Compass Email Marketing Garners Sellers Exponential Exposure

Compass Email Marketing Garners Sellers Exponential Exposure

Listing With Robert and Compass Will Provide the Most National Agent Views

Listing with Compass Provides Sellers The Highest Amount Of Exposure Through the Internal Agent Network.

Compass properties are sent out via e-mail, which exposes them to 8,000+ real estate professionals around the country, and often the e-mail – and listings – are forwarded to others. The other day I heard how this e-mail landed in the hands of a prospective buyer who ended up buying a fabulous property in Soho and another in West Hollywood. It works.  This is just one public relations/marketing opportunity we have at Compass. There are others.

Yesterday I spent some time with a journalist from a major international media publication. I asked her what we could do as a company to improve from her perspective:  her answer was simple and worth repeating.  Whenever you have a spectacular property that you are about to list, you should let either your manager or regional PR Lead know about it ASAP. But you must make this known BEFORE it is exposed to the outside world through the search engines, MLS systems or aggregators. The more time you allow before it is listed, the better chance you have for placement.

While we could hound our public relations team to generate public relations for listings (and they do a spectacular job of securing an extraordinary volume of exposure for Compass), it’s up to us the agents, along with the sellers help, to properly prepare, stage, update, landscape and clean the property – early, well before it goes live on the MLS.  Property photos are a major key to property traffic during the listing launch and first few open houses.  The more spectacular, the better your chances. And of course, the press loves NAMES….the more well known the better.  Some owners don’t want this publicity, but it would be wise to let them know their identity may be revealed regardless, so why not use it purposefully up front and control the placement in the media.

One exposure in a major publication can lead to many more re-posts on blogs and other media outlets. I recall one placement of a movie star’s apartment that generated roughly 30 additional articles. Public Relations works. But it requires some work on behalf of the seller and the agents messaging EARLY.  Coming soon campaigns are an important part of this process. PR is never guaranteed, but you will never know unless you try.

Need more information on how we sell properties for more and in less time?  Reach out or fill out the link below.

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Written By: Robert Rodriguez

Personally Speaking: I’m a proud dad and hockey player who leads with empathy and gratitude.

Goal: Providing my clients, friends, and colleagues with timely, intelligent and actionable advice.  I am always available to answer your questions regardless of whether you need to buy or sell.  Text, call or email 424-353-9004 | Robert@WestLALiving.com

Professionally Speaking:   Over 100 million in total sales volume, successfully completed over 200 transaction sides throughout the LA area and in a variety of neighborhoods with a wide range of property types.  In my 9 years as a licensed sales agent, I have climbed the ranks of the LA residential sales industry, distinguishing myself both locally and nationally.  I have sold complex Estates, land, income property, single family, luxury leases and condos. Both colleagues and clients widely recognize me as a respected professional whose reliability, dedication, and expertise is second to none.

 

California Proposition TEN –  Will Make Los Angeles Housing Worse

California Proposition TEN – Will Make Los Angeles Housing Worse

California Proposition 10 Will Not Help The LA Housing Market

The Facts | California Proposition 10

This flawed measure is the wrong way to provide more housing that working Californians can afford. We should focus on better solutions for providing rent relief to Californians than this initiative, including increasing tax credits for renters, passing new bonds to provide public funding for affordable housing construction, and requiring developers and cities to build more affordable housing across the state.

Proposition 10: is the wrong solution for a state that desperately needs to create more affordable housing for middle-class families.

Prop 10 repeals a housing law with no solution.

Prop 10 is the wrong approach to our state’s housing crisis. It repeals an important California rental housing law with no replacement and no plan to address affordable and middle-class housing or deal with the problem of increasing homelessness on our streets.

Prop 10 will reduce affordable and middle-class housing.  Independent academic experts from Stanford, UC Berkeley and USC all agree these policies will discourage new construction and reduce the availability of affordable and middle-class housing– and drive up rents for many Californians.

Prop 10 will drive up rental prices:  Prop 10 will cause property owners to take rental units off the market in favor of vacation listing services like Airbnb, which means more AirBnBs in our communities and less affordable housing for renters – further driving up housing costs.

Prop 10 will eliminate homeowner protections.   Prop 10 eliminates protections for homeowners and allows regulators to tell single-family homeowners how much they can charge to rent out a single room in their homes. Homeowners will be subject to regulations and price controls enacted by unelected boards.

Prop 10 will stick taxpayers with legal bills.
Prop 10 contains a hidden loophole requiring taxpayers to pay the initiative supporters’ legal bills for participating in certain lawsuits, even if they lose and even if their position is frivolous. This blank check benefits lawyers and puts taxpayers on the hook for limitless legal bills. Prop 10 will reduce home values. The policies authorized by this initiative have been shown to reduce property values by more than 10%, according to MIT researchers, and significantly restricts what single-family homeowners can do with their homes.

The average California homeowner could lose $39,000 in the value of his or her home if this initiative passes.

Prop 10 Is opposed by a broad, bipartisan coalition.

Prop 10 is opposed by Veterans of Foreign Wars, Dept. of California, the California Council for Affordable Housing, Leading Age California, California NAACP, both gubernatorial candidates, Democrat Gavin Newsom, and Republican John Cox, and dozens of other organizations who agree this initiative will make our housing crisis worse.

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Written By: Robert Rodriguez

Personally Speaking: I’m a proud dad and hockey player who leads with empathy and gratitude.

Goal: Providing my clients, friends, and colleagues with timely, intelligent and actionable advice.  I am always available to answer your questions regardless of whether you need to buy or sell.  Text, call or email 424-353-9004 | Robert@WestLALiving.com

Professionally Speaking:   Over 100 million in total sales volume, successfully completed over 200 transaction sides throughout the LA area and in a variety of neighborhoods with a wide range of property types.  In my 9 years as a licensed sales agent, I have climbed the ranks of the LA residential sales industry, distinguishing myself both locally and nationally.  I have sold complex Estates, land, income property, single family, luxury leases and condos. Both colleagues and clients widely recognize me as a respected professional whose reliability, dedication, and expertise is second to none.

Proposition FIVE – The Property Tax Transfer Initiative October 2018

Proposition FIVE – The Property Tax Transfer Initiative October 2018

Proposition 5 – The Property Tax Transfer Initiative October 2018

California Ballot – Proposition 5 – What you need to know…

The Property Tax Transfer Initiative:

 

This initiative, now on the November 2018 ballot, would allow those aged 55 and over to sell their home and buy another, and retain some or all of their Proposition 13 property tax savings.

 

Why is it needed? Under Proposition 13, homeowners are protected from rapidly increasing property taxes.  However, seniors, who are often on a fixed income, fear they will not be able to afford a significant property tax increase if they sell their existing home and buy another one, discouraging them from ever moving. As a result of this “moving penalty,” almost three-quarters of homeowners 55 and older haven’t moved since 2000. This initiative will allow them to sell their home while keeping some property tax protections, and therefore create homeownership opportunities for young families.

 

How do property tax assessments work now? The amount any homeowner pays in property taxes is based on the assessed value of their home at the time of purchase. Generally, Proposition 13 limits property taxes to 1% of the as-sessed value at the time of purchase even if the value of the property subsequently increases. 

 

Unfortunately, homeowners lose their Proposition 13 property tax savings when they move to another home. Under another law,

 

Proposition 60, senior homeowners – defined as 55 years of age or older – are allowed to transfer their property tax bases to another home in the same county so long as the purchase price of the replacement home is equal to, or less than, the sale price of the original residence.

 

Under Proposition 60, a senior homeowner is limited to making only one such transfer over the course of his or her lifetime. And, if the spouse of a senior homeowner has already transferred a property tax base, that senior homeowner is disqualified from making another transfer of the tax base.

 

Proposition 90 is an extension of the original Proposition 60 program. Proposition 90 allows senior homeowners to transfer their property tax base to a home in a different country so long as that county accepts such transfers (at last count, only 11 counties in California are accepting transfers from other counties).

 

Propositions 60 and 90 are relatively limited. That’s where Proposition 5 comes in.

 

How Will the Initiative work? Prop 5 would allow homeowners 55 years of age or older to transfer some of their Proposition 13 property tax bases to a home of any price, located anywhere in the state, any number of times.

 

What’s next? Prop 5 will now appear on the November 2018 ballot to decide it’s fate. Where can I find more information? California Associate of Realtors

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Written By: Robert Rodriguez

Personally Speaking: I’m a proud dad and hockey player who leads with empathy and gratitude.

Goal: Providing my clients, friends, and colleagues with timely, intelligent and actionable advice.  I am always available to answer your questions regardless of whether you need to buy or sell.  Text, call or email 424-353-9004 | Robert@WestLALiving.com

Professionally Speaking:   Over 100 million in total sales volume, successfully completed over 200 transaction sides throughout the LA area and in a variety of neighborhoods with a wide range of property types.  In my 9 years as a licensed sales agent, I have climbed the ranks of the LA residential sales industry, distinguishing myself both locally and nationally.  I have sold complex Estates, land, income property, single family, luxury leases and condos. Both colleagues and clients widely recognize me as a respected professional whose reliability, dedication, and expertise is second to none.

9 Mobile APPS Los Angeles Home Buyer Should Have When Touring Homes

9 Mobile APPS Los Angeles Home Buyer Should Have When Touring Homes

9 Must Have Mobile APPS For Los Angeles Home Buyers

If you're thinking about or are in the process of buying real estate in Los Angeles, you should have, at the ready, the below 9 mobile APPS and sites in your phone or saved as a favorite on your computer or mobile browser.

The nine APPs and sites I listed below are what I actively use and always recommend to out of state family and friends.
1) Notes App.  Your native note-taking app on your phone or Evernote are both great options.  It’s crucial to take detailed notes after you tour every listing.  Either your agent can do it, if you share a notes system or if you collaborate through shared search technology, like our proprietary Compass APP and backend.
What notes will you be taking?  The link below provides a checklist of 17 Key items you should ask or try to determine with every propeyou see see and consider a viable option to buy.
2) LADBS.  This is the Los Angeles Department of Building and Safety’s native mobile APP.  You can quickly search a listing and see if any permits were pulled on recent or older work, if there are existing permit or property violations, or if there are any pending items that are still outstanding with the city.
**PRO TIP** The records are not always accurate online, they are most of the time, but not 100% of the time.  Therefore, during the escrow process we will recommend two or three different service providers that can pull all of the records for you, in case they aren’t accurate online, or guide you to one of the LADBS locations so you can pull them yourself.
3) Magic Plan.  This apps allows you to create floor plans and measure distances.  If you’ve found the one, I highly suggest using this app to find out if a bedroom will fit a queen or king size bed or if your couch will fit in your potential new living room.
4) Zillow Mortgage.  Currently, outside of the Compass APP, this my favorite mortgage calculator.  It includes, in every payment calculation, the property taxes, home insurance, private mortgage insurance (if you put less than 20% down), principle, and interest in every calculation.   Are you lowering or increasing your price range and need to see what the new payment will be?  Download this free app ASAP.
5) Mapping LA by the LA Times.   Ok, so this isn’t an APP, but easily accessible via any internet browser.  Save it as a favorite or take a look at the areas you’re considering in this site.  It provides lots of useful and relevant information regarding demographics, area boundaries, schools, and crimes.
6) CrimeMapping.  You can either download the APP or go to their site.  Crimemapping.com.  The LAPD uses their site and uploads relevant and recent reports.  You can also visit the LAPD site:
7) Parking APPS – INRIX ParkME & Polist Assist.  We all know parking in LA can be a pain.  These two apps hope to provide a solution to that problem.  INRIX provides you with the larger parking structures or the free ones.  Polist provides information regarding the metered ones.
8) Compass Market Apps.  Are you a hardcore analytical?  Maybe you’re an accountant or statistician by trade?  Well, this is the app you’ve been dreaming of.
If you’ve ever had any questions about which market is trending up, down, or steady.  You can run an instant analysis on almost all Los Angeles areas and filter by bedroom count, price range, property type and much more.  The APP provides insight on all of the recent Los Angeles transaction data as well as historic price trends.
Below are a few screenshots of the app’s interface.

9) Compass Search App.
Currently, Compass, in my opinion, is the gold standard for search because of the user interface, the ability to collaborate with a professional on EVERY listing you like, and the perfectly balanced mix of hybrid real estate brokerage and technology company. It’s the first real estate technology company designed to combine high tech and real estate, with no intention of replacing the essential human element of a real estate transaction.  Compass is also the fastest privately growing brokerage in the country.  They are recruiting the most talented agents in the industry and empowering them with time-saving tools to advise their clients, and technology and data that infuses accuracy and speed and provides actionable information for home buyers and sellers.  The focus is always the consumer.
The Compass eco-system includes top talent from within and outside the real estate industry including Google, Twitter, McKinsey, Goldman Sachs, and Facebook.
I know I work for Compass and may have a bias, but if it wasn’t the most efficient and easy to use platform – then I’d either be using a competitors service or would have purchased my own off the shelf solution.  In fact, I no longer use my local MLS service, unless I need to input a listing.   I’m huge on real estate technology being intuitive, with beautiful design, easy to read and use, and that it carries with it a low amount of clicks or actions in order to complete a task.
Why does Compass feature a top engineering staff, while most brokerages outsource or purchase off the shelf technology?
Compass is now a startup valued at over 4B, which has raised over 1.2 Billion in investor funds from companies like Soft Bank, Fidelity, IVP, and Wellington.  The aim is to create the best technology, not only for the consumer, but to also pair it with the best agents.
The search experience with our app, in my opinion, is second to none; you can create collections (like Pinterest boards), favorite your top properties, click “not interested” on ones you don’t like, calculate a mortgage directly from the app, take notes on each home, and collaborate with your agent.
The interface for the consumer whether it’s a buyer, seller, investor or renter features the ability to save and alter searches with or without your agent, share key market insights and reports with a few clicks, and move the process from buying to search to escrow or for sellers from pricing consideration and market analysis to pre-listing, to active listing,  to escrow and closing.  Again, this all just getting started.  
Want to search together?  Or need me to set up home tours for your favorite properties?  Simply download the app and add me as your preferred agent, and you’re set.

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Written By: Robert Rodriguez

Personally Speaking: I’m a proud dad and hockey player who leads with empathy and gratitude.

Goal: Providing my clients, friends, and colleagues with timely, intelligent and actionable advice.  I am always available to answer your questions regardless of whether you need to buy or sell.  Text, call or email 424-353-9004 | Robert@WestLALiving.com

Professionally Speaking:   Over 100 million in total sales volume, successfully completed over 200 transaction sides throughout the LA area and in a variety of neighborhoods with a wide range of property types.  In my 9 years as a licensed sales agent, I have climbed the ranks of the LA residential sales industry, distinguishing myself both locally and nationally.  I have sold complex Estates, land, income property, single family, luxury leases and condos. Both colleagues and clients widely recognize me as a respected professional whose reliability, dedication, and expertise is second to none.

Buyer Guide: What Home Buyers Should Look For And Ask When Touring Homes

Buyer Guide: What Home Buyers Should Look For And Ask When Touring Homes

How to Tour Homes Like A Real Estate Pro

17 Point Checklist

Below is a list of what home buyers should look for and the questions they should be asking each time they tour a potential home they are considering to purchase.

1) I first notice curb appeal.  Does the subject property have it or are there significant imperfections?  Simply put – is the exterior ugly, does it only have a back entrance, or maybe no parking?
The majority of the housing stock in Los Angeles is older and some properties carry significant flaws.  Most active and seasoned agents tour 20-40 properties a week and will be able to quickly communicate any out of the ordinary features, which may need considerable exterior updates or structural changes in order to correct.  If the price accounts for the flaw(s) and the buyers budget is met, then a defect may be an opportunity and not necessarily a hurdle.
2) Lot location is another important factor to gauge when previewing a home you will potentially purchase.  Luckily for us, it’s 2018 and Google street view is a tool everyone can access and one you should be using before touring a property.  You can get a generic feel for the area, a bird’s eye view of the neighborhood and make a few minor pre-determinations as to whether the property will be a good fit and if you should even go and tour it.  
I also ask myself the below listed questions.
  • Is the home on a busy road?  
  • Is it next to a freeway?
  • Does it back up to a fast food restaurant or gas station? 

These, and a few others, may decrease your average sales price when compared to other listings in the area when you try and sell in the future.

3) Neighborhood or Area.  Neighborhood, curb appeal and lot location are key factors that determine price and desirability.  Do the neighbors show pride of ownership?  Are the neighboring homes in the process of being remodeled or or do they look tired and worn out?  Quality of schools, access to public transportation, zoning restrictions, and upcoming developments also play a role in pricing and future desiribility.  In fact, there is a 21 point checklist of items you should consider and ask your agent when discussing potential areas and before deciding where your target neighborhood will be. For example, if you are purchasing a home between 1.5M-2M there will be a host of exchangeable neighborhoods through out Los Angeles, so taking a look at the list below will be important in helping determine where you should go.

 https://westlaliving.com/blog/price-is-just-one-factor-when-buying-real-estate/

4) What shape is the roof in?  I’m not an inspector, but I’ve read 250+ inspection reports, and toured thousands of homes.  I’ll never be the final word when it comes to the condition of a roof, but can provide a general opinion.  You’ll obviously have it inspected and either a roofer or your general inspector will be the final say.  But if we can determine that a home has a host of upgrades that you and the seller are likely not going to deal with or negotiate for, then you can save yourself time and valuable inspection dollars by moving on to the next potential option.
5) Does it have new or old windows?  Windows can be expensive and if they are old, in disrepair, or original to the home (if its older) they can increase your heating and cooling costs as they will not be as energy efficient as the new ones.
6) Does the flooring feel uneven or sloped?
7) How old is the electrical panel?  Is the panel 100, 200, or 300 amps?  If the property is older, has it been re-wired for electrical?
8) How old is the water heater?  Does look like its in good shape?  **PRO TIP** Most water heaters have a sticker somewhere on them that tell you the date the unit was manufactured, in case the seller or listing agent do not know.
9) Is the sewer line original or has it been replaced recently?  Any recent plumbing issues?
10) How old is the plumbing inside the house?  Is the plumbing galvanized, copper or PVC?
11) Has a termite inspection been completed?  If there is a termite inspection, will be provided a copy before or after we submit an offer?
Will the seller be willing to pay for a section 1 termite clearance?  If not, when was the last time it was treated for termites?
12) Is it possible for me or the buyer to poke my head underneath the crawl space to take a look a quick look at the foundation? 
**PRO TIP**
If it’s a raised foundation, then you may be able to see the plumbing underneath and determine if it’s copper, galvenized or PVC.  Also, if it’s a raised foundation you may be able to check and see if it’s been retrofitted for earthquake safety, which means it may have anchors, bolts and cripple walls.  However, even though I can give you a general opinion, the home inspector(s) will have the final say.  If you notice that the foundation is raised and made of bricks, you should think very carefully about purchasing the property.  Replacing a brick foundation can cost anywhere from $25,000 – $60,000 or more. Brick foundation are extremely unsafe and volatile during an earthquake.  If you cannot afford to replace or if there seller is not willing make a price or credit concession in consideration of the brick foundation, I am of the opinion that you should move on to a different option.
13) Are there any other disclosures the seller or listing agent made during the showing or that they maybe forgot and we should be made aware of?
Before I arrive, I also have the following information handy.
14) Average sales price to list price ratio for the area and comparable homes.  Are similar listing trading for more or less than the asking price of the subject property we are visiting?
15) What are market trends for the neighborhood, are they trending up or down?
16) What are the average days on market for similar listing in escrow and recently sold?  This will help tell you if you should move quickly with an offer or take a few days to think it over and compare other potential options.
17) Listing agents leave a blue print.  How does this listing agent operate?  Meaning, does he or she price their listings below market value to bid them up OR have they historically priced high and been worked down on price  OR do they normally price their properties at fair market value and achieve asking price or close to it?
Like this information?  Want to talk privately?  Shoot me a message.

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Written By: Robert Rodriguez

Personally Speaking: I’m a proud dad and hockey player who leads with empathy and gratitude.

Goal: Providing my clients, friends, and colleagues with timely, intelligent and actionable advice.  I am always available to answer your questions regardless of whether you need to buy or sell.  Text, call or email 424-353-9004 | Robert@WestLALiving.com

Professionally Speaking:   Over 100 million in total sales volume, successfully completed over 200 transaction sides throughout the LA area and in a variety of neighborhoods with a wide range of property types.  In my 9 years as a licensed sales agent, I have climbed the ranks of the LA residential sales industry, distinguishing myself both locally and nationally.  I have sold complex Estates, land, income property, single family, luxury leases and condos. Both colleagues and clients widely recognize me as a respected professional whose reliability, dedication, and expertise is second to none.

Price is Just One Factor

Price is Just One Factor

Recent Sales & Area Price Averages are TWO of MANY Factors That Evaluate Price and Value

Below is list of questions to consider when assessing current and potential future value of a property and the desirability of the neighborhood.  There are many factors beyond price, price history, average price per sq. ft. and the homes specs that are crucial in helping determine your offer price, list price, or the property’s viability as an option for your family. 

Whether you are in the market to buy or sell the 21 bullet points listed below outline what to consider before making your move.

  1. Is the neighborhood trending up or down?  Do you see other renovations, new construction coming?
  2. Is the neighborhood looking tired and worn out? If so could it be re-invigorated in the future, Miami-south-beach-style?
  3. What are the crime statistics? Heading up or down? Stable?
  4. Quality of schools.
  5. Access to public transportation.
  6. How long does it take to get to daily conveniences? Even weekend house buyers are asking for walkability to a local coffee shop and are buying in towns rather than being far removed.
  7. What does the vegetation look like? A beautiful tree-lined street will have eternal charms. Any plans to plant/landscape the public areas of the area?
  8. Is the neighborhood designated a historical landmark? Restricting what can be built may have longterm value.
  9. What are the zoning restrictions? Restricting height and size could limit future supply.
  10. Are there esthetic restrictions? Think Nantucket; they have a very uniform architectural code that keeps a uniformity to the entire island, values keep soaring.
  11. Neighborhood quality of life: what is it like to live in this area? What is the quality and quantity of retail?
  12. Food. Good food – whether a superb food market or restaurant – can change an entire neighborhood.
  13. Demographic studies: who is moving in and who is moving out and why?
  14. What cultural attractions are there in the area? Sometimes a theatre or movie theatre can transform a neighborhood. Multiple cultural attractions are even better.
  15. What is the quality of the infrastructure? The roads, bridges, sidewalks, lighting, access points
  16. Transportation: is it easy and straightforward? Is it safe? Are there public transportation options? Is there sufficient parking?
  17. Government: how restrictive is government and how difficult do they make it to build, renovate, do business?
  18. Taxation: what sort of local taxes exist? What is the local debt? How prudent is the government on spending? What is the money spent on? If taxes are high, what exactly do they deliver?
  19. Economics: What is the strength of the local economy? How diversified is the economy? Is it reliant on one big employer (risky)? What are the unemployment numbers and how consistent are they?
  20. How much open land exists? Are there many opportunities to build more?
  21. How attractive is the area to younger people? Is it appealing to all generations or just one?

 

There are just some of the considerations to ponder and explore. The longer your checklist covers the above, the more robust the value of the real estate generally.

 

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Written By: Robert Rodriguez

Personally Speaking: I’m a proud dad and hockey player who leads with empathy and gratitude.

Goal: Providing my clients, friends, and colleagues with timely, intelligent and actionable advice.  I am always available to answer your questions regardless of whether you need to buy or sell.  Text, call or email 424-353-9004 | Robert@WestLALiving.com

Professionally Speaking:   Over 100 million in total sales volume, successfully completed over 200 transaction sides throughout the LA area and in a variety of neighborhoods with a wide range of property types.  In my 9 years as a licensed sales agent, I have climbed the ranks of the LA residential sales industry, distinguishing myself both locally and nationally.  I have sold complex Estates, land, income property, single family, luxury leases and condos. Both colleagues and clients widely recognize me as a respected professional whose reliability, dedication, and expertise is second to none.

Top 5 Family Law Pitfalls in Real Estate

Top 5 Family Law Pitfalls in Real Estate

Top 5 Family Law “Pitfalls” in Real Estate

Thinking about getting married?  Or maybe you already are?  It’s important to understand how to protect your real estate assets in case your relationship doesn’t pan out.

1. House purchased during the marriage by both spouses but using money given by on party’s parent.  This may be considered a gift to the community, and both spouses may be equally entitled to the gifted funds.

2. House already owned by both spouses as a Community Property, but refinanced in one party’s name because of credit problems.  This may be viewed as transmutation, which means you are converting a separate property into marital property.

3. House to be purchased by a non-married couple who may choose to marry at some point in the future.  This could fall under a cohabitation agreement.

4. House owned by one spouse as separate property and placed into a revocable family trust without the proper protective language.  This could also be construed as transmutation.

5. House owned by one spouse as separate property, where the mortgage is paid-down during the marriage using Community Money could also be interpreted as Transmutation – Moore/ Marsden.

This article should not be construed as legal advice.  We are not attorney’s and providing any legal information is beyond our scope of expertise.  We highly suggest you consult legal counsel regarding any items mentioned in this post, especially if you are going through a separation or divorce or contemplating one.

Do you have questions? We have answers.

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Robert Rodriguez

Robert Rodriguez

Compass

Written by me, for you.

Goal: Providing my clients, friends, and colleagues with timely, intelligent and actionable advice.  I am always available to answer your questions.  Text, call or email 818-395-5517 | Robert@WestLALiving.com

Professionally Speaking: In my 8 years as a licensed sales agent, I have climbed the ranks of the LA residential sales industry, distinguishing myself both locally and nationally. I am closing in on sales upwards of 200 properties throughout the LA area and in a variety of neighborhoods with a wide range of property types. I have successfully sold complex Estates, land, income property, single family, luxury leases and condos. I have widely been recognized by both colleagues and clients as a respected professional whose reliability, dedication, and expertise is second to none.

Are we in a bubble?

Are we in a bubble?

Are we in a bubble?

Is California in the midst of another bubble?

One of my least favorite buzz words is “bubble.”   The resurgence of our economy has incensed doubt in some potential purchasers and sellers. One of the top real estate related questions I’m hearing from my clients is, “are we in a bubble?”  The cheap answer is there is no way to know with certainty, while partially correct, as your real estate professional,  I owe you more than a canned response.

The Facts:

  1. 8 years of uninterrupted price growth, which means we have entered the second-longest bull market in US history.
  2. All 1.3M jobs were lost during the recession.  2.6M jobs have been added during the expansion.
  3. Statewide median price plunged to $245,000 in 2009.  The median price is now closer $550,000, still 9% below the pre-recession peak.
  4. Unemployment remains at all time lows.  Income is growing and expected to increase.
  5. According to Wikipedia, an economic bubble or asset bubble, sometimes called a speculative bubble, is a situation in which asset prices appear to be based on implausible or inconsistent views about the future.

So, what’s the problem?

The foreclosure backlog has been wiped out, homeowners have equity, and there is significant new wealth creation for many families.

  1. Home price growth is far outpacing income growth.  The home price-to-income ratio measures the relationship between home costs vs. median household income.
  2. Currently, the median home price is roughly 8 times higher than the median household income, which is well above its historical average of 5-times income.
  3. The housing affordability index, which measures the percentage of households that can afford the median-priced home has dipped to 28% – meaning 72% cannot afford the median price home.
  4. Over 830,000 working-aged adults have left California, in the past decade, to states where home prices are dramatically lower.
  5. Low housing inventory, deteriorated affordability, and declining rates of homeownership are the concern.  Studies show that high housing costs are burdening the top employers, either by not being able to develop competitive enough hiring packages or being able to subsidize relocation costs.

How are the economics today different from the previous crash?

  1. The average FICO score for closed conventional purchases was 752.  This represents excellent creditworthiness for most people purchasing real estate.
  2. Most borrowers have skin in the game, meaning they are putting anywhere from 5-20% down.
  3. Most borrowers are locked into fixed-rate loans.
  4. As long as the borrowers keep their jobs and the economy doesn’t experience an external shock, then there is little incentive to default or walk away from a mortgage.
  5. During the run-up to the previous crash, borrowers were in loans they couldn’t afford, in adjustable rate mortgages, and many in zero-down payment products.  Further fueling the drive up in prices was loose lending standards, which drove speculation and a house of cards real estate market.  This is certainly not the case now.

What are the tipping points?

Look out for interest rates increases, which will affect affordability and place downward pressure on price appreciation.  The Federal Reserve recently raised interest rates for the 6th consecutive time since the previous financial crisis.

Also, keep an eye on potential external shocks to the economy that will affect the demand side of housing.  It’s simple; California housing prices grow because demand outstrips the chronically under-supplied market.  An economic shock that takes away demand by ramping up job losses or impacting wealth or incomes will most certainly reduce price growth.

Right now, the stock market or global economy look like the most likely targets for a potential shock.  The national price-to-earnings ratio is above its normal range, hinting that the value of many publicly traded companies is higher than their profitability suggests.  It’s important to note that if we see an external shock that causes a decline in home prices, the damage will likely not be as widespread as the previous “Great Recession.”

The wildcard is tax reform, which could tip the balance in either direction.

What do I think? 

To intelligently analyze the market, you have to be able to differentiate between a symptom and a cause.  For example, the flu is an infectious illness, which causes symptoms like fever, chills, cough, runny nose, etc.  The inability to systematically produce enough new housing units is the flu, and the symptom is the run-up in prices.  LA, which is currently the most underbuilt county in California, must build up and/or become denser.

Approximately, 180,000 new housing units must be produced each year just to tread water on housing affordability.  We will likely see more high rises, townhomes, an expansion of public transportation, and changes.  Every time I drive around our scenic city, I can’t help but notice there is almost zero vacant lots/land.  This may be unpopular for some, but a likely path.

Areas once considered low income or undesirable will become the next “it” neighborhoods.  This has already happened in individual pockets.  If you’re looking to take advantage of double-digit price appreciation, some areas are still trending at above average year over year price growth.  You just have to know how to search.

I also don’t believe we are at the tipping point yet.  Sentiment among local agents and the buyers and sellers I speak to is optimistic.  There is still room for more growth.  We will likely not see a downturn this year and possibly even next year unless an external shock hits the US or global economies.  I’m of the opinion that the current tax reform bill will likely fuel wage increases, corporate profitability and continue to stimulate growth in the markets.  According to the report in the link below, the two most overvalued regions are the Bay Area and Orange County.  However, not all markets are overvalued, but if prices do fall, they will likely hit those areas hardest.

What’s the silver lining?

Most economies in large cities are mainly made up of Finance, Insurance, Real Estate, Law and Health Care.  Los Angeles additionally features technology, film/tv, creative, media, and international trade sectors which help keep it slightly more insulated than other cities. 

Do you have questions? We have answers.

4 + 7 =

Robert Rodriguez

Robert Rodriguez

Compass

Written by me, for you.

Goal: Providing my clients, friends, and colleagues with timely, intelligent and actionable advice.  I am always available to answer your questions.  Text, call or email 818-395-5517 | Robert@WestLALiving.com

Professionally Speaking: In my 8 years as a licensed sales agent, I have climbed the ranks of the LA residential sales industry, distinguishing myself both locally and nationally. I am closing in on sales upwards of 200 properties throughout the LA area and in a variety of neighborhoods with a wide range of property types. I have successfully sold complex Estates, land, income property, single family, luxury leases and condos. I have widely been recognized by both colleagues and clients as a respected professional whose reliability, dedication, and expertise is second to none.