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Looking for a way to save energy while you travel this holiday season?

According to the US Bureau of Transportation Statistics, the Thanksgiving and Christmas/New Year’s holiday periods are among the busiest long-distance travel periods of the year. Traveling on holidays can be hectic and we aren’t always thinking about what we can do before we leave our homes that will save energy and money while we are away. The answer? Turn off your water heater. Normally, your water heater will power up and reheat the water that’s in the tank every 30 minutes or so. If you are leaving town, there’s no reason to have the water heater working at it’s normal pace. Turning it off saves energy…and lowers your PG&E bill. If you have a tankless water heater, then you’re already switched on. A tankless water heater only heats water when you need it.

Is your laundry room as functional as it could be?

Laundry is one of those chores that are a constant in life. With the busy lives we all lead and the the approach of the holiday season right around the corner, check out ways to make your laundry room more functional (and perhaps more inspiring) here: Laundry Room Ideas

Gorgeous & sophisticated 1 Bedrm Condo For Sale at Park Terrace in Mission Bay!

325 Berry Street, #417, is a gorgeous and sophisticated 1 bedroom condo featuring a modern & open floor plan.  The unit has a gourmet kitchen w/ granite counters, glass tile backsplash, a breakfast bar, custom cabinetry & s/s appliances. The living room/dinning room features a private balcony overlooking the common landscaped courtyard. The bedroom features plush carpeting & a spacious walk-in closet. The bathroom boasts granite counter tops and a shower-over-tub w/ subway tiles. There is a stackable w/d in the bathroom closet.

The building amenities include a fitness center, a landscaped courtyard w/ outdoor seating & BBQ, plus on-site HOA mgmt. 1 car-prkg & prvt. storage included. This amazing condo is near the Embarcadero, restaurants, cafes, shopping, AT&T Park. Public trasnportation is easily accessible with a close walk to MUNI and Caltrain. There is also excellent freeway access.

Monthly HOA Fee: $545.14

Showing Sunday, April 13, between 2:00-4:00 PM!

San Francisco Real Estate: August 2013 Market Snapshot

red hotIt’s red hot, red hot!  Are you wondering what we are talking about?  The San Francisco real estate market of course!  Despite mortgage rates on the rise, all 10 of SF’s neighborhood districts are still sizzling with strong buyer demand and lower than normal inventory levels.  How sizzling, you may ask? The best way to explain current market conditions is with hard data, followed up with year over year comparisons for the same month, i.e. August 2013 vs. August 2012.

Let’s get the ball rolling:

Single-Family Home Data:

 $1,320,335: The average sales price for all single-family homes that closed escrow for the month of August 2013.

Data from August 2012: The average sales price for all single-family homes was $989,681.

77.9: The percentage of all single-family homes that closed escrow above the list price for the month of August 2013.

Data from August 2012: 66.0% of all single-family homes closed escrow above the list price. 

246: The number of new listings for all single-family homes that hit the market for the month of August 2013.

 Data from August 2012: 254 single-family homes came on the market.

 217: The number of all single-family homes that closed escrow for the month of August 2013.

Data from August 2012: 241 single-family homes closed escrow.

37: The number of days it took on average for all single-family homes to close escrow for the month of August 2013.

Data from August 2012:  Single-family homes closed escrow on average within 49 days.

Condo/TIC/Coop:

$935,911: The average sales price for all Condos/TICs/Coops that closed escrow for the month of August 2013.

Data from August 2012: The average sales price for all Condos/TICs/Coops was $805,615.

66.0:The percentage of all Condos/TICs/Coops that closed escrow above the list price for the month of August 2013.

Data from August 2012: 45.5% of all Condos/TICs/Coops that closed escrow above the list price.

287: The number of Condos/TICS/Coops that hit the market for the month of August 2013.

Data from August 2012:  313 Condos/TICs/Coops came on the market.

288: The number of all Condos/TICs/Coops that closed escrow for the month of August 2013.

Data from August 2012: 323 Condos/TICs/Coops closed escrow.

37The number of days it took on average for all Condos/TICs/Coops to close escrow for the month of August 2013.

Data from August 2012: Condos/TICs/Coops closed escrow on average within 54 days.

Feel free to contact us directly at info@salma-co.com if you would like more information.

Data Source: San Francisco Association of Realtors

What can I expect from the lender pre-approval process?

 

Congratulations on deciding that you would like to enter the world of home ownership!  One of the very first steps to do now is to determine what your purchasing power is.  Maybe you have an idea already, but before the property and home tours begin, it’s best to confirm how much money you can borrow from the bank and how much you can afford.

We always say to start the pre-approval process with your existing lender relationships.  During the pre-approval process, your lender will check your credit and employment history and review any other pertinent financial information to give you a concrete number that will help inform the price parameters of your home search.

Some of the items you may be asked to complete or bring in order for your lender to pre-approve you are the following:

-  Loan Application (which you’ll receive after a lender has pre-qualified you)

-  Authorization to Obtain Credit

-  Federal tax returns

-  Current pay stubs

-  Current bank and brokerage statements (including retirement accounts)

Once you are pre-approved by your existing lender, make sure that they walk you through all the loan programs that might be available to you.  Ask them about pre-payment penalties, loan fees, and any other special requirements for that particular loan program.  It’s always best to have a ballpark idea of how much your loan will cost prior to home shopping.

Another thing to remember is that your home search may take 6 months, 1 year or longer.  The interest rate or loan program that you were quoted during your pre-approval process may not be available by the time you get in contract on a home (market conditions constantly fluctuate), but at least you’ll have a baseline to compare it to you.

Once you are pre-approved by your existing lender, we advise you to investigate what other local lenders may be able to provide you.  It’s entirely up to you to decide whom you will originate your loan with, but there are a few things to keep in mind and ask your lender during the pre-approval process.

-Does the lender or mortgage broker do loans in your local market?  If so, when was the last one they closed and how quickly can they order an appraisal, etc.?

Ex: Maybe you have a few accounts with a brokerage firm that also generates loans.  You speak to them and are pre-qualified for a loan with them, but then you realize that their appraisal timeline requires 21 days and other buyers you are competing with in the SF housing market are working with lenders that only require 14 days for their appraisal timeline.  You can still choose to work with this financial institution, but the terms of your offer (physical inspection, financing and appraisal contingencies) are just as important as offer price.

-Some financial institutions are very much relationship orientated.  Do your research now about which financial institution you want to forge a relationship with for your real estate buying needs, because 10 years down the line if you decide to add to your portfolio, the lender you have a long term relationship may be able to offer you a better loan program (or jump through hoops behind the scenes to push your loan through faster then normal, thereby making you potentially more competitive then another buyer).

The bottom line is purchasing a home may be your biggest purchase ever and ensuring you’ve done your lender due diligence prior to touring homes and writing offers is the best way to prepare your self for a competitive marketplace.

It’s wise to shop around locally and see what varying banks can do for you.

POPOS in San Francisco

Have you ever walked around downtown San Francisco and happened to stumble
across a well-maintained (and slightly hidden) plaza, terrace, atrium, or even a small
park? These outdoor spaces are called POPOS, and the acronym stands for: privately
owned public open space.

Here is a little history on POPOS…

Before 1985, POPOS were voluntary endeavors that developers could construct and
maintain for additional density bonuses for their projects. By 1985, POPOS were
required by the city’s downtown plan, with the intent to provide quality open spaces
in sufficient quantity and variety to meet the needs of downtown workers, residents,
and visitors.

Today there are almost 70 POPOS located within the downtown area, and with all
the future development in the pipeline, there will be many more to come. The city
is currently working to get better signage in place for POPOS, but in the meantime,
there is an interactive map of each POPOS on the Planning Departments website.

You can view the map by clicking here.

Here are a few of our personal favorite POPOS:

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1) Citygroup Center – 1 Sansome Street – This beautiful indoor plaza is decked out with marble and a glass atrium. There is ample seating and it provides a great escape from the hustle and bustle of downtown.

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2) 1 Kearny Street – This rooftop terrace gives you great views of Market Street, and of the amazing architecture from the surrounding buildings. There are benches that seat up to 23 people, but it usually does not get very crowded.

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3) 343 Sansome Street – This fifteenth floor open space is only open from 10 AM
– 5 PM, Monday through Friday, but it is worth a trip just for the view of the bay
alone! There are 18 chairs, 50 linear seats on planter boxes, and it has art in the
form of a large sundial, which helps you know when it’s time to get back to work
after your lunch excursion.

Do you have any favorite POPOS’?

The San Francisco Real Estate Market: Current Snapshot

With Q1 2013 recently coming to a close, we wanted to take a moment to discuss where the market has been and where we are headed. As many of you know, the current real estate market has been CRAZY!

Historically, San Francisco has always been a strong and swift market, with escalating values, but lately we are seeing trends reminiscent of the 2007/2008 market (the height), a time where wild bidding wars were the new norm.

Let’s take a look back on when this all started:

There was a shift at the end of 2011, and by Q1/Q2 2012, we were definitely in what appeared to be a seller’s market. Since that time, and now more then ever in Q1 2013, due to historically low levels of inventory and continued low interest rates, sellers have been in the driver’s seat of the market.

Why are inventory levels so low?

Some of this has to do with sellers holding back. If they sell now, there are not a lot of options for them to replace their current properties. Other sellers feel that they do not have enough equity in their homes yet.

Once inventory levels rise the market will be forced to correct itself, but until that happens, we don’t see the real estate market changing.

Here’s a snapshot of just how low our housing inventory levels are:

Q1 started off 2013 with the lowest housing inventory level San Francisco had seen in the past seven years! 5,344 homes (SFR and condos) were listed for sale at the start of Q1. Though it is typical that the fall/winter months have lower inventory levels than spring/summer months, there was certainly nothing normal about January’s numbers.

To put this into perspective, here’s a little number comparison:

Q1 2013 represented the lowest housing level seen in SF, with only 5,344 homes available. Rewind five years back to Q2 2008, and there were 29,478 homes listed for sale!

What’s happening in Q2 for housing inventory levels?

Q2 is off to a better start regarding housing inventory levels. As of last week, 6,786 homes were listed for sale in San Francisco, While this shows slight improvement year/year, we are still down -43.1% for home listings/inventory level, but our median home price is up +41.3% year/year.

Now, with such limited inventory, buyers are facing incredible competition trying to successfully get into contract on a property. It’s reminiscent of the stress an 18-year-old faces during college admissions, when they are trying to secure the last spot at a coveted university.

2013 has been already proven to be a very fast-paced real estate market. With the demand so great, listings are often marketed for less than a week before offers are due. Real estate markets are cyclic and there is no doubt that these current market conditions will not last forever, which makes it an excellent time to sell. The buying pool is large and highly qualified, and there is a limited amount of inventory to compete with.

If you are looking to buy in this escalating market, really think about whether buying in this market is right for your real estate goals. If it is, then the value of representation is more important then ever.

If you or someone you know have any questions about the market, or about the buying/selling process, please do not hesitate to contact us.

Time to Talk… Real Estate Taxes!

You did it! Congratulations on closing escrow and officially being a property owner!

Once the elation simmers down and you begin to figure out the nuts and bolts of how to live in your new home, you will probably begin putting systems in place for managing the monthly and annual expenses of owning your new property.

Before getting into contract, we walk all of our our clients through the property expenses they can expect to pay, in addition to your monthly mortgage (assuming you put a loan on the property)  and operating expenses.  However, we know what it is like to close escrow. Your hand is super tired from signing a million documents, your head hurts, and you are just so excited about your new place, the last thing you want to do is start figuring out your expenses.

So let’s take the time to refresh you on what is what:

Common operating expenses vary across product type. If your new property is a condo, one of the operating expenses may be condo liability insurance, in addition to HOA payments and other possible expenses. If you’re now the new owner of an apartment building, one of your new expenses will probably be to a property management company, for help handling the general day-to-day management of the property, leasing of units, and a handful of other things.

However, regardless of the type of property you own, every property owner has to pay real estate taxes to the City and County of San Francisco’s Office of the Treasurer and Tax collector.

At Salma & Company, we get a lot of questions about property taxes, especially in December and April, when 1st and 2nd installment payments are due.

In today’s blog, we answer some of the most commonly asked questions that our clients ask us:

1) How are my real estate taxes calculated?

Let’s take a quick look back at the year 1978…

“The People’s Initiative to Limit Property Taxation” was proposed legislation that became an amendment to the California Constitution in 1978. Article 13A of that document established the maximum property tax rate to be one percent (1%) of the assessable value. In addition to this base rate of 1%, tax rates deemed necessary to pay off indebtedness, such as bonds authorized by the voters, may be added.

2) What is the Fiscal Year 2012-2013 Property Tax Rate for San Francisco?

1.1691%.

3) How do I calculate that?

Example: If you purchased your condo for $858,000, your property tax payment for the year would be: $10,030.87.

The tax amount may also be increased for any special benefit assessments, such as sewer service, school bond assessments or reduced by any legal exemption which may apply.

4) How is the value of my property assessed?

Real property is appraised by the city and county of San Francisco on two occasions:
1) When the ownership of the property changes, and
2) When new construction or significant improvements (other then normal maintenance) to the property take place.

Once this value is determined, Proposition 13 limits the ability to increase that value by more then 2% per year.

For example, if you bought your new home for $1,500,000 in 2012-2013, your property tax amount due for the first year would be: $17,536.50.

If the city decides that your home is worth 2% more during your second year of ownership, your home value would be: $1,530,000. Your property tax amount due for Year 2 (based on Year 1 tax rate*) would now be: $17,887.23*

*this is for example purposes only. This number would alter slightly depending on what the published tax rate would be for Year 2.

5) When are property taxes due and how do I pay them?

Your annual tax bill (aka secured property tax bill) is mailed every October. Depending on the when your ownership was put on the tax roll, the annual tax bill is sent to either the previous owner or directly to you. If you haven’t received a secured property tax bill by November 1, you should make sure to contact the SF Office of the Assessor/Recorder to get a new copy. Regardless, you still have to pay your tax bill on time, even if you didn’t receive it when expected, as state law does not allow the Office of the Treasurer & Tax Collector to excuse penalties for late payments.

The first tax installment is due by December 10th, and the second installment is due by April 10. If December 10 or April 10 happen to fall on a weekend or holiday, taxes are not delinquent until 5 p.m. the next business day.

6) What else do I need to worry about?

Alas, in addition to your annual property taxes, you may be responsible for paying supplemental property taxes. Any time property is sold, the value of the property is reassessed. When a reappraisal is made, that additional assessment is called a “supplemental assessment” and reflects the difference between the existing value and the new value. This “supplemental assessment” generates a “supplemental tax bill” which is pro-rated based on the number of months remaining in the year, ending on June 30. If your property has been reassessed at a higher value, you will receive one or more supplemental tax bills, in addition to the annual bill we discuss above.

Real estate taxes can be hard to understand at first, but we are here to help you navigate through the confusion.

For more information on real estate taxes in San Francisco, please feel free to contact us.

A TIC vs. a Condo: What’s the difference?
TIC

One of the questions that we receive most at Salma & Company is in regards to the difference between a TIC and a Condo. In today’s post, we answer some of our most commonly asked questions about TICs, and help you figure out what is right for you.

What is a TIC?

A TIC stands for “Tenants in Common,” and is often referred to as a TIC (as in T. I. C. and not tick!). Traditionally, TICs came about because they provided a more economical way for people to obtain home ownership, as they were usually less expensive than a condo or Single Family Residence (SFR). The main reason a TIC is more affordable is because of how it is structured.

With a condo or SFR, the title to the property is held exclusively by the owner of that  property.  A TIC, on the other hand, is owned by co-owners, each of whom own a percentage of an undivided property. Their deed to the property will only show the percentage they own. For example, if there were three TIC partners on title, their deed would read as follows: Joe Doe owns 33%, Jane Doe owns 22% and John Citizen owns 45% of 207 Castro Street.” If you own a condo or a SFR, you own it all… the walls, the tile, the flooring, everything! If you are a TIC owner, while the deed states the percentage of the property you own, the TIC agreement designates which unit the partners have the exclusive right to occupy, among others rules and conditions, i.e. “John Doe has the right to occupy 207 Castro Street, #1.”

I have been pre-approved for a loan from my bank. Will I be able to buy a TIC with a traditional loan?

In the past, TIC partners would all go in on one traditional loan together, and each owner was responsible for their percentage of the mortgage. As you can imagine, the financial risk associated with this was quite high. Owners had to worry about not only their portion of the mortgage, but they had to trust that others would make their payments as well! If one of their TIC partners struggled to make payment, they were just as culpable, even if they had been paying their percentage on time.

Fortunately, starting in 2004 a few banks began to offer individual loans for TIC purchasers, drastically reducing the financial risk of TIC ownership. These loans are commonly referred to as “fractional loans,” and have become the norm for most TIC sales. With a fractional loan, if one TIC owner defaults on their loan, the lender will only foreclose on that specific owner’s share. No other owners are affected by it.

However, for lenders to protect themselves, interest rates on fractional loans tend to be higher than those of traditional residential loans. Banks also require borrowers to have six months worth of reserves at close of escrow.

Can a TIC become a condo?

It is possible, but not guaranteed. San Francisco operates under a condo conversion lottery process. Each year, 200 units get picked for conversion. Keep in mind that this is based on units, and not properties. For example, a four unit property entering the lottery would be considered four (4) units in total, not one.

Fortunately, there are a few ways to work around this infamous condo lottery. If a two unit property meets the residential occupancy requirement, in which each owner on the title has resided in their respective units for at least one year, they can apply for conversion.  Additionally, a two unit mixed use building, such as a residential flat above a commercial unit, can apply as well.

If you’re leaning towards a TIC and have a desire to convert it to a condo, keep in mind that the building’s eviction history is very important, as some types of evictions actually limit the future owner’s ability to condo convert.

TICs are not for everyone, and each person needs to carefully analyze the risks and rewards. This post is intended to provide you with the basics, but each property and situation is different. Nothing is black and white, which is one of many reasons why representation is incredibly important! At Salma & Company, we’ll walk you through the process and help you find what is best for you.

If you have any questions about TICs, Condos, or SFRs, please contact us!

What Does It Mean To Add Value To A Home?

As most people that have bought or are buying a home can attest, “add value” is a term that is constantly thrown around in real estate, especially in the San Francisco market. With real estate prices being some of the highest in the country (as the San Francisco Chronicle just reported yesterday, Bay Area real estate prices, including San Francisco, have surged 17.5% in January compared to one year ago), buyers need to ask themselves “how can I add value to this home?” Adding value to a home, along with diligently maintaining the property, is key to building equity (the difference between the current market value of the property and the amount you still owe on the mortgage… i.e. the amount that the you would receive after selling a property and paying off the mortgage).

San Francisco tends to be a long-term hold market. Most people who make money on their real estate investments, be it from a house, condo, or an apartment building, are those that hold their properties long- term and consistently look for ways to add value and enhance their property. Should you decide to sell or refinance your property down the road, continually looking for ways to add value will help ensure that your property is worth more than you purchased it for. In addition to appreciation (the increase in value of a property over time due to inflation, supply and demand), the best way to build equity is to add value.

For example, let’s say you buy the dumpiest house on a nice block in a great neighborhood. Though the neighborhood is great, the house is old, and it still has the original kitchen and bathrooms. For a few months, maybe even a year, you digest your new property, and really think about what improvements you can make that will enhance your life. While you love the upstairs bathroom, you really wish you had more natural sunlight, so you decide to add a skylight. Later on, you start to feel that your kitchen is a little cramped, and because you’ve realized that you rarely use the adjoining outdoor porch, you decide to blow out the wall separating the kitchen from the porch, and add the underused porch square footage to your kitchen. These are examples of great renovations that will not only enhance your life, but will add value.

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Example of a before and after bathroom remodel, an excellent way to add value!
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For some people, adding value can be as simple as a paint job, or as complex as a full kitchen remodel. Increasing curb appeal, landscaping, and maximizing space and light are other easy ways to add value. The key is to focus on things that are important to buyers, and to not over-improve. After all, no one wants to buy the most expensive house on the block!