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In exchange for something of value (consideration) the right given to a party (optionee) by the owner of a property (optionor), to purchase or lease property within a specified time.

The option is a pre-arranged, written agreement between an owner and a prospective buyer that states the right to purchase a property at a fixed price and within a specified time frame.

Because the option will become the sales agreement, all terms should be clearly defined, and spelled-out. A prospective buyer generally pays an option fee in advance to the owner in exchange for the right to exercise the option. How this works locally here, in the case of a "lease-option"; a buyer who perhaps wants to "try-before-you-buy", or who needs more time to raise a down payment, will agree to lease a home for a period of 6 months to a year, while paying rent and usually an option fee. At the end of the term, the buyer then has the ‘option' to purchase the property outright at the price previously agreed.

Often times a portion of the rent paid during the lease term and the option money, are applied to the purchase price. The caveat is this; if the buyer chooses not to exercise the option, he looses the option money and rental fees.

This type of arrangement benefits both buyer and seller because it provides income for the seller, and the buyer locks in a purchase price well in advance of actually purchasing a home. There are downsides of course, such as the property value declining below the agreed upon price. It is another way to acquire real estate when conventional sales just won't do. Try it!

(c) 2007 John Wall. Visit www.TeamResults21.com.

Do you think you've lost your chance to own a home in Long Beach? I'm here to tell you not to give up yet. There are programs in place for first time homebuyers that help you own your own house or condo. These programs  are sponsored by the California Housing Finance Agency.

There are numerous properties that qualify and anyone who meets the qualifications can apply. In Los Angeles County a 3 person + household with up to 103,600 income can qualify for CalHFA's 40 year mortgage, a fixed rate conventional mortgage for up to 100% of the purchase price. There are down payment programs available also that can be combined with this loan program too.

The details are available at http://www.calhfa.ca.gov/. If you think you've been left out of the real estate market, take a look and see if one of these might benefit you. With the right finance and professional representation, you too can be a homeowner.

Within the last 2 years, the IRS has been allowing taxpayers to mix the rules applied to the sale of their principal residence and those of IRC 1031 tax deferred exchanges. A welcome turn in this market where homes values have skyrocketed upward and produced gains well above the current $250,000/$500,000 capital gains tax exclusions afforded by the IRS.

If you don't know already, the IRS allows a seller to exclude from capital gains taxes, upto $250,000 from the sale of his principal residence if he's lived in it for 2 of the last 5 years. ($500,000 if married) Any amount over that would be subject to taxation. So if a seller nets a profit of 350,000, the portion subject to tax would be $100,000.

If the seller can rent the home for 2 years before the sale, that 100k could then be rolled into another investment property and excluded from gains tax. The investment could also produce income for the seller as long as he owns the investment property. That income though, would presumably be taxed at the owner's low income tax rate, not as gains.

Strategies like this can get complicated and before making the decision to make a transaction like this, you should consult with your CPA or Tax Advisor.

In March, 2007 there were 239 single family residences sold in Long Beach. The number of Condo units sold was much lower at 72.

The median price of condos dropped in every area except neighborhoods in the 90807 and 90808 zip codes which saw increases. The biggest drop was a 28.4% decline in median sale price in the 90814 zip code.

In single family residences, homes in 90813 saw an increase of 14.6% in their median sale price. Declines in the single family market as whole were marginal except a 10.2% decline in 90806 zip code. That zone also saw the 2^nd largest inventory of homes available which may attribute to the median decline as competition was strong in March.

The median price is the price point at which 50% of homes sell for more and 50% sell for less. These averages easily misrepresent actual market performance in a particular neighborhood especially when there are many varying styles and types of homes available.

If you would like an analysis of your home's market value, or for more information, please contact me at (562) 433-1914 or e-mail john.wall1@century21.com.

You've spent every weekend visiting open houses. You've put in hours researching properties and the marketplace. You've carefully reviewed your finances to see how much you can afford. And after all that, you think you may have found "the one." Now, how do you know if you should make a bid?

First, go back and review your wish list - the roster of criteria you set forth when you first started looking at properties. Does this listing have some or most of those qualities? Can you live without the ones it doesn't have? Or, could you add those amenities in the future?
If you answered yes to those questions, look carefully at your finances. Run the numbers one more time and make sure the price fits within your budget. Look closely at how much it will cost you to own this home on a monthly basis. In addition to mortgage and taxes, consider things like insurance, utilities, emergency repairs, improvements, and furnishings.

If the numbers work, consider the area where you are looking to buy. Can the neighborhood support your investment? What about the town? Does it have a good school system, sound infrastructure, attractive business district, easy access to transportation? Those types of things will be appealing to buyers should you ever decide to sell. Remember, this home is also a serious investment; one you hope will earn you a significant return over time.

Next, consult your agent. He may see hundreds of transactions each year, and should know a good value when he sees it. Discuss what would be a fair and reasonable bid. information on what homes in that area have been selling for during the past six months will help you develop an attractive offer. It is also wise to come up with a backup plan should the offer be rejected.

Once you've considered these questions, and the answers are in the affirmative - go ahead and make that bid!

John Wall, CENTURY 21 Results
http://www.teamresults21.com/
        (562) 449-8421
Residential & Investment Properties

Yesterday, Bankrate.com reported a slow climb
in interest rates. The 30 year fixed was 5.77
up from 5.74, while, the 15 year fixed rate
showed a similar increase to 5.52 from 5.49.

Adjustables still don't look good when compared
to their fixed-rate older brothers.

And another popular real estate site
had something positive to say
about Los Angeles County with a 2.3% increase
in salesprice over last quarter.

There are all sorts of great real estate websites out there.
Go visit one today.

John Wall
WWW.TeamResults21.Com

Southern California's median price continued its upward movement, cresting the Half-Million Mark. The median has risen nearly 5% since this time last year, for the 6 county area.

 The median price is the middle price of resale home's where half are sold for more than the middle price, and the other half are sold for less.

The median in Los Angeles county is holding its own at $540,000, up 6.3% since this time last year. Orange county is ahead at $629,000 a modest increase of .06 since March 2006.

Statewide; 39,800 new and resale homes were sold last month, including SFR and Condos, up 27.5% from the month prior.

A reverse mortgage is a way to borrow money against the equity in your home to provide you with tax-free income. You can receive funds in any number of ways including:

• Lump sum
• Regular monthly payments for as long as you live (or reside in your home)
• Monthly payments with a pre-determined cut off date
• A line of credit to draw on when you need it
• or a Combination of these

A reverse mortgage can enable you to enjoy retirement more, provide some financial cushioning for future emergencies or major expenses, while, allowing you to remain in your home and keep title to it. Being more complicated than a conventional mortgage, a reverse mortgage carries some pros & cons and has different qualifying requirements for borrowers. The most notable requirement is that the youngest borrower must be at least 62 years old when the loan closes.

Some other requirements are that the home must be your primary residents and remain so during the term of the loan, and that existing loans, or mortgages be paid off prior to closing on the Reverse Mortgage. (reverse mortgage funds can be used for this according to cash advance rules).

If you choose to, you can even pay off a reverse mortgage early by refinancing out, or just settling up with the lender. If you should pass away before the loan is paid, your heirs can choose to pay off the loan or sell the property, any proceeds above the loan amount of your home goes to your heirs.

applying for a reverse mortgage is easy, and you can start online. The National Reverse Lenders Association website is a good starting point to gather information from lenders. The URL is http://www.reversemortgage.org/ .

Team Results also has a 12 page pamphlet available that covers in detail all aspects of  reverse mortgages. We'll gladly mail a copy or e-mail an electronic version at your request. Send requests to TeamResults@Century21.com. Be sure to include your preferred delivery method.

There are various methods used to consummate a real estate transaction. In California, Escrow services are the preferred method. Strictly speaking escrow is an agreement between the parties that provides for the placement of instruments, and money be placed with a third party for safe keeping, pending fulfillment of the conditions of the contract.

Basically, a seller places his or her title or deed within escrow and the buyer, deposits money in escrow. The escrow agent is charged with ensuring that all conditions of the purchase agreement are met before the transaction is closed (deed to buyer, and money to seller). Escrow is one safeguard against ‘taking the money & running'.

In some cases when a title company is involved, the title company itself my act as an escrow agent. Escrow services cost money and the fees vary with differing escrow companies. Usually the fee is equally split between buyer & seller, but escrow fees are one of those negotiable monies in a real estate transaction so fees could be paid by any mutually agreed party..

© 2007, John Wall, All rights reserved.
John.Wall1@century21.com

Okay, so I'm going to give this a shot. I'm going to do a series on real estate topics aimed at educating consumers on the aspects of a real estate transaction that frequently go on in the background without much to do. I haven't yet determined whether to go A-Z or mix it up, but today I'm going to talk about Appraisal. I would love to hear from consumers, if you would like to see a specific topic or have a question that you would like addressed. Please Email me at John.Wall1@Century21.com.

An Appraisal is an opinion, an estimate of the value of property. Professional appraisers use one of three methods or appraisal approaches to find the estimated value of a particular property. They are; cost, income, and comparison.

The cost approach is a method used to estimate the value of a property based on the depreciated cost of replacement (buildings & land). In other words, what would it cost to replace a particular property?

The income approach is used to estimate the value of income producing property like a business or apartment building. Basically this methods takes the average capitalization rate (rate of return) for similar properties in the area and using a little trick called "math" divides that rate by the expected annual net income of the property in question.

The comparison approach, by far the most common used to estimate the value of residential property, and in my opinion, the most effective, takes into account the sales price of similar properties in the area. Making adjustments for slight differences in each comparable home (none are exactly the same), and appreciation or depreciation if the most recent sale has been some time in the past.

When Realtors present a CMA or "comps" for your home they generally have used the comparison approach to estimate your home's probable sale price. Keep in mind that a real estate agent's estimate is not the same as a professional real estate appraisal.

(c) 2007 John Wall, Realtor. all rights reserved. John.Wall1@century21.com