Are probate sales the best values for Bay Area real estate?

Many of us have heard from someone we know or seen on TV people finding amazing deals with probate real estate. Let’s take a look at this issue to better understand the whole picture.

What is probate? Probate is the legal process of settling an estate involving someone who has passed away and did not have a will to specify where or to whom assets should go. It is wise to consult with legal counsel who is well versed in this issue as probate sales can often take long periods of time to resolve. The majority of conflicts during probate are because relatives or parties involved with the deceased do not agree on where assets should go. This can cause turmoil and sometimes unfortunately create major battles within families. Make no mistake about it many people get fussy when it comes to money! In most probate cases, the assets and properties of the deceased will automatically be passed on to the surviving spouse if there is not a will or trust in place. There are cases where even if these instruments are in place, it still has to go through the probate process. If there is a will in place, generally there is an executor of that will who is in charge of carrying out the details of that will and distributing the assets accordingly. If there is not a will in place, the probate court can appoint an executor or in the case of an intestate estate the appointee by the court would be called an administrator of the estate.

The administrator of an estate needs to take a complete inventory of the assets and personal property in the estate. They would then be in charge of taking care of any debts owed by the deceased and paying any taxes owed. The administrator would then be in charge of distribution of assets and properties to the beneficiaries according to the ruling in the court system. (Provided there is not a will)

The court must approve the transfer of every item in the estate and often time’s individuals will challenge this ruling by stating they are entitled to the asset in question. When this happens, they must petition the administrator of the estate or file a law suit to try and prove why they are entitled to the asset(s) in question. So where are the great deals for real estate?

When the probate court has to settle estates, they want to do so in a timely manner. The court is not in the business of holding onto cases longer than necessary. This does not mean the courts will just give assets away either. The court will always ask for an appraisal to determine value. Considering they want to settle the estate quickly, the courts will be inclined to accept reasonable offers to help the process move along. Usually, in the state of California, the court will set a date to look at offers. They will ask for a 10% deposit in the form of a cashier’s check and a pre-approval letter for the balance if there is financing. The court will have to approve the final bid and agree to the terms prior to acceptance. What does this mean for the average buyer? You’re rolling the dice! It is not uncommon to get properties at a ten to twenty percent discount depending on the property and location. Many people are under the impression that probate sales go for fifty cents on the dollar but that is simply not the case. In the bay area to be able to secure a property for a twenty percent discount is a fantastic deal considering the average home is $622,000. Even if it were a five hundred thousand dollar home, that would be a hundred thousand dollar discount. When it boils down to brass tacks, probate sales are just like any other property being sold. Location, location, location! What condition the property is in, how much of an investment it will take to get it ready for sale etc. There are many expenses when selling a property and this must be figured into the equation prior to purchase. The strategy must also be carefully considered to think about tax planning. If the home is going to be sold right away, it could be subject to capital gain. It would be wise to check with a CPA about this issue. Say for example you were able to get a twenty percent discount on a property but were subject to a capital gain tax of twenty four percent. This might not be such a great deal. On the other hand, say the same property was to be used as a primary residence where the family planned to stay for a long time. This may be a great deal.

The moral of the story is to do your homework and have a complete understanding of what you are getting into prior to purchasing a probate property.

Matt Larsen
Bay Area Real Estate

Top Five home improvements to bring value upon selling a home

Every home seller wants to get the highest price for the sale of their home but how many really know what to do and what not to do to get the most return for their investment? There are many home improvements that can be done. Which home improvements are proven to bring the highest return and which home improvements can be nothing but a money pit? One of the best things to do while getting started is to walk your home inside and out and look at it from the eyes of the buyer. When you pull up in front of your home, does it have great curb appeal? What is the first impression? This is very important to remember because we never get a second chance to make a first impression. Next, walk around the yard and look at the grounds, the plants, flowers and trees. Do they look healthy, green and lively? Is the front and back yard free of debris? What is the condition of the exterior of the home, the light fixtures etc? This is called the observation step of getting a home ready to bring top dollar and it is a very important step when getting started. Now let’s take a look at what has been proven to bring a strong return on investment to fix a property to sell.

The number one item is paint! Having good exterior and interior paint has proven time and time again to bring top dollar upon sale. Buyers want a home that looks clean and presentable and there’s nothing like a good quality paint job to make a home shine. Studies have also shown that a fresh paint job will speed up the time it takes to sell a home.

The number two item is the kitchen! A great kitchen can mean serious profit when selling a home. The kitchen for many buyers is the heart of the home and therefore a very important area to consider. Changing old fixtures, cabinets and flooring can be a good place to start in the kitchen and can make a significant difference in the way a kitchen looks. If one really wants to bring a great return upon sale, a home seller can change the sink, counter tops and the appliances to make the kitchen look like a center piece. This is a great area because a little or a lot of money can be spent upgrading the kitchen. In general, for every $5,000 spent could bring as much as $15,000 in return.

The number three item is useable space! A good home can become great if it is completely functional and has all useable space. Many times the way a home is laid out can be improved by knocking out a dysfunctional wall, adding a bathroom or a bedroom, or turning a previously unusable room into a room that has a purpose. Look around the home to look for areas that fit into this category and figure out how they can be expanded or refurbished to bring extra value.

The number four item is adding an extra bathroom or upgrading bathrooms! This is a very important area of the home being functional, comfortable and convenient. If the home has two bedrooms and one bathroom, adding a second bathroom will add great value. The average cost to remodel a bathroom with all the bells and whistles is on average $11,000. In most cases this will do more than just pay for itself! It will add a much greater value, make the home more saleable and bring more money upon sale. Another selling point for bathrooms is to make sure there is plenty of light or adding a skylight can bring extra value.

The number five item is adding a redwood deck or enclosed patio! This is a great way to improve the look of the home from the outside. This is also a great way to add extra space and make the home more functional. Many people love to be outside when the weather is nice, barbeque and entertain family or friends. The key to this element is to make sure to use quality materials. This is not an area to cut costs.

There are other things that can be done such as making sure the home is clean, the floors are clean, there is no debris or clutter and there are no leaks in the faucets. Contact Team Enterprise for other home improvement tips to bring added value.

Regards,

Matt Larsen
Please visit us online for more related information:

1-877-510-3948
Bay Area Real Estate

2008 Winding Down With Bay Area Real Estate Purchases Revving Up

The end of the year is upon us with the holiday’s right around the corner. It has been a very interesting, volatile and bumpy ride with the economy, stock market, Presidential election and real estate crisis. We witnessed some of our largest financial institutions go under, Fannie Mae and Freddie Mac both become taken over by the government and the stock market loose nearly 4 trillion dollars. We have witnessed world renowned business and economic figures such as Warren Buffet and Alan Greenspan in the spot light stating they have never seen anything like this. Our national debt has accumulated to unprecedented levels and our economy literally nearly collapsed. We have had numerous phone calls and emails from worried clients who are watching their retirement portfolios dwindle before their eyes and many have felt helpless. It is during these times that I recall a quote my father used to say to me “with every disaster there is always a gift on the other side”. What does this mean for real estate?

Right now is the best time to buy Bay Area real estate in the past twenty years. For those who have been waiting to purchase, the time is right now.

We are seeing more buying activity in the fourth quarter than we have seen all year. The market is rich with great deals and multiple offers are happening frequently. Many people have been waiting for the “bottom” to hit but the truth is most of us will see it in the rear view mirror. According to Data Quick, Bay Area sales are at the highest volume they have been in 17 months and median values are down 40% from a year ago across 9 Bay Area Counties. Investors and buyers have stepped off the sidelines and into the game. We will most likely see more purchasing activity in 09 with the window of opportunity closing in quickly. The buying frenzy has indeed been initiated and the heat is on. This is a very important step for all of us. Our economy needs to stabilize and homeowners need their property values to stop declining. Bay Area real estate for many is a good investment strategy if it is long term. In today’s market it is not all that bad to have a saleable, tangible asset instead of an extremely volatile stock portfolio.

Much of the purchase activity in the real estate market is with bank owned or “distressed” properties. We would like to put out a word of caution when dealing with these types of properties. Many of the lenders who own these are located out of state and have lengthy contracts that are drafted by their own attorneys protecting the banks best interest. The purchase contract in California is designed to protect the buyer not the bank. It is important to watch out for clauses in the banks contracts like their contract supersedes the interest of the California purchase contract in case of a difference between the two. It is also very common in the banks contracts to revert back to the passive removal of contingencies instead of the California contract requiring an active removal. A passive removal of contingency means that per the banks contract the buyer has a certain amount of time to do inspections, remove the appraisal and the loan contingencies. If that date comes and goes, the contingencies are automatically removed and the buyers deposit is on the line. The California contract requires the contingencies to be removed in writing with both parties signing and dating those removals. Make sure to be very careful when dealing with bank owned properties and that you are working with a professional who knows what they are doing. It is also a very good idea to have an attorney look over any agreement from a bank before you sign it just to make sure you fully understand what you’re getting into.

The real estate market most likely will see a significant number of lawsuits arise in the following months largely due to bank owned and distressed properties. There will be many attorneys watching very carefully for negligent behavior and real estate agents and brokers should be cautious in their dealings. There is nothing to worry about as long as business transactions are done carefully and professionally. Real estate has made more people wealthy than just about anything and the Bay Area is no exception. This market is a niche and demand is always been strong. The population will continue to grow and the economy will remain a large player in the global economy.

Please contact Team Enterprise for more information or visit us online.

Best,

Matt Larsen

Bay Area Real Estate

1-877-510-3948