My Agent Keeps Telling Me To Reduce My Price … Can’t She Sell Anything?

Your Agent is continually talking to you about lowering your price because the market keeps dropping and your home clearly hasn’t sold. Quit the ostrich act! It isn’t your Agent that is necessitating the downward price adjustment - it takes a willing Buyer and a willing Seller to make market value. When there are many listings and few Buyers, the market value declines … supply and demand. It isn’t your Agent’s lack of selling skills or incompetence (we hope) that are causing your home not to sell if it isn’t priced right for what you are offering.

Agents don’t make the market … but the good ones monitor the variables closely to enable you to stay current in the market such as: interest rates; the economy – local, regional, National… even Global today; the inventory – existing and new product coming on line, the overall Market activity, Buyer demographics; other investment opportunities or vogues; changing area amenities, i.e.- increase in medical services in the community; and many more.

When the market runs up some Agents don’t have their Sellers make adjustments. When the property sells the Seller doesn’t know how much was truly left on the table. When the market drops it is evident to all if a property isn’t priced right – the property sits on the market … and sits…and sits. Properties that are priced right are for the most part selling. The price is up to you, the Seller, and what a Buyer is willing to pay for what you have.

Buyers today want a great buy … your Agent can’t control that. She can tell them how your home stacks up in the Market, but she can’t prevent the “lowball” offer that so offends you. She can tell them why your home is priced so well, but she can’t overcome their “media paralysis”, their fear to act because of what others have told them they should fear. Some are so afraid by what they see and hear that you could give them your home and they’d be afraid of “the catch”.

Our Advice: Your Agent cannot overcome the collective consciousness of our society which today is in such a panic that many people have simply put their lives on hold. She can, however, be realistic, positive, energetic, and attentive to your needs as she approaches her fiduciary duties daily to get your home sold by finding the good smart Buyers that are out there today taking action. Good agents can help you save, or make, money by helping you make good decisions. That can be interpreted for some Sellers as minimizing their ultimate loss. It shouldn’t be a test of wills between you and your Agent – you should be working towards a common goal – selling your home for the best possible price in a reasonable time and protecting you from problems.

Money seems to be ready to flow back to real estate from stocks given the great real estate prices, incredible interest rates, and brilliant future of real estate. As the money flows, prices will gain traction and things will turn around. This is now the peak opportunity for Buyers to make their best buys, and for Sellers to maintain their optimism about their home selling. Enjoy it – these are the Good Old Days! When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781- 5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com

It’s Time To Be Thankful.

Being humble and grateful is a beautiful and fulfilling manner of life, and periodically it is good to simply be thankful. It is that time of year when Americans express their thanks with, and through, the holiday of Thanksgiving. In that traditional spirit we are thankful for the opportunity to express our thanks, and, perhaps, some that you can also identify with.

We are very thankful for many, many things including: the continuing favorable interest rates; the assorted Home Retention Programs being developed and the spirit in which they are being formulated; Buyers that are boldly venturing forth and buying with confidence; our fellow real estate practitioners that are continuing to help Buyers and Sellers gain and maintain perspective to navigate in these interesting times; the high standard of the real estate practice in our area; USDA Rural Development 100% loans that provide wonderful opportunities for home Buyers in our community; the opportunity to help people with our real estate knowledge and experience.

We are very thankful for the prevalent Volunteer Spirit found throughout the Carson Valley that results in so many special things; for our friends’ conspiracy to nominate Jim so he received the Carson Valley Chamber of Commerce “Unsung Hero of the Year” award; for the generosity of our community towards worthy causes even in trying financial times; for the local business community and their continued efforts to provide goods and services; for our Tiger Family; that we live in a free country; that if we don’t like something about our life we can change it; that if we like something about our life we can keep it; that we have so much to live for.

We are very thankful for this great Valley we live in – the natural beauty and the wonderful people; the wonderful life changing opportunities for our children and families; that the Youth are still and always important in our community; that families are important as is community itself; that Values are respected and a way of life for most; that people still stop to help one another; that in our community people still say hello to strangers with a smile.

Our Advice: Be thankful and grateful for your health, your family, your friends, and your community. Be a shining example of gratitude and be thankful for what is … not resentful for what isn’t. Our wonderful Valley gives us a wonderful quality life to enjoy while the real estate market cycles … as it always has and always will. Enjoy it now… every day… and be thankful for it. These are the good old days… be thankful we can share them together.

Together lets move boldly into the future and continue to generate many things to be thankful for. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com, 775-781-5472. http://www.carsonvalleyland.com/ email us at carsonvalleyland@hotmail.com

Can We Convert Our Vacation Home To A Primary Residence For Taxes?

Yes, you can, but be advised that the rules are changing on January 1, 2009. Though the Housing Assistance Act of 2008 was primarily designed to provide relief for homeowner’s facing foreclosure, a provision was included to help the government generate more taxes that will have an effect on you when you sell your second homes after that date.

Under the old rules you could sell your primary residence and your vacation home and keep up to $500,000 (married) in profit from both if you owned and lived in each appropriately. The new rule allows profit exclusion only up to the actual percentage of the time of total ownership that it was used as a primary residence. For example, you buy a home next year and use it as a vacation home for ten years. Then you sell your primary residence and move to the vacation home full time. After fifteen years you sell it. You will have owned the property for 25 years, 10 as a vacation home and 15 as your primary residence. Your primary residence period, 15 years, is 60% of the total ownership period. Under the new law, if you made $250,000 profit you can exclude $150,000 from taxation and will have to pay capital gains on the remainder profit of $100,000.

The new rule does not include ownership time prior to the enactment date, January 1, 2009. Using the above example, if you owned it for 5 years prior to that date, held it for the same 25 years, and moved in for the same 15 years, and were fortunate enough to realize the same $250,000 profit, you can now exclude $200,000 of profit, a tax savings of $37,500.

Loophole: Primary residences are granted a special tax status regardless of their subsequent use. This creates a potential loophole, i.e.- on January 1, 2009 you move out of your primary residence and into your vacation home. On January 2, 2011 you sell your then-primary residence and take the maximum exclusion on the profit. You then move back to the original primary residence and take the exclusion as long as you meet the basic criteria, i.e.- live in it two of the last five years, etc.

Our advice: Many people adjust their holding plans/strategy according to the tax consequence of their actions, and this new tax provision will undoubtedly result in owners holding their property longer. If held until their demise their heirs would have a stepped up basis in the property and little tax consequence to a subsequent sale. Beware of adjusting your holding plans too much, however, since this tax change will likely have an effect on vacation home markets and your property’s market value may change over time nullifying any tax savings you are protecting by holding. If your second property was a rental unit before you moved into it, remember that you may have to recapture depreciation.

Planning your real estate moves based on taxes should be done in concert with the advice of your tax advisor. Real estate agents have working knowledge of real estate related taxes, but don’t know your entire portfolio or financial circumstance, or enough about the tax code, to provide tax advice. Consult your accountant to assess the tax consequences of a sale or transfer. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com

My Agent Won’t List My House At My Price … Why?

Sounds like you have an astute business person for an agent… congratulations. We have often discussed the agents that will list at any price because they are either: a. ignorant and thrilled to finally have a listing to work on, or b. they are going to take the listing and beat you up week after week for a price reduction. The smart agent knows that an overpriced listing won’t sell, and ultimately it will have a detrimental impact on the Market and the property itself.

The matter is actually more involved for the savvy agent, the good business person that understands not just the mechanics of the industry, but the fact that it is, indeed, a business. Despite the perception of the uninformed public that all a listing agent does is put a sign in the ground and put the property in MLS, there is a lot more to it. When a homeowner signs a listing they agree to pay the agent a selling fee when the agent has performed … not just procuring a Buyer, but actually closing the escrow with the Buyer.

When an agent lists a property they are committing to a substantial financial investment. In our particular market area, Northern Nevada, Just taking a listing actually costs the agent around $2,000 of hard money… without the extra stuff. Then there are ongoing monthly carrying costs in the neighborhood of $400 per listing. That figure will vary according to how many listings the agent carries and what his monthly operating costs are, i.e.- if an agent has ten listings and a monthly base cost of operation of $5,000 his monthly cost per listing is $500. If it takes six months to sell your home, a neutral market (not Buyer or Seller), the carrying cost is $3,000. The agent’s cost is now $5,000 without a guarantee of any return. If you have a $300,000 home and their side of the fee is 3% they will gross $6,000. Now you know that the net is only $1,000 for their personal expenses, i.e.- taxes, house payment, food, utilities, recreation… life.

Some agents might take a listing for the sign placement if you have a highly visible property. That is an old school thought for there are fewer sign calls these days with the proliferation of the Internet in our industry. If your agent is taking the listing too high you might be an unwitting victim … and so is the agent. They are only fooling themselves as to their actual benefits of the listing, and they aren’t serving you well.

Our Advice: Even in a traditional office where agents don’t pay as many direct costs, they still pay as their broker receives a larger portion of the selling fee. Many agents, regardless of their fee-split arrangement, don’t know they are in business. Be careful with such an agent when considering them to list your home. If they can’t manage their own finances properly how careful will they be with yours… your money… when it comes time to negotiate on your behalf and to protect you through the escrow process that is fraught with financial traps?! There is no “let’s just try it”, or “they can always make an offer” since marketing times have gone from a week to nine months on average. The costs and risk are just too high to put your hook in the water on a whim.

An agent must protect your property and investment as well as their time and financial expenditures when they take a listing. The art is to price it right – to get you the most possible in a reasonable period of time. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com

Are Lenders Still Impacting the Market?

Yes, lenders are still having an impact on real estate values and sales. The numerous bank-owned properties throughout Carson Valley are continually driving down the neighborhood values because of the banks’ lack of maintenance on their properties. The dry lawns, weed forests, and other value-sapping deficiencies resulting from lack of care and a vacant property are driving down the values of entire neighborhoods.

There are other, less obvious lender impacts in our market that are also having a major impact in sales as they affect a borrower’s ability to qualify. These involve major changes that are new policies or procedures. They can range from allowable debt/income ratios being lowered, to a higher FICO score requirement. Those are usually known to a borrower at the beginning, but we have seen changes in the middle of a loan process. The more subtle, less publicized ones are the ones that will trip you up.

Consider the new Fannie Mae and Freddie Mac rules that apply when buying another home before selling your old one. Historically, the Buyer generated a lease agreement for the existing home and was allowed to use 75% of the lease income to offset payments on that home. Two months of cash reserves were typically required. The New Rules require a borrower with a home in escrow, but not sold, to qualify on their ability to carry the payments on both homes, no lease income or rental survey income is allowed.

If the new home is a second home, the borrower has to show the ability to carry both payments and have six months PITI on both properties in documented reserves. If you are buying a rental property you can use 75% of the rental amount, but now you must provide documented evidence that you have at least 30% equity in the property. Additionally, there are detail requirements that must be complied with, i.e.- you have to provide the receipts of the security deposit from the tenant, and the deposit into your account. If you have less than 30% equity the rental income won’t count to offset your payment, you must now have six months reserves for both properties.Our Advice: Don’t let the details stop you if you want to buy a new home. We recommend, however, that you don’t experiment with lenders. We have many good, seasoned, honest lenders in our Carson Valley that will work with you, protect you, and perform for you allowing you to achieve your objective. A new lender doesn’t know where the roadblocks in the process are. Your process will be one continual surprise resulting in an exceptionally frustrating experience if your lender isn’t seasoned. The seasoned lender will take you through the process addressing each hurdle like a hurdler. Lenders today are working to minimize the risk to the investor. That has resulted in a new industry which is much like the old industry … you have to truly qualify to borrow. If you qualify … proceed with confidence and don’t let the hurdles bother you along the way.

Professionals in our industry have rarely been as important as they are now. The major wealth in the world has been largely accumulated via real estate. These are good investment times, don’t let the hurdles keep you from your goal. Get with a good hurdler and have confidence in achieving your goals. Your lender, escrow officer and real estate agent are more important to you than ever before in these exhilarating times. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, visit our websites at carsonvalleyland.com or carsonvalleyland.net .

Vacant Lot Myths

There’s a utility pole on the corner of the lot I’m buying. I have power for my home … right?

Yes … maybe. Just because there is a power pole on your property doesn’t mean you have access to it, or that there aren’t significant extra costs to use it. Depending on how many homes are drawing from that pole/transformer and where you place your home on your lot, you could be faced with substantial additional costs. Check it out with the Power Company.

Since the pole is there, we have “all utilities” … right?

No. You should be looking for phone and cable television as well as to power when you evaluate a lot. Just because there is a utility pole doesn’t mean you have the other utilities. We’ve seen areas of Douglas County where power and phone lines are on opposite sides of the highway. Additionally, the phone lines are on short poles and you can’t put power lines on those poles. This can result in substantial increased expenses when you go to construct. Remember, too, more local areas aren’t served by natural gas than those that are.

The neighbors next to the ten acre parcel I’m looking at are on well and septic. I can drill a well and put in a septic … right?

Be really careful on this one! There are areas where homes are grandfathered in with well and septic, but in the intervening years water and/or sewer lines have been run nearby. If you are within the minimum distances from those lines you will be mandated to hook up to them. This situation is not always financially detrimental, but it can affect your intended use of your property.

My lot is in a flood plain so I just build up my house and I’m okay … right?

No, no, no! Things have changed over the years, and might change dramatically in the next few months - Douglas County is in the process of revising its Flood plain Construction ordinance. Some of the proposed changes may have a significant financial and time impact on your construction. Be careful on this one – do your homework!

I see lath at the corners on the lot I’m buying so I don’t need a survey … right?

No! Lath, a wooden slat, is used by surveyors to easily see the location of a corner, or traverse point, but it doesn’t physically mark the corner. Corners are marked with rebar very close to the ground. If the survey was done in the past 20 years, or so, it will have a yellow cap with the surveyor’s license number on it. Be very careful when identifying old corners. Is the yellow cap still in good shape? Does the corner look like it is intact and not tampered with? If you are getting a building permit you will need to have the corners marked for the County inspector. Be very careful in this area.

Our Advice – When buying land to build on, write your offer with a “Due Diligence” period that will give you time to study the property and get the answers you need so you have a total and clear understanding of what it is that you are buying. There is much to consider when buying a lot to build on. All is not what it may seem and you should know as much as possible about the actual status of the utilities, easements and deed restrictions that may affect the property, status of the property corners, drainage and flood plain matters, etc. Some lots are just plain unbuildable - economically or physically – know what you are buying

Don’t fret over buying vacant land – get good Engineering, Title, and Real Estate professionals on your team so you protect your investment and maintain your peace of mind during your acquisition and construction process. Don’t gamble with your most important investment.

Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com , 775-781-5472.

The Weeds Are Growing Faster Than My Garden … What Can I Do?

It sounds like you have the very situation that Webster uses to define the weed: “a plant that is not valued where it is growing and is usually of vigorous growth; especially: one that tends to overgrow or choke out more desirable plants.” Weeds are nature’s way of protecting and often enhancing our soils, but they can be destructive and obnoxious. Removing them will require an assessment of the type of weed(s), size of the area affected, surrounding plants, ability to physically remove them, or the need for chemical application, and the selection of tools and chemicals to get the job done.

Certain weeds are actually controlled by Nevada Statute, and Douglas County ordinance. These are known as noxious weeds, and include Canada thistle, Puncture vine (also known as “goatheads”), Whitetop, and others. You can see photos of noxious weeds at various stages of their development online at Douglas County. Ever see your pet or child suddenly pull up limping/hopping in pain in the spring or summer? That’s a good indicator that they’ve discovered a goathead. Keep your family safe and protect your property value – do your weed maintenance.

Nevada weed laws include: NRS 555.150 Every landowner or occupier, whether private, city, county, or federal shall cut, destroy, or eradicate all noxious weeds as required by the state quarantine officer. NRS 555.170 Should the owner/occupant fail, neglect, or refuse to comply; the state quarantine officer may notify the board of county commissioners for the county in which the property is situated. The county board of commissioners shall proceed to have cut, destroyed, or eradicated the weeds in accordance with the initial notice. NRS 555.180 Control costs not paid by the owner shall be a lien against the property and shall be collected as provided by the law for the collection of other liens.

Weeds are well intertwined with mankind as we cohabitate on this planet. Weeds can indicate soil deficiencies and help with the remedy, can provide cover for other crops, can stabilize the soil, some have insect repelling abilities, some provide beauty and fragrance while others are hideous and hurt. Some historic weeds are now known as vegetables and embraced by man. Others offered medicinal properties and are now called herbs. Weeds can present interesting dilemmas. Consider this- would you rather see green weeds with flowers by the roadside, or the debris like that we regularly have to pick up at our property that was thrown from passing vehicles such as coffee cups, beer bottles and chew cans? The weeds serve to cover such human trash.

Some weeds are clearly good for us – others are a menace and must be controlled.
Weeds come and go in cycles as the weather changes. You never know what Spring will bring until the Valley greens up and you take a closer look. Look closely at the greenery on your property - certain weeds are lethal to livestock, others painful for your pets and children. It isn’t just the rancher’s responsibility – we all need to keep the Valley safe. Some weed seeds lie dormant in the ground for 5-10 years before weather circumstances cause their sprouting. Timing is important for weed control – get them before they go to seed.

Our Advice: Identify the weeds that are on your property. If you have noxious weeds you must take action – it’s the law. Questions - contact the friendly and very helpful Douglas County Weed Contact, 782-9835 for help in identifying them and developing an eradication plan. Get help – some weeds will multiply like starfish if you don’t remove them completely. Eradication can be by: a. Mechanical means, i.e.- hoe and sweat, with adapted equipment, b. Chemical means, the nature of which will vary according to the specific weed and its location, i.e.- in a vegetable garden, or on a roadside, or c. organic means, i.e.- mulching with organic materials. You can hire professionals to apply pre-emergent chemicals to stop them before they get started, or to safely eradicate them for you. There are many resources available to you … use them and take action.

Weeds … get on ‘em and stay on ‘em or they will grow like … weeds! Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com or www.carsonvalleyland.net , 775-781-5472.

There’s Water in Our Ditch and It Hasn’t Rained … What’s Up?

Its that time of year again – time to irrigate the crops that keep the Valley so green and the aesthetic wonder that it is. Throughout the Valley is a network of conveyance ditches that bring water from the Carson Rivers (East and West Forks) to the property where it is to be put to beneficial use. Look around and you’ll see them everywhere, even in town. It sounds like you have such a ditch on the edge of your property. Yes, it hasn’t rained, but the ditch is full of water because it is being transported from the river to somewhere down the ditch from you so it can irrigate crops.

Water is important for keeping the Valley green, but more importantly it is an essential component of agricultural production. The rancher’s living and the well being of their livestock is dependant on it. It is taken very seriously by the ranchers and should be respected by all Valley residents. The Carson River was the subject of the longest running court case in the history of the U.S. Filed in 1925, it was resolved in 1980 with what is known as the Alpine Decree. That the litigants stayed on task for that long demonstrates their passion and zeal for this most important resource. That passion has not waned among those that have the benefit of surface water rights, but is now better managed among them by the dictates of the Decree and the oversight and decisions of the Water Master.

Ranchers work hard to maintain the ditch network. You see them burning the weeds to allow the water to flow better. You will also see them removing silt build up to keep the flow at its optimum. Water is precious in the desert and the ranchers work hard to get as much to their property as possible with as little loss as possible. Each branch of the river has a Federal Water Master representative to direct the water flow – who gets the water, how much they get, and when they get it based on historic use, priority, and the water flow in the river. Neighboring water users work together to coordinate the most efficient use of the water around the clock during the irrigation season. If you are a new owner of a water righted property and aren’t sure about what to do ask your Seller, your neighbors and the Water Master for your property. They will gladly help you understand protocol, custom and the law so you can enjoy your asset and assimilate nicely in the neighborhood.

Our Advice: Be clear whether you live near an irrigation or a drainage ditch. If you live near an irrigation ditch be careful with your children and animals. Water can be in the ditch unexpectedly. The water can move rapidly and goes through many culverts along the way. Your child or pet can have a difficult time extricating themselves from the water if they happen to fall in. Also, if there is a culvert on your property it is in your best interest to keep it clear of obstructions. Not only can it cause water to back up and flood your property, by maintaining it and helping the ranchers you remove the need for them to enter your property to maintain the ditch, a right they have.

In case you are wondering, no, you can’t use the water going by your property as it belongs to someone else. Enjoy the flowing water, a treat in our high desert environment. Note the joy of the flora and fauna, wild and domestic, as the water spreads the essence of life throughout the Valley. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, http://www.carsonvalleyland.com/ or http://www.carsonvalleyland.net/ , 775-781-5472.

These Are the Good Ol’ Days, Make the Best of Them … What Is Right With Today’s Market.

We believe these are the good ol’ days for reasons that we are happy to share. One of the most exciting changes is the big supply of homes available to choose from. Instead of taking what you can get and compromising your true wants and needs as was happening to Buyers in 2005, Buyers now have a wide variety to choose from so they get exactly what they want in a home. This is well illustrated by the fact that in July of 2005 there were only 3 homes under $300,000 in the Ranchos part of our Valley. Today there are 64 homes offered under $300,000, 13 of which are under $200,000!

In 2005 Buyers were being “shoehorned” into homes at the edge of, and sometimes over, their ability to pay. This was done with subprime loans, teaser rate loans, and sometimes just plain fraud. Buyers were happy to buy, but many are now paying dearly for their stretch. Today’s borrower has some wonderful loan opportunities that make their home purchase a comfortable, safe endeavor. These include increased FHA loan amounts and enhanced loans that are easier to get with scaled down guidelines.

In the height of the market run up we often had to extend the time for closing because vendors, i.e.- physical inspectors, appraisers, etc., were so backed up. What took 3-4 weeks to schedule then can be done in a few days now. Escrows can close in a short period of time even with a new loan instead of the drawn out uncertainty of overworked and often overwhelmed staff and underwriters.

Interest rates are about the same today for a 30 year fixed loan as they were in 2005. The benefit for Buyers is the down and monthly payments are less. Consider these statistics provided by Jake Fair of Bank of America, the $325,000 home in 2005 required $65,000 down, $1,247 monthly payment, and an annual income of $33,253. In some neighborhoods the same home can be purchased for $225,000, a down of $45,000, $1,079 monthly payment, and an income requirement of $28,000 – a savings of $20,000 up front and almost $200 a month!

Neighborhood characteristics are changing as the Buyers are changing from investors to happy homeowners that show pride of ownership. In a wave of change investors are pulling back and primary residence homeowners are outpacing investors. Homeowners typically have an interest in the property not demonstrated by transient tenants that aren’t as concerned about the yard. It’s a good time to get in to transitioning neighborhoods at an affordable price.

Our Advice: Real estate is a good long term investment, especially a primary residence where you enjoy not only the financial return, but also the emotional return of living in and enjoying the property. People are buying now with reasonable expectations, one might say normal expectations. There is less competition today from the “get rich quick” artists that were buying wildly and driving prices up in the “hey day”. Your offer will be reasonably considered by a Seller today – be reasonable with your offer and you will have a healthy escrow.

These are the “good ol’ days” … make the best of them. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com , or www.carsonvalleyland.net 775-781-5472