Warren Sapp Looking to Sack $6.7M Debt Via Chapter 7 Fire Sale

September 20, 2012

 Warren Sapp, the former football star who landed in the elite confines of Windermere, FL, is filing bankruptcy.  There was a time when he was collecting all kinds of insanely bodacious bounty, but that was during his NFL playing days.

Now comes the tale of Sapp’s financial meltdown, courtesy of the Tampa Bay Times. In a mightily detailed account of Sapp’s personal finances, the story gives a primer on how a 39-year-old man who earned $77 million could wind up with $826.04 in his checking account, debts totaling $6.7 million and a home being auctioned by U.S. Bankruptcy Court.

It’s quite a story about the outspoken Sapp, whose humble beginnings are plainly seen by the homes that dot the street where he grew up, which is now called Warren Sapp Drive in Plymouth, FL.

Despite his continued role in the TV broadcast booth and a new book that attempts to cash in on his loquacious ways, Sapp has filed for Chapter 7 bankruptcy, an avenue that attempts to portray his losses as business related.

But the devil is in the details, and, according the Times’ examination of the 59-page filing, only time and the courts will tell whether Sapp fits the bill for this kind of bankruptcy procedure. In the meantime, Sapp’s home at 11049 Bridge House Rd, Windermere, FL, 34786 is on the market for $3.774 million.

The 10,000-square-foot, 4-bedroom, 6.5-bath home was ordered on the market by the U.S. Bankruptcy Court, which under Sapp’s Chapter 7 filing requires the liquidation of all his assets. The home is scheduled for auction on Nov. 1, with the caveat that the list price is conditional. The real sale price will be determined prior to the auction.

In the meantime, anyone with an Air Jordan jones can take advantage of Sapp’s fiscal plight; the bank has also ordered the sale of Sapp’s collection of 240 pair of sneakers. The only catch? They’re all size 15.

 

 

Tip of the Week: Dept. of Justice Warns of Debt Relief Scams

September 5, 2012

The Dept. of Justice Consumer Protection Branch is warning consumers about debt relief scams and providing tips to avoid such scams. Tips include:

  • Fraudulent debt relief companies will often make claims of being able to negotiate a one-time settlement with creditors that will reduce a consumer’s principal by 50 percent or more. The Consumer Federation of America, an association of non-profit consumer organizations, warns that such a promise is a virtual impossibility.
  • If you have trouble making credit card payments, immediately call the creditor to work out a payment plan. If that is unsuccessful, a non-profit credit counseling service may be able to help you. These services may charge a small fee, but the cost will be substantially less than using a debt relief company. An excellent resource for locating a local credit counseling service is the National Foundation for Credit Counseling, at www.nfcc.org.
  • If a company offers a “one size fits all” solution, what they are really offering is a “no size fits anyone” problem. Legitimate credit counseling services tailor a consolidation plan to each consumer’s individual needs.
  • Do not be afraid to ask questions. Demand that the company disclose set-up and maintenance fees, and that these fees be set in writing. According to the Consumer Federation of America, consumers should not pay more than $50 for the set-up fee and $25 for monthly maintenance of the account.
  • Do not rely on the company’s website. Conduct your own research of the company – the Better Business Bureau and the state consumer protection agencies are valuable resources.
For more information on debt relief scams, see the Federal Trade Commission’s website. Additional information on legitimate debt relief services can be found on the Consumer Federation of America’s website

Housing Market Snapshot

June 3, 2012

An update on our current market counties in the Bay Area.

I hope you will find the following snapshot of local Real Estate inventory interesting. The table represents aggregated values based on MLS data for the specified date.

Housing Inventory Snapshot May 31, 2012
  Average List Price Median List Price Average Days On Market
Santa Clara County, CA
Single Family under $1M $615,884 $608,000 46
Single Family over $1M $2,425,837 $1,799,950 53
Condo/Townhome under $600K $376,989 $379,000 45
Condo/Townhome over $600K $809,957 $729,000 42
San Mateo County, CA
Single Family under $1M $645,934 $650,000 49
Single Family over $1M $3,879,677 $2,295,000 71
Condo/Townhome under $600K $418,477 $445,000 52
Condo/Townhome over $600K $908,239 $785,000 73
Santa Cruz County, CA
Single Family under $1M $598,361 $624,900 73
Single Family over $1M $2,134,907 $1,649,000 101
Condo/Townhome under $600K $338,777 $299,000 129
Condo/Townhome over $600K $904,200 $748,000 96
Monterey County, CA
Single Family under $1M $511,519 $469,000 78
Single Family over $1M $3,197,835 $2,249,000 121
Condo/Townhome under $600K $353,144 $375,000 82
Condo/Townhome over $600K $882,316 $825,000 85
Alameda County, CA
Single Family under $1M $476,432 $450,000 58
Single Family over $1M $1,818,848 $1,400,000 69
Condo/Townhome under $600K $293,270 $273,100 63
Condo/Townhome over $600K $778,781 $720,000 46
Contra Costa County, CA
Single Family under $1M $429,936 $350,000 57
Single Family over $1M $2,031,242 $1,575,000 93
Condo/Townhome under $600K $229,259 $185,000 62
Condo/Townhome over $600K N/A** N/A** N/A**
 
 
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Profits? It’s Not That Flippin’ Easy

May 15, 2012

It’s tough to resist the entertainment factor in those reality TV shows like “Flip That House.” But here’s a little secret you may not know: Not everything on TV is as it seems.

In fact, I would guess that based on my experience of watching people try and flip properties for profit, 90 percent who try it once never attempt it again.

I’m not saying it isn’t possible for this to be profitable, and I know people who do it full time and do make money at it. But the odds are highly against the average person succeeding. However, if all those reality TV shows have piqued your interest, here are a few items to consider if you want to attempt this strategy.

Buy Low, Sell High

First, you will have to buy a property at significantly below market value or sell it above market value to make money. If you buy it and sell it at the market, you will lose money due to commissions, time, and renovation costs. So your best bet is buying a property below market value. That’s not simply below what it sold for four years ago, it’s below what is the current market value after taking into account all the distressed property sales in the area. And if it’s a decent property, you’re probably going to be fighting many other individuals trying to buy the same house. And when lots of people are vying for one piece of real estate, the price gets bid up and you probably are going to pay market value.

Recouping Value

What about adding value with a renovation? While there is no question you can add value by renovating a property, you probably will not add more value than the cost of that value. (Check out the Hanley Wood estimator, especially “cost recouped” column.) You might put in a $20,000 kitchen that only adds $15,000 in value. More than likely you will go way over budget on the rehab and spend way more than the value you have.

Transaction Costs

You also have to keep in mind the 3-5 % transaction costs. You may think you will resell the property in three months, and you might. But what if it takes six months, or nine months. You will be making mortgage payments, property tax payments, insurance, some maintenance, HOA fees, and all other kinds of costs as you hope to get the property sold quickly. And they add up…

Fuzzy Math on This Flip

An individual I knew bought a property for $100,000 and sold it for $140,000, netting $40,000 in six months — so he told me. Then we talked about the costs involved. Purchase and finance costs, including $5,000 for rehab costs; $8,000 for holding costs; $6,000. He was up to $19,000 in costs before he even transferred title to the new owner. Sales costs added about $10,000 and he gave the buyer a $3,000 credit, too. That added another $13,000 in costs.

Here is the revised math on his flip: Sale price was $140,000, less total costs of $32,000 ($19,000 + $13,000), less his $100,000 purchase left him with $8,000 in profit for six months of work. So much for the $40,000 profit.

This result is more typical with profit-making real estate deals. Some people do score on short term, get-rich=quick attempts. Most of them are doing it full time and taking significant risks with their investing choices.

Luckily. the guys flipping properties on TV are making a living producing TV shows and getting paid by advertisers. That means their house flipping is more theater than business. There’s a much better chance they will make a living that way then trying to actually flip properties for a profit.

Information provided by Leonard Baron, MBA, CPA


 

 

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Multiple Offers Make a Come Back!

May 14, 2012

In case you missed the news, markets are starting to pick up, which means more home buyers are likely to get off the sidelines. But, given the lack of good inventory in many real estate markets, there are more buyers than properties.

The result? Multiple offers are making a comeback.

The days of bidding wars, with several offers over the asking price, are probably gone in most markets. But buyers in certain markets are likely to see competing offers under the listing price. However, with that said, in the Mid-Peninsula area of the San Francisco Bay Area we are seeing many multiple offers and all are over asking. In Palo Alto, we had a home with 28 offers and another with 18. In San Carlos, another HOT spot we are seeing multiple offers all over asking and sold in a few days.

Here are three strategies for buyers to follow when the home they want has received other offers:

1. Don’t over-analyze the other offers or the listing agent

After multiple property viewings and interacting with the seller’s agent, by you at an open house, or your agent, the listing agent tells you there’s another offer on the property. Your reaction: “Really? Are you kidding me?”

Take the listing agent’s word for it, but only use that as one data point. Don’t spend too much energy trying to figure out what’s really going on with the other offers. If you love the property, keep moving forward, but at your own pace. Make the offer you’re comfortable with, and only when you’re comfortable making it. Don’t feel pressured to make an offer in order to compete, especially if you’re not ready to put in a bid.

2. Focus on your negotiations with the seller

Sometimes, the listing agent will say that the other offer is a better price, has a larger down payment or a quicker close. Who cares? The seller will still be looking at and working with your offer when considering their circumstances. For all you know, the other offer may be a horrible “low ball” offer or from a buyer who isn’t pre-approved for a loan or from an out-of-area agent who is unfamiliar with local customs and protocols. Or the buyer may have made the offer after only seeing the property once.

Even though there are other parties making offers, don’t get distracted by them. Stay focused on your own negotiations with the seller. Remember: You’re not negotiating with another buyer, and trying to do that will drive you nuts.

3. Present yourself and your offer in the best possible light

Most people make a decision about whom to sell their home to based not just on price but on the whole package. Who are the buyers and what is their level of interest in the home? What’s the price they’re offering? How many contingencies are they asking for and what are the timeframes of each? What is the down payment amount and length of escrow.

Consider writing a note of introduction to the seller with your offer or ask that your agent do so. Be sure to present a pre-approval letter with your offer too. This is a no-brainer in demonstrating to the seller that you’re a qualified buyer and you’ve taken the time to get approved for a mortgage. As an agent myself, I always include a separate sheet that highlights the important items in the contract in a nutshell as an over-view.

Finally, put your best foot forward with your earnest money deposit. While there are customary ways of approaching earnest money deposits in each real estate market, putting up only a few hundred or only a thousand dollars may give the seller the impression you’re not that serious. If you can put up the full 3 percent, do it. It shows you mean business. Don’t forget this money is refundable should something major come up, and your contingencies protect this deposit.

Ultimately, keep in mind that the sellers are probably embarking on a major life change. They may be selling due to a job transfer, new baby, or the need for more (or less) space. It’s a huge decision for them, and receiving an offer can be as exciting as it is nerve-wracking. So lead with your best offer and don’t wait for a counter because there might not be one. Be patient and understanding. See what happens. If you don’t get the property, learn from the experience and move on. Who knows? You may find something even better.

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Proof that the Real Estate Market Is Coming Back

May 8, 2012

Hello everyone. I have had a lot of questions lately on our area in the Bay Area with our market. People are bidding well over asking. With a lot of buyers and very few houses or inventory, it has been a challenge these last couple months. I thought I would take some time to post this for you.

Last week, the National Association of Realtors (NAR) released their Pending Sales Report which showed that contracted sales were 12.8% higher than the same month last year and higher than any time since sales were impacted by the Homebuyers’ Credit back in April of 2010. The index stood at 101.4 which represents a level that is “historically healthy” (see methodology below).

Here is a graph showing pending sales over the last twelve months:

 According to the National Association of Realtors:

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

 

 

 

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

 

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

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What to Know About a Down Payment

May 7, 2012

My Mortgage Docs to be Reviewed by an Expert

My Mortgage Docs to be Reviewed by an Expert (Photo credit: Casey Serin)

When you buy real estate, it’s very exciting. First, you shop (till you drop) until you find your dream home (or maybe your dream home minus some bedrooms and closets). Then, you write possibly the biggest check of your life.

What is it? What happens to it?

It’s Not Actually a “Down Payment

Because it’s the first money that a buyer puts “down” against the purchase, buyers often refer to it in slang as the “down payment.” That’s not technically correct, mostly because a purchase might involve more money down later. For example, you might buy a $400,000 house and hand over 5 percent of the purchase price (or $20,000), when you sign the contract, and then put another percent down at closing, so that your entire down payment is $40,000, in addition to the fact that you’re handing the seller a mortgage for the last 90 percent

How to Handle That “Earnest Money

So technically, that check that goes with the contract is known in the trade as “earnest money” (because it’s used to prove that you’re very, very earnest about buying this property) or the “contract deposit.” You don’t, however, want to just hand it over. It should go into a special account, known as an escrow account, which is held by the escrow and title company in California.

Where Does the Money Go?

It varies by state.  In California, all the other money in a real estate transaction, even the mortgage, goes through escrow, too (but that’s not the way it is in most states). More typical is that the earnest money stays in escrow until the deal closes — and you own the house or apartment.

If Something Goes Wrong, Do You Get Your Money Back?

Well, that depends on the terms of your contract. Your contract — which you should read carefully and have your agent explain — should outline in what scenarios your earnest money is forfeited, and in what scenarios you would get it back.

Typically, you might get it back if:

  • the seller changes his or her mind and decides not to sell
  • you have a contract with a financing contingency, and the bank denies you a mortgage loan
  • you have a contract with an inspection contingency, and the inspector finds something seriously wrong (like a terrible termite infestation) with the subject property
  • there is a fire in the property before you buy
  • you elect to cancel the contract rather than go through with the deal

The most typical reason not to get your money back:

  • you, as the buyer, change your mind and decide not to buy.

In other words, you can’t just cancel your contract on a whim. There are probably secondary provisions that keep you from “throwing” the deal — for example, if you have a financing contingency, then you wouldn’t have to go through with the purchase if the bank doesn’t give you a mortgage loan. But, there are probably contract provisions that state that you have to apply seriously and give the bank the income documentation and financial records that it asks for.

You have to be careful with an FHA loan and make sure you have a lender that is very familiar with the intracies of an FHA loan. One example cites a case where the buyer thought she was getting an FHA loan, and then found out that the FHA wouldn’t finance in the condo building where she was trying to buy. You might think that’s not her fault, but she still lost her deposit because she didn’t do enough research.

So, (I said this above but it bears repeating) read your contract. The huge amount of money you save may be your own.

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3 Questions You Must Answer When Buying a Home

May 5, 2012

 

If you are thinking about purchasing a home right now, you are surely getting a lot of advice. And some of that advice is probably negative. Why buy now with prices still falling? Don’t you realize real estate is no longer a good investment? Don’t you know that people who bought six years ago lost their shirt? We understand the concern your friends and family have. However, let’s look at whether or not now is actually the perfect time to buy a home.

There are three questions you should ask before purchasing in today’s market:

1. What are the experts recommending?

In the last 120 days, many experts have said that buying now makes sense. This list includes: John Talbott, Christopher Thornberg and Warren Buffett.

2. When will I begin to see appreciation if I buy now?

This is a great question. Macro Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey in 2010. They ask 100+ housing industry experts to project housing prices through 2016. The most current survey shows that the experts are predicting prices to remain relatively flat in 2012. The experts then project prices to rise reaching a cumulative appreciation of over 10% by 2016.

Purchasing a home today makes great sense from a financial standpoint. Think of the old axiom: you want to buy low and sell high. This decision should not only be a financial one however.

That leads us to our third and final question:

3. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. The Fannie Mae National Housing Survey shows that the four major reasons people buy a home have nothing to do with money:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of the space

What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the reason you decide to purchase or not.

Bottom Line

Don’t allow money to get in the way of you making the right decision for you and your family. In the long run, the finances will work in your favor anyway.

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COSTCO DOING HOME LOANS

May 1, 2012

Visit msnbc.com for breaking news, world news, and news about the economy

One of the main differences with Costco is that they have several lenders that they work with, and they do not give out your information until you pick the lender. It will be interesting to see how this goes. So far, they have met with great response.

Smart move. Afterall, Costco has millions of folks visit their stores on a regular basis. Offering home loans makes sense.

This is also good news for the overall housing recovery!

What this move signifies is that one of the worlds largest retailers believes that the real estate crash must be over or they wouldn’t venture into selling loans. You can be assured that Costco did extensive research before they decided to get into the Mortgage Business.

 

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Historical Home On-The-Market

January 29, 2012

Storied “House-On-Hill” In Hillsborough Listed for $29 Million

I once had an open house (Verbalee Lane) on the street from this estate and “no” mine was a mere $2 Million. It is on a short street with very different houses along the way. When you got to the end of the street you could see this big estate with the front gates. A lot of history in this home. I just wanted to share this with you. I think those of you that love Historical Homes will find this fascinating.

 

At a list price of $29 million, it might be a stretch to call this fabled San Francisco-area property a bargain.

But considering the history and quality of this 30-room, 35,000-sq-ft Hillsborough real estate market gem — called one of the most spectacular private residences ever created — “House-On-Hill” should turn a few heads, especially since the price has dropped dramatically since the estate was first offered for sale at $45 million in 2002.

“The owners are very realistic now and there is no other property on the market like this one,” said listing agent Daniel J. DerVartanian.

“You could not recreate this property now, not for the quality of the $20 million renovation that the current owners undertook or for the fact that they wouldn’t let you build this size home on six acres,” he said.

While the house has been marketed by the owners for the past two years, listing it with a real estate brokerage has appeared to been a boon. In the week since House-On-Hill has been listed, DerVartanian said the property has been shown to several interested and qualified buyers — not a tough demographic in a region where Silicon Valley millionaires may be looking to make their own impressive mark on the real estate map.

House-On-Hill as it looked in 1930. SOURCE: Chicago Treasures

Designed by architect David Adler as a Cotswold-style Tudor, the mansion is nestled in the hills overlooking San Francisco and was completed in 1931 for Hibernia bank heiress Celia Tobin Clark.

In 1992, the property was purchased from the Tobin-Clark family by Sam J. Bamieh, a prominent businessman at American Intertrade Group and major Republican Party donor. While the property had already boasted an illustrious history of world-famous visitors, that tradition continued under Bamieh, whose connections to the Saudi royal family and others is its own intriguing story.

A special VIP suite of rooms has been the guest residence of a prestigious list of U.S. Presidents and other world leaders including, Presidents Nixon, Reagan, Ford, and Bush, as well as Prime Minister Margaret Thatcher and His Majesty King Hussein. The list of other notable guests who visited Bamieh for parties or fundraisers is much longer.

DerVartanian said Bamieh and his wife meticulously renovated the entire property with an attention to detail and an eye for the preserving the original design features. All the systems have been updated, from the opulent music room to the lovely Otis lift to the hand-mill work, and no detail was overlooked.

The list of features includes:

  • Carved front entry opening to an elegant black and white marble reception foyer
  • Carved balustrade staircase leading to opulent public rooms including a banquet-sized formal dining room with carved marble fireplace
  • Over-sized French doors leading to the loggia and grand terrace
  • Cozy library with 17th-century English paneling featured in Helen Comstock’s “One Hundred Most Beautiful Rooms in America.”
  • Grand music room
  • The mansion includes 12 bedrooms, including 4 master suites
  • 12 full baths and 3 half baths
  • Four kitchens
  • 12 fireplaces
  • In-ground pool
  • A six-car garage

It’s tough to argue with a sales pitch that calls House-On-Hill a once-in-a-lifetime opportunity, but given the location, the restoration and the history of the place, that pitch sounds right on key.

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