Orange County California Property Tax Collection Trouble?

A little birdie told me there is an impending problem in California.  This isn't about the foreclosures the banks are holding on to, but rather the bellwether that something else is about to happen.

It turns out California County tax collectors have a couple of problems this year.  First is that property values have fallen.  The lawmakers still hungover from the party, some still drunk from all the years of double digit real estate value increases are now crying the blues and asking for tax hikes.  Their mismanagement of money is our problem somehow.  For years, flippers where the states best friends, bidding up homes and driving up tax revenues.  The cities, counties and the state just sat back and spent like a college kid with a new credit card.

Now things are changing.  And the state is blaming the banking and real estate industry.  The politicians spent the money, not the bankers and real estate industry.

 The obvious thing is that home values are falling, and every time a home sells, so falls with it the income to the state, city and county tax collector.

What isn't obvious is the number of delinquent property tax bills.  This isn't easy information to dig up and compile without spending a lot of money.  It turns out someone did in Orange County California (where I live) and the numbers aren't good.

As the number of homes in tax default increases, the number of foreclosures are not far behind.  This is double jeopardy for the tax collectors and the honest tax payers.  Somebody still has to pay for all of those schools, roads, firemen and police.  It is tough to say out loud but a lot of people took pay cuts and lost jobs.  The government sector is going to have to own up soon.  Raising taxes won't fix anything.  There aren't enough "rich" to solve the problem.  It just sounds great on TV to "tax the rich".

Some areas of government can be cut temporarily but my source tells me this isn't an increase that represents a temporary problem, and the government has a very hard time cutting services at any level.

What does that mean for investors and agents?  It means keep an eye out for deals.  The banks have proven they are terrible at selling homes profitably, and the tax collectors don't have much experience either.  The worst case scenario is some back door deals or government giveaway that drags the entire market down further.

Like all crisis there is opportunity if you know what to look for.  This one is one that you can see coming which makes it an excellent opportunity for investors who can afford a buy and hold, buy and rent or are also contractors that can do very inexpensive work for a potential buy and flip.  The buy and flip will be pretty thin for the next 12-24 months as this settles out.  Banks won't keep letting people live in a home for free so deals will be out there.  Banks just got fined with a huge payout to the states, which some states are going to skim from to make up for the tax loses, further complicating the ongoing mortgage problem

As funny as it sounds, banks and the county offices need the help of experienced real estate agents, investors and speculators now more than ever.  That is really hard to admit for people who think the government should run everything.  As they realize the need for help and the need to cut budgets, look for some smoking deals to get put together at every level.

In every crisis there is opportunity.  This next 24 months is going to be a big one.

Home Shopping Season In Full Swing

This weekend the Southern California Coast was blessed with fantastic weather and more open houses than hungry homebuyers could devour.    Investors were still trying to figure out what is happening with the "mortgage deal" announced last week.  Already states are starting to dip in and take the money for their own use according the Huffington Post Article.

Investors are now watching to see how the banks react to the news they are being fleeced by the states and the homeowners aren't going to get as much as the banks and investors expected.

The word on the street though is that home loans are happening again.  Banks are still holding tight on continuing foreclosures and letting any real short sale deals shake loose.  Now that the banks are getting fleeced by the government for playing the game, they are looking very closely at everyone's ability to pay their loans.

Big companies can hire big law firms to move assets and spend cash to appear even more bankrupt.   Homeowners only have credit cards and auto loans to build up their proof that they can't afford their homes.  For many they are going to find out they are stuck.  A few will get lucky and renegotiate their loans.

With all of this going on, you wouldn't know the housing market wasn't hopping driving around Southern California.  Open house signs where everywhere with the occasional driveway hosting a moving truck.  Agents were working like it was 2005, and people were in the homes.

It is too early for me to put in writing that the home market has bottomed, but we are defiantly close and people are feeling a lot better about looking for and locking in their dream homes.

If you have the ability to get a loan, this might be a great time to get the house that you want at a pretty reasonable price.  My advice, don't stretch to thin yet, but start learning your market.  The time is coming soon when you will be looking at a deal that could be a great long term money maker.

Right now is a great time for a buy and hold or buy and rent strategy.  If you have the time and liquid cash, getting a foreclosure that needs some work can be a flip opportunity.  Step lightly here though since their are still thousands of home owners that haven't made a payment in years.  For now, the banks still hold the wild card.

Bike To Beach Houses

After house hunting for nearly two years, my wife and I found a house that we liked.  While most people would have probably never wanted to look at another house again, my wife did just the opposite.  She got her license and now works at Coldwell Banker - Beachside in Huntington Beach.

Everyone said this is a bad time to get into real estate, and even her parents think she is crazy.  On the other hand, I think this is a great time to get into real estate if you understand the business and are willing to do the extra service.

Think about all the reasons that you shouldn't go into real estate.
1. Loans are harder to get and loan limits are smaller
   This means more people need real professional help to navigate the loan and home buying process.
2. Foreclosures and Short Sales are everywhere.
   This means that more banks and homeowners need help selling property, and a weekend real estate agent won't do.
3. The Market is terrible.
   The market is terrible because everyone got lazy, banks, agents, sellers and buyers.  It was simply put up a sign, fill out an application and move.  People still need a place to live and a really good agent will always do well.

For all the reasons there are to stay out of real estate, there are equally strong reasons to go into real estate.  The only question is "Are you willing to do the work?".  Kelly is.  She has asked me to join her, so I am in the process of getting my license as well.

One of the things we learned during our two year house hunt, is that not many agents know how to help people understand what they are looking for.  We knew exactly what we where looking for and still got confused by agents on a regular basis.

Just like success at anything else, buying a home today requires a set of goals.  One of our goals was simply the ability to ride our bikes to the beach since we knew we couldn't (yet) afford a waterfront home. There are about 30 other aspects of living in a home that you should consider, and we created a checklist and a point system to make sure we didn't buy the wrong house.  Kelly has that system ready for you, and Kelly is now the "Bike to Beach" expert in Southern Los Angeles and Orange Counties.

If you need a new house and are looking west of the 405  in Long Beach or the Orange County Coast, give her a call and get the right house.

Starting Real Estate License School

For as long as I can remember I have been interested in Real Estate. It fascinated me that a house could double in value in just 5 years, or that an empty piece of dirt could be turned into a multi-million dollar location with the right building.

In the early 90's I sat down and mapped out a plan to own 15 rental homes and be retired.  Youth and my wanderlust got the better of me and I still haven't hit 15 rentals.

Fortunately, I decided to sell all of my investment properties in 2002 through 2004 so I wasn't hit by the bubble bursting, and lived pretty nicely for the next few years.  Still a little young to understand how to retire, I spent all the money, and started over about a year ago.

Back then I bought every TV infomercial "Get Rich  In Real Estate" program I could find.  The common thread to all of the programs was simple.  You had to work.  That work was hours and hours of digging for deals.  I chose a different method which worked very well.  I bought a house, lived in it while renting a room out.  After I had enough money for another house I would rent out the house I was living in and move to another.  

When I got married, my wife had a house and that became a rental.  Our program was much slower but worked very nicely until we decided to sell everything and move out of state.  That is a story for another day.

Nearly 20 years later, my life has come full circle. We are back on the west coast, living a split life in Southern California and the Reno-Tahoe area of Nevada.  Last week my wife finished her California Real Estate License by passing her state exam.  She is now an agent in Huntington Beach California.

Her interest in real estate started  to peak while shopping for the house we live in now.  Agent after agent would tell us "Deals like that don't exist here" or "You don't know this market." After a year of acting like investors instead of grabbing the first home we liked, we ended up in the second home I ever saw after being told, "That house won't happen, what else do you want to see?" more than once by the agent we were trying to work with.

As part of my SEO and Marketing work, My brother Roy and I met Dean Graziosi, the TV Real Estate Guru at a marketing conference.  I came home with his books and a great conversation under my belt.  Yes, Dean is a real person and walks the walk.  Telling my wife about my conversation with Dean pushed my wife over the edge.

Scott Bourquin - Dean Graziosi - Roy Bourquin

Instead of listening to the agent and following his recommendations, we set out on our own, and followed the escrow of every house we liked.  We knew that 50% of short sales don't close, and ours was no exception.  Almost a year to the day, the house fell out of escrow and I scooped up a pretty good deal, right where I wanted to be.

My wife is hooked, and we are back in Real Estate, at least as owners together, and now she as an agent.  One of the things Kelly learned in her Real Estate License course was that I really couldn't legally be of any help to her without a real estate license.  She convinced me to get my license as well.

Instead of selecting the online school she chose, Allied, I picked another one.  Now that I have finished the first class, Allied was a much better program and a better deal.  Fortunately I don't need to take the electives since they were included in my business degree from San Jose State University, so I will have fewer classes to complete with the school I chose.  My advice if you want a license, don't pick the lowest price and read the fine print.

If you are pursuing real estate as a career or as an investor, keep in touch.  I'll let you know how it goes for me right here.

What Kind Of Real Estate Agent Do You Want?

If you are buying or selling a home there are basically two kinds of agents, a "listing" agent and a "selling" agent. These might sound like the same thing but there are some big differences that you should know about.  More importantly if you are in the market for a home, you should know how to interview an agent.

Real Estate Agents come from all walks of life.  Kelly, my wife, was a teacher for 18 years and had been working in retail part time for the past eight years.  She also has an MBA and 15 years of experience as a real estate investor.  So with a resume like that you might wonder why she got her license to become a real estate agent. 

The answer is simple.  After helping people for years buy and sell home and watch agents make all the money, she decided to get paid for her efforts.  Besides, she likes home shopping and is pretty good at it.

The Right Agent can help find the Right House

A listing agent is the person that you sign a contract with to "list" your home.  They put the sign out front, do a lot of paperwork for you and get your house listed on the MLS so people shopping for homes know it is available.  Many "listing" agents do advertising above and beyond just the sign and the MLS.  

There is your first question to ask if you are selling a home: "What advertising will you do for my home?"

The "selling" agent is the person who actually brings in the buyer for your home.  Many people call the selling agent a "buyers" agent.  I did until I started taking classes to get my own real estate license.  

The MLS is not the only source of buyers.  Larger national companies have relocation contracts where businesses send buyers who are in a time limited position directly to them.  Local companies don't have that advantage.

In California, an agent has a responsibility to their client.  With the booming market up until 2006 many agents have forgotten this aspect of their job.  When an agent is the "listing" agent and also the "selling" agent that is called "dual agency".  This is a tough place to be, since the agent is supposed to put both the seller and the buyers interests above their own.  

California doesn't allow agents to act as an intermediary between the buyer and seller.  If they have dual agency they "represent" both.  In an open market, if you don't like the buyers offer that the listing agent brings you, you are welcome to wait for another offer, including one from a "selling" agent.  

The second question for your agent is: "Do you primarily serve sellers or buyers, and what does your office specialize in?"

This leads directly to the third question: "How often is one of your listings sold by someone in your office?" and I don't mean another office with the same name.  You want to know if their office is really finding buyers or just planting signs to get a check.

Another question I would want to know is "How many homes have you purchased or sold for yourself"  There is no faster learning curve than to buy a home, rent it and later sell it.  The best agents are also investors.

Today many of the "best" agents are part of a "group".  If you sign with an agent, you should know if they will show up or an "assistant".   Many people find out later that they never again see they person whose name is on the sign in front of their home.

Finally if you are selling your home do some homework.  There are some "legal" yet misleading tricks agents use to get their name out there like putting up open house signs that go no where, and putting a sign in the ground after a sale to give the impression the listing agent lost the sale.

Anybody can list a house, promise a higher price or offer a lower commission.  What you want is an agent that is genuinely working in your best interests.  You want an agent that knows how to get a home ready to sell, how to sell it and has an office with buyers waiting.  Even in a buyers market like we have right now homes are selling.