to single-family dwellings, there’s more freedom. Want to paint your front door purple or fly a skeleton flag outside your door? No problem. It’s your property and you can do what you want (within the law, of course). You won’t ever have the person above you clomping around on their hardwood floors keeping you up at night. Obviously with a house, you are a land owner, as opposed to owning the insides of your four walls with a condo.

I am considering putting my home up for sale in the next few months. I don’t have to sell it, but I wouldn’t mind selling it and beginning the process of downsizing. I spoke with a couple agents in my area about listing it at a certain price. Both felt that price was too high, and that it would be a big mistake to list that high. It seems to me that I should be able to list at my price and see what happens. If no one bites, then I’ll consider a reduction. Why is that such a bad idea? —Stacey, Studio City

Let me start by saying this—it is a bad idea. Buyers are very savvy these days. They have tons of websites and information sources with which they can follow the market and see what houses are selling for in a certain area. And believe me, they do. Trust me. No one is overpaying for real estate right now.

There are so many ways this can be detrimental to your process, and even result in your netting less than if you’d priced correctly. If you really screw up your marketing plan, you can even potentially drag down property values in your neighborhood. There is a sweet spot that is really important to try to nail when pricing your home. Overprice it and you risk it sitting on the market for months and months. And every week that it sits there, it is going to ultimately sell for less than the week before. You have a very clear window (usually about 2-3 weeks) to really capitalize on the excitement and energy that comes with a new listing. That is your time to get the most eyeballs on your home, and try to generate the most interest possible.

There is a real art to pricing a home properly, and a good agent will be able to show you recent solds in the area, as well as what your current competition is. It’s critical that you price accordingly if you are a real seller.

The last thing you want is for your listing to become “stale.” It raises red flags within the real estate and buyer community about the house. “What’s wrong with it?” “Why has it not sold?” “If no one else wants it, I probably don’t either!” Even if by some fluke you do get something close to that price you’ve had in your head for a while, you also have to take into account the possibility that the home might not appraise at that price (meaning the buyer’s lender decides it’s not worth what they agreed to pay for it). In summary, if you do want to sell, price it right.

The Positive Economics Of Buying A Home (Or why NOW is the time to buy!)

Fri, 27 Aug 2010 00:35:59 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on July 22nd, 2010

Everyone seems to have an opinion on the current real estate market. Those opinions seem to differ based on who it’s coming from and what’s at stake for them. Those who aren’t anywhere near ready or able to buy love to smack-talk the market. They say everything is still way overpriced, and that things still haven’t stabilized yet. My neighbor’s brother’s church leader’s dentist’s cat said that anyone who buys now is crazy. However, those who have gotten their ducks in a row and are actively seeking to buy know that interest rates on 30 year mortgages fell to the lowest on record for the third week in a row on July 8, and that prices are lower than they’ve been in recent memory.

It amazes me that when it was a seller’s market, buyers were jumping through rings of fire to get their piece of the action, getting in over their heads, taking risky loans that would ultimately come back to haunt them, and offering sellers any insane amount of money that was being asked. Now, however, that things have cooled, and it really is a buyer’s market, people want to wait and watch and attempt to “time the market.” I’ve said it before and I’ll say it again. Know how you know when we’ve hit the bottom? Because we’ve started going back up.

Since I’ve started this column, I’ve had a lot of calls from people who were unsure exactly what they needed to be able to do if they really wanted to consider purchasing. The most valuable bit of information I give them is a quick primer on loan programs. A very common program with a lot of buyers now, and the one that provides the fewest barriers to entry for a buyer, is an FHA (Federal Housing Administration) loan. These loans are awesome. For qualified properties, a down payment of 3.5 percent of the purchase price of the property gets your foot in the door. For a $350,000 condo, that’s $12,250. There is also a fantastic loan program for teachers only called CalSTRS (California State Teachers Retirement System). With this one, you can get in for just three percent down.

Beyond that, I’m starting to see some lenders that can do five percent down loans for qualified borrowers who meet certain requirements.

The first thing a potential home buyer usually begins to sweat over (and believe me, you will sweat), is all of the expenses and new costs they have to acclimate themselves to after a purchase. But one thing that I find many buyers haven’t been educated on is the opportunities for savings that come with purchasing a home. There are many financial benefits you should know about. Here are a few that will add up to big savings come tax time:

1. $10,000 First-Time Homebuyers Tax Credit. As of May 1 2010, first-time homebuyers can receive up to a $10,000 tax credit (split over three years). The credit is available on a first come, first served basis, and will be offered to qualified California residents until the amount of credits issued reaches $100 million. This basically means a $3,300 write off of your California State Income Taxes for the next three years, beginning with the year you close escrow. (As a side note, there is also a $10,000 tax credit on new homes available to all homebuyers, not just first-timers. An individual may not have both credits though).

2. Points On Your Loan. When you as a buyer take out a mortgage, typically you can expect to pay between one and three points on your loan to the mortgage broker. A point is equal to one percent of the loan amount. Normally you shouldn’t expect to pay more than one point, but there are situations where you will pay more than one in order to secure a better interest rate (your lender can help determine if that’s the route for you). The point(s) you pay are fully tax deductible.

3. Mortgage Interest Write-Off. For most loans homebuyers take out, the majority of the monthly payment amount is comprised of interest—not much principal. Interest on a mortgage payment is a tax write-off, therefore whatever percentage of your monthly payment is made up of interest, that part is tax deductible.

4. Private Mortgage Insurance. Buyers who put less than 20 percent down on a purchase are required by the lender to pay for Private Mortgage Insurance. PMI is basically a financial guaranty for the lender against loss should the borrower default on the loan or walk away from the mortgage. Your PMI premium is tax deductible, subject to certain income restrictions.

5. Property Tax. Every home buyer has to pay property taxes on their property. This tax is paid twice yearly, and the annual amount is equal to approximately 1.25 percent of your purchase price. Often referred to as “real estate tax,” this amount is also tax deductible.

6. Home Office Deduction. If part of your home is used as a home office, or exclusively for business purposes, you may be able to take deductions for that too, such as repairs, insurance, depreciation, etc.

As with everything tax related, you’ll want to consult with your accountant on matters of tax deductions, but make sure you’re working with one who is well versed in real estate-related deductions.

All of these benefits available to homeowners can really add up, and it’s worth taking note when you’re calculating the real costs of owning vs. renting. My goal is to try to bridge the gap between the perceived difficulty in purchasing a home and the reality of how easy it can be if you’re qualified, have good credit and are ready to begin building your future. Real estate remains a great long-term investment, and there hasn’t been a better time to buy in the last ten years. If you or anyone you know is considering buying (or selling) in the near future and would like to meet with me to have more questions answered, give me a call or drop me a line!

HELPING YOUR AGENT HELP YOU: The secrets to being a good (and successful) buyer.

Fri, 30 Jul 2010 15:37:52 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on July 15th, 2010.

As the real estate market continues to trudge through a economy, and more and more buyers decide now is the time to get off the fence, the ratio of buyers to sellers in my active client base has slowly tilted more towards buyers. And I love working with buyers. Helping someone realize the American dream (or a reasonable facsimile thereof) is a pretty awesome feeling.

With the growing popularity of websites such as Redfin and Trulia, my buyers are more savvy than they've ever been before. Talking to other agents in my office and around town though, I'm never surprised at the challenges put before us from buyers who have unrealistic ideas about what their money is going to get them and how they're going to go about it. Now, in their defense, a lot of the misinformation comes from the media, whether it's information that's simply factually incorrect, or it just doesn't apply to our region. Real estate is hyper-local, meaning what's true and applicable in Venice or Marina Del Rey isn't necessarily so in West Hollywood or on the Sunset Strip.

No Realtor expects you to know everything. I mean, how often do you buy a home? We do this all day everyday, and see everything you can imagine, and some things that aren't fit to repeat in a respectable publication such as this one. Tuning you in to what's happening in the local market is part of a good Realtor's job. I like presenting hard data that paints a true picture of the market. It won't be long before you - the buyer - can spot a good value a mile away.

When you first meet with your buyer's agent, expect to talk about what exactly you hope to find in a home. Be prepared to prioritize these things, because very often it's impossible to find everything on your list, and you may have to decide at some point what's a must and what you can live without.

When you find that house or condo that makes your heart skip a beat the second you walk through the door, don't hem and haw about it. It's painful to see a great property get snatched up by another buyer while you mulled it over. More painful – for agent AND buyer – is spending the next 6 months looking for something “just like that first one we saw.” If you like it, tie it up STAT.

One of the most common things I hear from buyers is, “find me a foreclosure I can get for 50% off with no money down.” I usually give the benefit of the doubt and assume they've been listening to too much AM talk radio and informercials. No part of that statement is going to happen. Unfortunately the days of “no money down” are behind us, and foreclosures are often priced an average of maybe 10%-15% below market value (I'm speaking about West Hollywood and surrounding areas). More importantly though, consider this. Of 34 lender owned condos in the city of West Hollywood that sold in the last 12 months, the average sales price was 98.5% of the list price.

Another thing that often becomes problematic for buyers (and in turn, their agent), is a refusal to offer one cent over the asking price. Well, that presents a couple of issues. First, one has to factor in the value of the property at that price versus other comparable sold properties in the area. If you're looking at a house that's priced $50,000 below a comparable house 5 doors down, you may have to offer over the asking price if you want to compete with other offers that may have been made on it. Don't be fooled by a too-good-to-be-true list price designed to create a flurry of activity and a stack of offers.

Don't tick off sellers and by making low-ball offers. It doesn't work. If a seller was willing to accept $500,000 on a house priced at $750,000, it would be priced accordingly. The myth of the “fire sale” is mostly just that – myth. When you write an offer, expect one of several possible outcomes. Ideally, the seller will either accept it or they will respond with a counter offer. What you don't want is for them to either formally reject it in writing, or ignore it and not even respond at all (the real estate equivalent of the middle finger). Throwing something against the wall to see if it sticks is not a strategy. Your goal is to make an offer that at least encourages negotiation on the part of the seller.

As I mentioned above, by no means am I saying buyers are not smart or not realistic. Buyers are very well informed, often more so than a lot of the agents I deal with. Become a partner with your agent, and decide together what your goals are, and how realistic they are. Make your agent earn your trust and respect and once that happens, make the most of it. Don't ever be afraid to ask questions of your agent, and don't be afraid to request data to support the answers. Now, get out there and find that house!

flip that house???

Mon, 19 Jul 2010 13:47:48 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on July 1st, 2010.

With the proliferation of shows about house-flipping, enthusiasm continues to increase for what used to be a pastime for those with only the strongest of stomachs. Novices are getting into the game more and more, looking for their piece of the action.

For those not familiar with the term, “house flipping” is buying a home, making improvements and selling it for a profit, usually as quickly as possible. Typically the home is purchased either from a distressed seller or in such a condition that it will require some degree of work (either cosmetic or more substantial) in order to bring it up to such a standard that it can be re-sold at a profit. “Flippers” look for a house that needs updating and renovation, in a great location, that they can bring up-to-date and sell at a price comparable to the highest sales in the neighborhood.

There are many aspects to flipping property—far too many to cover in one column. However, here are a few important things to look for when considering a flip property. Once you find the house that seems like it might be ripe for a flip, there are a few things that you want to be sure to investigate thoroughly, because they can make the difference between a modest investment on your part and a huge one. And that in turn can be the difference between big returns on your investment and losing your shirt.

Plumbing. Many older homes were built using galvanized pipes. As they get older, galvanized pipes begin to pit and corrode, and can lead to decreased pressure and water contaminated by the buildup of hard mineral deposits. If the home has already been updated with copper plumbing, that’s one less major cost you’ll be taking on. When inspecting a house to determine its profitability, be sure to investigate whether any or all of the plumbing has been updated. Most new homes now use CPVC (chlorinated polyvinyl chloride) piping. It’s less expensive, more durable, immune to corrosion and resists scale buildup.
Roof. Most homes that haven’t been well maintained probably haven’t had a new roof in many years, or even decades. Check the roof for any signs of wear and look inside the house for signs of moisture or leaks that could indicate a failing roof. Roof replacement can range in price depending on what kind of materials you use. Finding a flip house with a roof that is still in good condition and isn’t close to the end of its life will save you money.
HVAC. When sizing the home up, be sure and check for yourself how well the heating and air conditioning systems work. They may need nothing more than a good cleaning or filter replacement. If there is no AC, you’ll have to have it installed to get top dollar. Even if there is no central air, there may already be ducting throughout the house from the heating system, which will lessen the cost of putting in central air.
Electrical. If the electrical panel has been upgraded from the old fuse box to modern circuit breakers, you’re already a step ahead of the game. You may need to add more capacity to it, but that won’t cost you nearly as much as replacing it. Are there ample outlets in each room, or will you have to add them? Rewiring an entire house costs a lot of money and can eat into your profits. If you can find a flip candidate that already has an adequately updated electrical system, that’s one less thing for you to spend money on.
Foundation. To bolt or not to bolt? That is the question. Bolting a house to the foundation (also referred to as seismic retrofitting) is basically what keeps it from falling off of its foundation during an earthquake. When buying a house, shear walls and bolting are very expensive, and since buyers don’t walk in and get turned on by bolting, finding a house that is already bolted will save you thousands of dollars that you can spend on slab counter tops and stainless appliances, which are a must if you are trying to get top dollar.
Keep your eyes open for a house that has a patio or space that could be easily converted (with the necessary permits) into additional square footage ... always a big money maker!

As mentioned above, flipping houses is not necessarily for the weak of heart, and it’s best for a novice to start small (consider starting with a condo that needs some love). Work your way up to bigger and bigger projects, pay attention to the market in the area you’re considering flipping in, and always pad your budget—you will very likely exceed it! A realtor can help you find houses that are underpriced for the area and have upside potential. They can also be an excellent resource for other service providers you’ll need during the process, and can help you assemble a winning team—including your lender, inspectors and contractors.

Jefferson Hendrick is an L.A.-based realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at jefferson@kw.com or facebook.com/jeffersonhendrickrealtor.

preparing your home for sale....

Fri, 02 Jul 2010 20:08:33 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on June 17th, 2010.

Selling a home in any market can be a major undertaking, even more so in a buyers' market such as the one we're in now. It's a major life change. As a Realtor, I always want to see my clients get top dollar, with no money left on the table, and we both want it done as quickly as possible. The longer a house sits on the market, the less it's ultimately going to sell for. A few pointers and guidelines will help you achieve a smooth, successful sale and get you on your way to your next destination.

The first and single most important thing on your “to do” list is to price your home correctly. There is no over-emphasizing this. Be as objective as possible when reviewing comparable sales with your agent (comparable sales are recently sold properties similar in size, area and condition). Listen to what the market is telling you (your agent is only the messenger). Coming on the market too high will result in your missing out on those first critical weeks – your best chance to get the house sold. Find the sweet spot that gets the most eyes on your property and in turn, the most qualified buyers from which to choose. A good strategy is pricing your home 5% under the nearest comp, making yours the best looking home at the best price.

One of the most important things I tell my sellers from day one is that you'll need to begin letting go of the home on an emotional level from the time you decide to sell. From this point on, begin seeing it as a product. Potential buyers aren't buying your memories. They're buying their future, and that's what you want them to see when they're viewing the home. Box up personal photos, most of your books, and your personal tchotchkes, knick knacks, doo-dads and what-nots. That googly-eyed thing you bought at a rest stop outside of Barstow? It's gotta go. Clear off the fridge doors, including your kid's finger paintings. Anything that might distract from the house itself is fair game.

Show the home furnished just enough that a buyer can see themselves in it. Many sellers temporarily rent a storage unit to put excess furniture and belongings. Don't shove it in the closets or fill up the garage with these items. Buyers will open closets and want to see the garage, and you don't want to give the impression that the house isn't big enough or lacks storage space. Create vignettes in each room using furniture and accessories. Don't hold back on things like pillows, rugs, plants, vases etc to give the home a warm, lived in feeling. Set out a cookbook in the kitchen. Set up the dining room table with full place settings. Put bright new towels in the bathroom, as well as new soaps and lotions. Set a bed tray on the bed with a newspaper and a coffee cup. Anything to give the illusion of a lifestyle.

Now this next one is very important. CLEAN that house from top to bottom, and not just once. Have it cleaned weekly, until it sells. Nobody wants to smell dog when they first walk in the house, they don't want to see dishes in the sink and they don't want to see soap scum all over your shower. Trust me, it's worth every penny. And get a second opinion on how the house smells...you might not notice it anymore – especially stale cigarette smoke.

Consider spending a few dollars on minor repairs and improvements that will help you get top dollar. Simple things like replacing dead light bulbs, repairing leaky faucets and patching holes and cracks to minor landscaping improvements are all good ideas. Curb appeal is essential, and shows pride of ownership. If your yard is lacking a certain visual aesthetic, you might not even get a buyer into the front door. Two words: first impression. We all know you only get to make one. Keep the lawn mowed, hedges and bushes trimmed, and consider planting some inexpensive flowers. New window treatments can make a huge difference in a room and don't have to cost a lot. Temporarily remove window screens while on the market, and make sure windows are clean.

A new coat of paint is one of the cheapest improvements you can make with the best return. Also, if you have any interiors that are painted crimson red or chocolate brown or royal blue or something similar, consider repainting with a softer, more neutral color. Again, you want people to see the house, not your taste. Not all buyers have “vision.”

Avoid being home when your agent is showing it. It distracts buyers and they don't feel free to say how they really feel about the house. Let the agent you hired do their job, and you'll be handing over the keys to a happy new owner in no time!

what recession? bel-air mansion sets new record for highest sale price in 2010...

Fri, 11 Jun 2010 15:17:35 -0700

Well, it was hard to miss if you perused the front page of the LA Times this morning. Right there, lower left hand corner, was a headline that almost made me choke on my egg white omelet (yes, egg whites....summer's coming!). It screamed at me, "Bel-Air Mansion Fetches Highest Price This Year For U.S. Residence." Then I felt the chunks rising, as I read "The 48,000 sqft French Chateau exceeds the previous 2010 record of more than $46.5 million, although final price isn't released."

Though we don't know the exact price just yet, seller Mohamed Hadid did confirm that the sales price exceeded the previous hightest sale for the year, which was set in Colorado. The sales price of the Bel-Air unit fell somewhere between $50 and $72 million (the most recent asking price, having come on to the market at $88 million). The property, which had been dubbed "Le Belvedere," boasts 19 fireplaces, 10 bedrooms, 14 bathrooms and a 3 flight elevator. According to the story, "There's a 5,000-bottle wine cellar and tasting room, a grand ballroom, a commercial kitchen, a screening room, a gym, a Turkish steam bath and a game room. The garage can hold 10 to 12 cars, and a motor court provides outdoor parking. A swan pond, fountains and rose gardens grace the manicured grounds.

The exterior uses more than 30,000 pieces of limestone mined in France. The entry, living room, library and master bedroom are gilded with 24-karat gold. The average room size is about 1,100 square feet, bigger than entire homes in less fancy neighborhoods. Lighting includes 90 sconces and 120 chandeliers made in France."

Sounds garish to me. But maybe I'm just sipping on haterade.

in the city of neon lights.....

Mon, 07 Jun 2010 18:13:07 -0700

(photo via curbed)

If you frequently make the drive down Santa Monica Blvd through West Hollywood, you may have noticed recently some new eye candy along the way. No, I'm not talking about eye candy of the human variety. The city of West Hollywood has joined forces with the Museum Of Neon Art (who knew there was such a thing?) to present On Route - 66 Lights, which consists of 4 vintage neon signs along various spots on SMB. Part of WeHo's 25th anniversary celebration, the exhibition is from the Art On The Outside project, "a program of the Arts and Cultural Affairs Commission whose mission is to promote and nurture the arts and cultural life of the City."

Very cool. More info HERE.

Ten Things First Time Homebuyers Should Know....

Mon, 07 Jun 2010 13:21:55 -0700

The following is a reprint of my column that appeared in Frontiers In L.A. magazine on June 3rd, 2010.

Anyone who hasn't been living under a rock for the past two years knows that the real estate market is down by 20-40% depending on area, and that this is the time for those who have been sitting on the fence to strike. There are TONS of deals out and prices are at roughly the same they were around 2004. Couple that with historically low interest rates and a $10,000 first time homebuyers credit, and you have all the workings of a BUYERS market! Here are 10 things you should know to get yourself started on the path to property ownership!

1. You CAN Afford It – If you have a reasonably strong credit score, decent reported income, and a steady job, it's easier than you think. You don't need tens of thousands of dollars to put down. Almost all homes (and many condos) can be purchased with a down payment of only 3.5% of the purchase price. There are many different types of loans and lenders, and an experienced Realtor can help you find the right one. In many situations, when you factor in tax incentives, you can OWN for a monthly payment not that much greater than what you're paying in rent. Stop paying someone else's mortgage!

2. Align Yourself With A Great Buyers Agent – You could just cruise the internet day and night looking for the latest listings, but why would you? The services of a Buyers Agent are FREE to you. Don't go straight to the listing agent. They are contractually bound to act in the best interest of the seller. You need your own person in your corner going to bat for you. Be loyal and only work with one agent. If you make them a priority, they'll make you one.

3. Get Pre-Approved With A Reputable Lender – Most Realtors insist that you've at least been pre-qualified for a purchase before they start showing you property, so they know what price range to look in, and so YOU don't fall in love with something you can't afford. It's a very simple, painless process, and your Realtor can put you in touch with a lender, who will only need about 10 minutes of your time to get the process going. There's no obligation on your part, and you're free to talk to as many as you want before settling on the one you feel most comfortable with.

4. Stop Trying To Time The Bottom Of The Market – How will you know when the market has hit bottom? Because it's started coming back up. By the time the LA Times or the local news tells you we've hit bottom, you've missed it. Buy now, while interest rates are still low and prices are way down.

5. Go To Open Houses – Every Sunday, agents hold their listings open. Get out and see what's out there, and how much things cost. Use that time to figure out what your priorities are, and what you'd want in a home. Get a feel for what you like and don't like, need and don't need and what's acceptable to you vs. what just won't do.

6. The Market Determines The Value Of A Property – Not how much you like or don't like it. When you find a property you like, a knowledgeable Realtor will search the MLS for “like” properties (or “comps”) that have sold in the last few months to determine what a fair offering price is and will call the other agent to determine the level of motivation of the Seller.

7. Starting Small Is OK – Don't be afraid to start with a small condo or house. This purchase is meant to get you INTO the market. The longer you sit on the sidelines, the more you'll be left in the dust. It's OK to start small, build some equity, and hopefully work your way up to something bigger. Then bigger. And so on!

8. Consider A Duplex – Buying a duplex is a great way to get into a property, live there, and still have someone else helping pay your mortgage every month! Ideally, it becomes an income property you keep forever. You could also buy a duplex with a friend and each live in half. In that situation, it's best to find one with very similar units!

9. Short Sales And Foreclosures – these can be great options that will get you into a property that might be priced slightly less than market value. Each can have pitfalls though, and you should talk to your agent about them before attempting to secure either.

10. $10,000 Home Buyer's Credit – If you're a first time homebuyer, there's a nice fat tax credit for you courtesy of our great state. It lasts through December 31st but is being given on a first come, first served basis and it COULD run out before the end of the year.....

some follow up....

Tue, 23 Mar 2010 16:22:04 -0700

A few items of follow up on some recent postings from this blog....

- I posted a couple of weeks ago a story the LA Times ran about parking meters in LA, specifically what the city claims are it's rules regarding broken and/or dead meters. Sunday was yet another parking meter related piece in the Times, this time regarding the ushering in of the era of paid parking (and ticketing). Who knew that Los Angeles was not the first, or the 10th, or even the 60th municipality to begin installing parking meters - even after such major metropolitan areas as Fairbanks, AK. I'd say LA has more than made up for lost time....

- In the war on supergraphics, chalk one up for up for LA City Attorney Trutanich. Eight of the giant canvas advertisements have come down in the past 3 weeks. The tallest, an 11 story ad near Highland Ave and Santa Monica Blvd. That'd be the one that Apple's had for years now, usually advertising iPods. Anyway, the interesting twist is that one of the companies attempted a little bartering with the city that seems to have been rejected. Beverly Hills based SkyTag attempted to offer $12.5 million towards the ongoing fundraising efforts to save the 138 acre expanse in the Hollywood Hills, the same effort that brought about the recent changing of the famed Hollywood sign to read "Save The Peak." The offer was turned down, with Councilman Eric Garcetti saying "We're not going to trade off beautification in one place for the visual decay of another."

- Because what would a post of mine be lately without the latest Hollywood starlets taking a brutal hit in the market? Britney Spears is on deck. It's your typical girl meets house, girl buys house, girl relists house a month later, girl loses marbles, girl gets placed under conservatorship, girl eventually relists house again at $2million loss. Nothing you haven't heard before. I'll let Your Mama break it all down for you.

so i pull up to the parking meter, and it says "FAIL"....

Thu, 11 Mar 2010 10:32:31 -0800

....does that mean I can't park at it? This is something I imagine everyone is this city has experienced. In the last week, probably. If the meter's broken, I just park there. Once in a while, I'll call the number on the meter and report it broken IF I have time (and that's big if). When I call, I'm told, "sir, you aren't supposed to park at broken meters," which immediately makes me want to stab myself with dull pencils. I usually do it anyway and hope for the best - which is that it doesn't automatically reset itself while I'm parked there.

The Los Angeles Times ran a story this morning about just this. Can you, or can't you, park at a broken meter. Well, here's your official answer. "There's a lot of short fuses in the world, people are out of work and out of jobs. . . . I want to have a friendly, efficient" Transportation Department, said LA City Councilman Tom LaBonge. "If someone says 'I got a ticket,' henceforth, 'from a failed meter,' we want to know about that, because we don't do that."

Amir Sedadi, assistant general manager of the Transportation Department, assured members that "the policy of the Department of Transportation is not to issue any citations to broken meters." As I said above though, the caveat to that is that you have to hope the meter doesn't correct itself, which they can do.

The other problem though, besides the blinking "FAIL" message (or my favorite, "dEAd"), is when you actually feed the meter, and it only registers some of the coins (or none) that you put in. That's when I've found you can call the number on the meter, report the meter as broken, and they will tell you you are clear there for whatever the maximum time the meter allows is. You may get a ticket, but they will have your call on record and you should be able to successfully contest it if you have to (which is admittedly a waste of time and a major pain in the a$$). If it really comes down to it, you can try putting a note on the meter saying it took your coins, AND that you've reported it.

Here's something interesting, and potentially frightening, that I stumbled across doing a little bit of research for this entry. The Times ran an article about a year ago, reporting that Mayor Villaragosa was investigating the prospect of taking the city's parking business private by leasing the meters and city owned parking structures to a private party to operate. That scares the hell out of me.

At the time the story ran, the city of Chicago had just done exactly that. For an upfront fee of $1.15 billion, Mayor Richard Daley leased control of all of the city owned parking to Morgan Stanley for a period of 75 years. The deal equates to about $20 million a year in revenue for Morgan Stanley, likey to increse when they impose significant rate hikes (in some cases quadrupled) that had been planned. So in other words, the cost of parking now lies in the hands of Morgan Stanley, not the city. And get this - while the City of Chicago retains the right to both write tickets and keep ticket revenue, Morgan Stanley has the right to do "supplemental enforcement." Yes. Morgan Stanley can now issue parking tickets in Chicago.

I don't know what the latest is with LA's consideration of such a move. I'll see what I can find out. At this point though, 18% of the city of Los Angeles' mechanical meters have been replaced with Pay Stations. Let me give you one piece of personal advise on those though. Always - ALWAYS - take that receipt it gives you and hang on to it until you get back to your car and see no ticket. I've had not one but TWO instances in West Hollywood around my office where I was given a ticket that was just plainly and simply erroneous. There was nothing to even contest. I faxed a copy of my receipt and the ticket to West Hollywood City Hall, and demanded that it be cleared immedately. And it was.

starlet's losing their shirts, part 8,474,732

Tue, 09 Mar 2010 12:56:30 -0800

Although she SEEMS not to know it yet based on her asking price, actress Mischa Barton is the latest Hollywood starlet poised to lose a boatload of money on her mansion - IF it sells. Purchased in 2005 for $6,400,000, the home is now on the market for $8,395,000. I'm quite certain that that number is the work of a business manager's mind, but seriously. She'll be lucky to get what she paid for it, especially since there's been construction around her since she bought it that's made her property less desirable. Says one commenter on Real Estalker,

"The new monster flipper house that is built above hers, built a raised retaining wall and privacy walls right to the property, line blocking all views and light. No privacy or sun now. The pool is now in total shade in the afternoon. No views to the west even out of the second story windows! The only views you now get are into the neighbor's bedroom. And the new flipper house(hotel) to the north looks right down on them."

Is that accruate? I don't know since I haven't seen it yet. But if I'm being honest, I don't know how she managed to hold on to the property for this long, since she's barely worked steadily since she bailed on "The O.C." three seasons in.

More info on the home at The Real Estalker. Check out an aerial view HERE.

more on what's up in weho...

Tue, 09 Mar 2010 01:26:15 -0800

Last month I wrote about several major developments going up in and around West Hollywood. One thing I'd left out and meant to get back to but hadn't yet, was the House Of Blues site on Sunset Blvd. Well I may as well cover it now, as Curbed LA is reporting that the West Hollywood Planning Commission just gave it's approval for a massive new development by Kanner Architects that'll add 149 MORE hotel rooms, as well as 35,000 square feet of commercial/retail space including a new 6,200 square foot music venue. In addition, the project will include 40 condos and 5 affordable housing units, plus another 22 of them offsite at 990 Palm Ave.

And much - I'm sure - to the chagrin of local residents, the building will be wrapped in a giant moving video screen that wraps around the top and sides of the building. That's gonna be pretty.

brittany murphy's sunset plaza estate hits the market...

Wed, 03 Mar 2010 00:57:24 -0800

Though it seems a bit soon, I guess that financially it makes complete sense that the mother and husband of the late Brittany Murphy have listed her Sunset Plaza house today. I don't know how anyone is going to get past the fact that she died in the master shower just 2 1/2 short months ago. Maybe it's just me, but it seems a bit much. I also think that they are clearly hoping for some of that celebrity glow to shine on the house, since it's more than a tad overpriced.

A quick history of the home for you. Murphy purchased the home on Rising Glen Road from another Britney you may have heard of - last name Spears - back in June of 2003. Murphy paid $3,850,000 for it. The home has 5 bedrooms and 7 1/2 baths in 8,000 sqft. The lot is 37,700 square feet, and includes a contiguous parcel of land next door. The Mediterranean estate, situated at the end of a private cul-de-sac boasts stunning city views, soaring ceilings, formal dining room, gourmet kitchen, french doors opening to pool and gardens overlooking the city. It has a gym, office, motor court and four car garage.

Asking price is $7,250,000.

round up from today's LA Times...

Sun, 28 Feb 2010 13:25:43 -0800

- The city of LA is cracking the eff DOWN on this whole supergraphics issue. An 8 story "How To Train Your Dragon" wrap ad on an office building at Hollywood and Highland has landed 49 year old Kayvan Setareh in jail on ONE MILLION DOLLARS bond. The ad had gone up just days after Los Angeles City Attorney Carmen Trutanich had filed a separate lawsuit involving more than a dozen supergraphics throughout the city. Expect this war to heat up, with millions of dollars in advertising revenue at stake, while preservation groups and neighborhood activists fight it tooth and nail. It's reported that the average supergraphic can generate up to $100,000 a month in revenue.....

- Buy a home last year? A new car? Put your kid through college? Purchase energy efficient appliances? Even recipients of unemployment. You're among those who are probably qualified for some tax breaks this year you may not know about. Have a chat with your accountant...

- According to MDA Dataquick, average sales price for a single family home in West Hollywood (90069 only) in January was $1,265,000, down 41.2% over January '09. Eleven homes sold. For condos it was better news, with 13 units selling at an average price of $472,000, a 16.5% INCREASE over January '09....

- ROADS TO BE ROAMED: An exhibit in Santa Monica, "Richard C. Miller: Over The Long Run" at the Craig Krull Gallery (at Bergamot Station) highlights the work of a photographer set on capturing the development and growth of early Los Angeles, circa 1948-1953 on film . The Times calls it "an unsually evocative record of Los Angeles' idiosyncratic beauty."

In "Cahuenga #6, 1953," photographer Richard C. Miller shows work on the Hollywood Freeway pushing into the Cahuenga Pass. (Richard C. Miller / Craig Krull Gallery)