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SILVAR Global Business Council Chair Jennifer Tasto welcomes everyone to the association’s global heritage potluck.
Over 30 SILVAR members attended “Global is Good Business,” a heritage potluck promoting SILVAR’s global business initiative on Monday. The event featured an array of traditional California and ethnic dishes, social networking, and an education segment in which real estate professionals with international experience spoke briefly about the importance of doing business globally.
SILVAR Global Business Council Chair Jennifer Tasto and SILVAR President Suzanne Yost explained SILVAR’s global initiative and the purpose of forming a Global Business Council. They said the number of foreign and immigrant buyers has steadily grown in recent years, and SILVAR would like to provide members with the tools and resources that can help them succeed in this market.
Janet Case, CEO of Proxio, explained how the international MLS can help REALTORS® extend their market reach and gain a competitive advantage. “Silicon Valley home buyers come from many cultures and from many parts of the world,” said Case. “Proxio provides multilingual marketing services to agents and brokerages, so they can serve multicultural and foreign buyers better, and global marketing tools that gain international exposure for sellers.”
Kenneth Chan, premium mortgage consultant with HSBC, and Citi mortgage consultant Evelyn Figueira said foreign buyers experience financing challenges like meeting mortgage requirements, moving funds from their country, and foreign income and asset verification. “It’s not as simple as having the money to buy property,”said Chan.
Michael Repka, managing broker and general counsel for DeLeon Realty, said foreign investors are drawn here due to business opportunities, the stability, and appreciation potential. “Real estate is becoming increasingly global,” stressed Repka.
Zach Benjamin, Business Development and Outreach Manager for the National Association of REALTORS® Global Business and Alliances Group, identified some tools and resources from NAR that can help agents, including NAR’s Certified International Property Specialist (CIPS) designation.
SILVAR is offering the five CIPS courses required to fulfill the classroom requirements for the designation on November 26-30 at an early bird registration price of $550 for any AOR member, if they register by Monday, October 15. These courses are open to the public, as well. You don’t have to be a REALTOR® in order to enroll in these courses.
A viral email continues to circulate indicating that the 3.8 percent tax on some investment income is a tax on all home sales. To help educate REALTORS® and homeowners regarding the 3.8 percent tax passed as part of health care reform in 2010, the National Association of REALTORS® (NAR) has developed the following top 10 list:
1. When you add up all of your income from every possible source, and that total is less than $200,000 ($250,000 on a joint tax return), you will not be subject to this tax.
2. The 3.8% tax will never be collected as a transfer tax on real estate of any type, so you’ll never pay this tax at the time that you purchase a home or other investment property.
3. You’ll never pay this tax at settlement when you sell your home or investment property. Any capital gain you realize at settlement is just one component of that year’s gross income.
4. If you sell your principal residence, you will still receive the full benefit of the $250,000 (single tax return)/$500,000 (married filing joint tax return) exclusion on the sale of that home. If your capital gain is greater than these amounts, then you will include any gain above these amounts as income on your Form 1040 tax return. Even then, if your total income (including this taxable portion of gain on your residence) is less than the $200,000/$250,000 amounts, you will not pay this tax. If your total income is more than these amounts, a formula will protect some portion of your investment.
5. The tax applies to other types of investment income, not just real estate. If your income is more than the $200,000/$250,000 amount, then the tax formula will be applied to capital gains, interest income, dividend income and net rents (i.e., rents after expenses).
6. The tax goes into effect in 2013. If you have investment income in 2013, you won’t pay the 3.8% tax until you file your 2013 Form 1040 tax return in 2014. The 3.8% tax for any later year will be paid in the following calendar year when the tax returns are filed.
7. In any particular year, if you have no income from capital gains, rents, interest or dividends, you’ll never pay this tax, even if you have millions of dollars of other types of income.
8. The formula that determines the amount of 3.8% tax due will always protect $200,000 ($250,000 on a joint return) of your income from any burden of the 3.8% tax. For example, if you are single and have a total of $201,000 income, the 3.8% tax would never be imposed on more than $1,000.
9. It’s true that investment income from rents on an investment property could be subject to the 3.8% tax. But: The only rental income that would be included in your gross income and therefore possibly subject to the tax is net rental income: gross rents minus expenses like depreciation, interest, property tax, maintenance and utilities.
10. The tax was enacted along with the health care legislation in 2010. It was added to the package just hours before the final vote and without review. NAR strongly opposed the tax at the time, and remains hopeful that it will not go into effect. The tax will no doubt be debated during the upcoming tax reform debates in 2013.
The Consumer Financial Protection Bureau (CFPB) has released a proposed rule that would require mortgage lenders to provide home loan applicants with copies of written appraisals and other home value estimates developed in connection with the application. The rule would ensure that consumers receive information prior to closing about how the property’s value was determined.
The proposed rule would require creditors to inform consumers within three days of applying for a loan of their right to receive a free copy of appraisal reports and home value estimates. Creditors would then be required to provide the reports to consumers as promptly as possible, but no later than three days before closing, regardless of whether credit is extended, denied, incomplete, or withdrawn.
The public has until October 15 to review and provide comments on the proposed rule. The CFPB will review and analyze the comments before issuing a final rule in January 2013.
The Housing Trust of Santa Clara County is asking SILVAR REALTORS® to inform their clients that money is available to help Santa Clara County residents purchase their first home.
“We have money and we want to help. There’s plenty of money for people to qualify,” Dan Lachman, director of lending for The Housing Trust of Santa Clara County, told a focus group composed of SILVAR REALTORS® meeting in Mountain View this week.
Lachman discussed The Housing Trust’s current homebuyer assistance programs and sought feedback from the REALTORS® on how the nonprofit lender can more effectively provide opportunities in Mountain View. The Housing Trust is planning to have a public outreach event for Mountain View residents in the fall. Mountain View City Council member Margaret Abe-Koga joined Lachman and the REALTORS® at the meeting, stating she wishes more people who work in Mountain View could avail of the home buyer programs, so they could live in Mountain View, as well.
The Housing Trust of Santa Clara County makes loans and grants to increase the supply of affordable housing, prevent homelessness and assist qualified individuals and families in buying their first home. Lachman specifically asked the REALTORS® to inform their clients of two programs that provide assistance to first-time home buyers – the Closing Cost Assistance Program (CCAP) and the Mortgage Assistance Program (MAP). In order to qualify for either of these programs, the household income for a four-member household cannot exceed $126,000, or the income for a single-member household cannot exceed $88,200.
The Closing Cost Assistance Program (CCAP) for first-time homebuyers provides 3 percent of the purchase price up to $15,000 towards the down payment, closing costs or other transaction expenses associated with a home purchase. No interest or principal payments are due during the term of the loan. This loan is due when the borrower sells the house or refinances the home, or in 30 years, with a 3 percent deferred interest rate.
The Mortgage Assistance Program (MAP) is an amortizing 30-year second mortgage available for moderate-income first-time home buyers. Second loans of 17 percent of the purchase price up to $85,000 are available under this program, with the interest rate at 1 percent above the interest rate of the first loan.
Lachman and his team have offered to speak to companies and business about the non-profit lender’s loan programs. See the next scheduled workshop here. For more information about The Housing Trust, its programs and program guidelines, visit www.housingtrustcc.org
In line with its global initiative to provide educational opportunities for members to succeed in global real estate markets, SILVAR is offering members and other real estate professionals the opportunity to complete classroom requirements for the National Association of REALTORS® Certified International Property Specialist (CIPS) Designation on Nov. 26-30.
CIPS courses provide training in international business issues, such as currency conversion, cultural awareness, and legal and tax requirements. The CIPS curriculum focuses on ownership and transaction principles of international real estate, including specifics on the real estate markets in Europe, the Americas, the Middle East/Africa and the world. Attend the 5-day CIPS Institute at SILVAR and fulfill the classroom requirements for the CIPS designation. You must complete the two core courses, three elective courses, and pass a multiple-choice exam at the end of each course.
The week-long courses will be taught at SILVAR by David Wyant, CIPS, ABR, AHWD, ePRO, GRI, TRC, SFR, a certified NAR faculty member, and 2009 NAR International Instructor of the Year.
SILVAR is offering an early bird registration special of $550 for the entire CIPS Institute (five courses) for any Association of REALTOR® member who registers by Oct. 15! Regular cost for the entire institute for SILVAR members is $599/$625 after Nov. 1; non-members, $625/$650 after Nov. 1.
It is also possible to take individual courses. Each course for SILVAR members is $150/$165 after Nov. 1; Non-members $175/$190 after Nov. 1. Breakfast and light lunch included each day.
Many business professionals take one or all of the CIPS courses in order to expand their knowledge and skills about international business. The invitation to attend SILVAR’s CIPS courses is open to the public.
VIEW FLYER for more details and registration form.
It is expensive to live in the heart of Silicon Valley, but buyer demand for homes, including million-dollar homes, continues to be strong. Real estate information service DataQuick lists the following Silicon Valley communities among the highest ranked areas for million-dollar homes sales in California in the second quarter.
- Hillsborough topped the list with 134 sales in 2012 Q2, up from 118 in 2011 Q2, with the most expensive home purchased for $5.28 million.
- Saratoga ranked second with 126 million-dollar homes purchased in 2012 Q2, up from 93 in 2011 Q2, with the most expensive of purchased at $5.35 million.
- Cupertino ranked fifth (after Manhattan Beach and Newport Beach in Southern California) with 105 million-dollar homes sold in 2012 Q2, up from 88 in 2011 Q2, with the most expensive home purchased for $2.45 million.
- Los Altos ranked sixth after Cupertino with 102 million-dollar home sales in 2012 Q2. The most expensive home was purchased for $6 million. Los Altos had 81 million-dollar home sales in 2011 Q2.
- In Los Gatos, the most expensive home purchased cost $4.66 million. There were 67 million-dollar homes purchased in the zip code of 95032, up from 44 in 2011 Q2. In the Los Gatos zip code of 95030, 62 million-dollar homes were purchased last quarter, up from 31 in the second-quarter last year.
Despite the hype over Facebook’s IPO, Menlo Park and Palo Alto made the list, but had fewer million-dollar home sales in second-quarter 2012 than the same time last year, according to DataQuick. Menlo Park had 100 million-dollar homes sold in second-quarter 2012, down from 124 last year, with the most expensive home purchased for $4.8 million. Palo Alto had 62 million-dollar homes sold, down from 69 in 2011 Q2, with the most expensive home purchased for $3.15 million.
Silicon Valley Association of REALTORS® (SILVAR) president Suzanne Yost, who is an associate broker with Alain Pinel Realtors in Los Gatos, is not surprised that many of the communities located within SILVAR’s five districts made the list. “Silicon Valley’s economy is healthy compared with other parts of the state because it is the heart of innovation, with many successful tech companies,” said Yost.
Yost added, “Our members have reported a surge of foreign buyers. They are attracted to the region’s weather, diversity, excellent schools, good mix and proximity to shopping, entertainment, the arts and services. We’re not that far from San Francisco, close to the freeways and airports. Buyers know they can’t go wrong and they are willing to pay the price for these amenities.”
SILVAR has five member districts, allowing members to work closely with their communities. They are the Menlo Park/Atherton District (including Portola Valley, Woodside and East Palo Alto), Palo Alto District, Los Altos/Mountain View District (including Los Altos Hills), Cupertino/Sunnyvale District and the Los Gatos/Saratoga District (including Monte Sereno).
The Federal Housing Finance Agency (FHFA) announced on Tuesday that it will align guidelines for Fannie Mae and Freddie Mac short sales and allow lenders and servicers to quickly and more easily qualify borrowers for a short sale.
The new guidelines issued by Fannie Mae and Freddie Mac to their mortgage servicers will offer a more streamlined approach to the short sale process by consolidating existing short sales programs into one standard short sale program. The program rules will expand eligibility criteria of borrowers, so homeowners who are current on their mortgage payments, yet suffer from specific hardships, will be able to qualify more quickly for a short sale.
Effective Nov. 1, homeowners with a Fannie Mae or Freddie Mac mortgage will be allowed to sell their home in a short sale even if they are currenton their mortgage, if they have an eligible hardship. Servicers will be able to expedite processing a short sale for borrowers with hardships such as death of a borrower or co-borrower, divorce, disability, increase in housing expenses, unemployment, disability, or relocation for a job, without any additional approval from Fannie Mae or Freddie Mac.
“We are pleased with the new guidelines. REALTORS® at the local, state and national level have long advocated for a more streamlined, standardized short sale process. Improving short sale eligibility will allow more families to avoid foreclosure and reduce the negative impact foreclosures have on families and communities,” said Suzanne Yost, president of the Silicon Valley Association of REALTORS®.
Some specific changes include:
- Eliminates current Fannie Mae and Freddie Mac short sale programs and creates a single standard short sale process for both entities (Fannie and Freddie HAFA programs will expire at the end of the year).
- Enables servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales without waiting for an approval from Fannie Mae or Freddie Mac
- Offers special treatment for military personnel with Permanent Change of Station (PCS) orders.
- Standardizes and clarifies foreclosure suspensions on a property with an approved short sale.
- May pay borrowers up to $3,000 in relocation assistance.
- Fannie Mae and Freddie Mac will offer up to $6,000 to subordinate lien holders to expedite a short sale.
Additionally, FHFA clarified that a borrower experiencing a hardship must wait at least two years before becoming eligible for a Fannie Mae or Freddie Mac loan. These changes follow FHFA’s announcement in June that established strict timelines for servicers to respond to short sales within 30 days of receipt of a short sale offer, provide weekly status updates to the borrower, and communicate a final decision to the borrower within 60 days of receipt of the offer.
At this month’s Palo Alto District tour meeting, Palo Alto brokers said the market environment has greatly improved from a year ago. While inventory is still low, it has been slowly rising.
Keller Williams managing broker Bob Stelzer indicated demand is coming back strong, and there has been a significant rise in listings since April. His data showed Menlo Park with 52 current active listings compared with 26 in April; Palo Alto 51, compared with 29 in April; and Los Altos 45 compared with 24 in April. High-end property sales increased substantially in the first half of this year in comparison to the same time last year.
Sellers are becoming realistic, according to the brokers. Many sellers caught up in the hype of Facebook’s IPO and thinking they would strike gold by waiting for prices to skyrocket, now realize the phenomenon did not create the “super market” they thought it would. These sellers are now ready to sell.
Broker Tim Foy of Midtown Realty, however, believes inventory is low because people are still looking for stability. Despite the uptick, he expects low inventory for a while. “It won’t change overnight. It’s a market reality,” commented Foy.
According to Alain Pinel Realtors broker Bob Gerlach, it’s not the Facebook IPO phenomenon that is driving the market, but rather, it’s interest from Chinese and other foreign buyers. He said majority of transactions through his office are with Chinese cash buyers. Foreign interest in property in the area has created a “dramatic effect” in the market, said Gerlach.
Gerlach indicated an obstacle to the market rebound is a pocket of sellers who can’t sell because they don’t have better places to go. Buyers these days are more selective. “It is a discretionary market,” he noted.
The brokers said listing agents need to make their sellers aware that despite the high demand, not all houses are “entitled” to top market prices because today’s buyers are more informative. There is more discretion now regarding “housing with a blemish,” added Foy.
Left to right: SILVAR Past President Gene Lentz, Board Director Bill Rehbock, Affiliate Chair Richard Miller, Board Director David Tonna, President-elect Carolyn Miller, C.A.R. President LeFrancis Arnold, President Suzanne Yost, Los Gatos/Saratoga Chair Cassie Maas, and C.A.R. Past President Jim Hamilton
SILVAR members from the Menlo Park/Atherton and Los Gatos/Saratoga districts had the opportunity to meet and listen to California Association of REALTORS® President LeFrancis Arnold at their meetings this week. Meeting California REALTORS® across the country is part of his duty as president of the state REALTOR® association, said Arnold.
Arnold said SILVAR REALTORS® are very fortunate to be working and living in Silicon Valley because compared to other parts of the state, the region was not hit as hard by the housing downturn. He has observed the growing interest in residential real estate here and in the state from foreign buyers.
“The housing industry is one of the most important assets in California,” said Arnold. Proof of this is in the billions of dollars of residential real estate purchased by international investors. Arnold noted the top foreign buyers come from Canada, China, Mexico and Great Britain, and they are looking at properties in California.
“No immigrant comes to America with a desire to be a tenant. They dream of homeownership,” said Arnold.
Global real estate is growing in importance, said Arnold. Foreign investors and immigrants create opportunities and bring diversity not only in housing, but also in the election process. It is important that everyone, regardless of race, is given the opportunity for homeownership. Arnold said another part of his duty as C.A.R. president is to meet with legislators and deliver this message. It is what C.A.R., SILVAR and the National Association of REALTORS® do at the state, local and national levels.
Arnold underlined the importance of political advocacy. REALTORS® at the local, state and federal level fight legislation that will negatively affect homeownership and allow REALTORS® to be political activists. He stressed advocacy for homeownership needs to continue because the threats are very real, particularly proposals to impose transfer taxes and continuing discussions on eliminating or reducing the mortgage interest deduction (MID).
Left to right: SILVAR President Suzanne Yost, Menlo Park/Atherton Chair Chris Isaacson, C.A.R. President LeFrancis Arnold and SILVAR Past President Gene Lentz
Arnold said REALTORS® at the local, state and national level will continue to work as a team and fight legislation that hurts the American Dream of homeownership.
“Each of us has a role to play,” said Arnold. “We have to continue to fight for homeownership rights.”
MLSListings Inc. reports market activity “slowed to a crawl for nearly all indicators” in the month of June for Santa Clara County and four other neighboring counties. The severe shortage of homes is impacting home sales, sparking multiple offers and slightly higher home prices in a number of communities.
The Silicon Valley Association of Realtors’ multiple listing service provider reports Santa Clara County had 1,093 closed sales of single-family homes, virtually unchanged from 1,097 in June 2011. Santa Clara County’s June’s inventory took a dive of 38 percent from last year. The county’s inventory of 2,589 homes was down 42.2 percent from inventory in June 2003 and down 57.4 percent from 6,071 homes on inventory in June 2008.
According to the MLSListings report, Santa Clara County saw its June 2012 median price of $695,000 jump 9.4 percent over the previous year. The June median for a single-family home in Santa Clara County is 26.2 percent higher than the median of $550,500 in June 2009, when home prices resumed their upward trend.
Unless inventory opens up, home buyers will continue to be squeezed in this tight market, says Suzanne Yost, president of the Silicon Valley Association of REALTORS®. “Many families are already having a difficult time finding a place to live. We will continue to see first-time home buyers facing strong competition from investors with cash. For motivated sellers, pricing is a key factor,” said Yost.
Silicon Valley Association of REALTORS® says ... 