Arcadia REALTOR Magazine - March/April 2018

REALTOR®

OFFICIAL PUBLICATION OF THE ARCADIA ASSOCIATION OF REALTORS®

PROUDLY SERVING THE REALTORS® OF ARCADIA, BRADBURY, DUARTE, MONROVIA & SIERRA MADRE

By the Numbers: AAR Members Recycled 24,860 lbs of Paper!

See page 6

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ARCADIA REALTOR® · JANUARY/FEBRUARY 2015

MARCH/APRIL 2018 · ARCADIA REALTOR®

Cooper’s Comments

REALTOR® 2018 ASSOCIATION OFFICERS Margaret Garemore 2018 PRESIDENT Kelvin Chang PRESIDENT-ELECT Frank Spencer TREASURER Sylvia Ramos IMMEDIATE PAST PRESIDENT BOARD OF DIRECTORS Julie Bencosme Cecil Griffin James Maceo Joe Pacilio Yvonne Rosas-Petty May Rahmanian Mike Vachani

C.A.R. DIRECTORS Ryan Asao Andy Bencosme Julie Bencosme Roy Blume Kelvin Chang Margaret Garemore Joseph Pacilio Sylvia Ramos Matilde Gonzales Frank Spencer Kelvin Wong

ASSOCIATION STAFF

Robin Allen Ext. 307 Director of Finance / Office Manager Robin@TheAAR.com Michael Beltran Ext. 302 IT Director / Webmaster Michael@TheAAR.com Brenda Faltes Ext. 304 Director of Membership & Professional Standards Brenda@TheAAR.com Amy Larsen Ext. 307 Director of Finance / Office Manager Amy@TheAAR.com Stephanie Maertens Ext. 303 Director of Education & Commercial Real Estate Stephanie@TheAAR.com Natasha Poon Ext. 301 Membership Services Manager Natasha@TheAAR.com Laura Thai Ext. 304 Director of Broker Compliance & Member Outreach Laura@TheAAR.com Andrew Cooper Ext. 308 Chief Executive Officer Andrew@TheAAR.com

ARCADIA ASSOCIATION OF REALTORS® 601 South First Avenue Arcadia, California 91006 626.446.2115 PHONE · 626.446.4072 FAX www.TheAAR.com 2

Who Is In Your Sandbox??

While at the park with my son, I noticed a little girl playing in the sandbox. When either her mom or dad went over to play with her, she welcomed them with a big smile and arms outreached. I soon noticed that another child playing nearby wasn’t being particularly nice to those around him. When that boy went over to try and play with the little girl, she was very reluctant to let him play with her. This little story correlates to the way so many wildly successful people conduct their business practices. If they cannot trust the people they are inviting into their sandbox to play, or if they are negative and pessimistic, they simply won’t spend even a minute with them.

So who do you allow in to your sandbox? Are you surrounding yourself with people of integrity, character and high-ethical standards? Are you associating with highly infectious positive people? As REALTORS® we’re obligated to follow the REALTOR® Code of Ethics in our business dealings but what if we do the same with the people in our personal lives as well?

Some people may argue that in business you have to deal with people that you don’t enjoy being around or who are negative because of the contacts or power they may have. I disagree. We have a choice with whom we associate and there are hundreds of thousands of examples of people who become successful at their own terms.

After taking a long hard look at who is presently in your sandbox, try asking yourself these questions: Are they the kind of people you really want to be associated with? Who would you most like to join you in your sandbox and who would you most like to get out of it? Lastly, what (or who) is keeping you from making those changes?

I can share a personal example of how hard it is to extricate yourself from the wrong people. A long while ago I ended a longtime friendship with someone I knew since kindergarten. My loyalty was the only reason I remained friends with him for as long as I did. But after repeatedly asking myself the same questions as above, after about the 100th time of gutwrenching internalizing, I finally accepted the fact that at the end of the day he wasn’t adding any value to my life and as a result I was allowing him to take precious value away. There are so many really good, honest, positive and supportive people that I choose to play with and who are also happy to join me in my sandbox. If you try this, after a while, you too will find that the only people who appear in your life are the kind of people you want to be around.

The more you intentionally choose who you spend your time with, the more enjoyable your life will become. I’m proof positive with that one.

Legendary sportscaster Charlie Jones summarized it best, “In five years you will be the same person you are today with the exception of the books you read and the people you hang out with.”

I hope the next sandcastle you build in your sandbox is the biggest and best one ever. Thanks for being a valued member,

ARCADIA REALTOR® · MARCH/APRIL 2018

Andrew Cooper Chief Executive Officer

MARCH/APRIL 2018 | VOLUME 22 | NUMBER 2

Contents 6

Regular Features 2

4

5

6

8

14

16

On the Cover 6

Annual Paper Shredding Day! A FREE Community Event held on Friday, April 20 at the Arcadia Association Building parking lot.

Additional Content

Cooper’s Comments

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Market Matters

11 AAR New REALTOR® Members The AAR welcomes its newest REALTOR® Members of 2018.

Attorney Comments

12 Committee Highlights Offering advanced educational opportunites while promoting programs and services to commercial real estate.

Andrew Cooper, Chief Executive Officer

Market Statistics for the San Gabriel Valley

Dave Freeman, AAR Legal Counsel

Recent FHA Changes to the HECM Program Homeowners use this loan to pay off thier existing mortgage(s), eliminate monthly payments.

Through the Lens

13 Buying a Home with a Purchase Reverse Mortgage This can make it easier for your clients to downsize to a house that better suits their needs...

Affiliate Corner

14 Home Equity Building Strategies More effective and efficient way to do this is aro refinance into a lower interest rate and shorter term loan.

A Look at What’s Happening Around the AAR

“Help Your Clients Protect Their Assets” Sam Wright, State Farm Insurance

16 Earthquakes: Is L.A. Next?

Give agents and buyers the vital data needed about retro-fitting buildings for earthquake safety.

MARCH/APRIL 2018 · ARCADIA REALTOR®

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Market Matters Market Statistics for the San Gabriel Valley - January 2018

City

Arcadia Arcadia Duarte El Monte El Monte Glendora Glendora Monrovia San Gabriel San Gabriel San Marino Sierra Madre Temple City

Zip Code

91006 91007 91010 91731 91732 91740 91741 91016 91775 91776 91108 91024 91780

Single Family Homes

Condominiums

Sales of Price Price % Single Family Median SFR Chg from Homes ($1,000) Jan. 2017

Price Median Condo ($1,000)

24 9 8 3 5 13 19 12 13 10 7 6 17

$1,100 $1,676 $448 $460 $489 $539 $620 $653 $870 $785 $2,350 $695 $750

Sales Count Condos

-50.3% -6.9% -7.3% 7.0% 17.8% 13.5% -0.8% -6.8% 4.9% 24.1% -7.5% -29.8% 2.0%

1 8 4 2 6 0 3 6 1 4 0 1 6

SFR Only

Price & Median Chg from Home Price/ Jan. 2017 Sq. Ft.

$599 $646 $520 $357 $443 n/a $560 $559 $832 $345 n/a $588 $749

-34.6% 1.9% 3.0% -17.1% -6.7% n/a 24.9% 8.0% 28.0% -54.5% n/a -16.1% -3.2%

$488 $625 $367 $449 $398 $402 $403 $475 $531 $519 $796 $598 $505

Market Statistics for the San Gabriel Valley - February 2018 Single Family Homes

City

Arcadia Arcadia Duarte El Monte El Monte Glendora Glendora Monrovia San Gabriel San Gabriel San Marino Sierra Madre Temple City 4

Zip Code

91006 91007 91010 91731 91732 91740 91741 91016 91775 91776 91108 91024 91780

Condominiums

Sales of Price Price % Single Family Median SFR Chg from Homes ($1,000) Feb. 2017

18 6 13 5 5 17 14 17 10 7 9 7 21

$1,214 $1,946 $418 $536 $603 $535 $650 $703 $845 $673 $2,340 $825 $768

ARCADIA REALTOR® · MARCH/APRIL JANUARY/FEBRUARY 2018 2016

-5.7% 57.2% 10.0% 15.3% 38.6% 3.9% -10.3% 10.6% -10.2% 42.1% 23.2% -8.3% 0.7%

Price Median Condo ($1,000)

Sales Count Condos

4 7 2 1 3 5 1 5 3 7 0 3 4

$678 $655 $360 $600 $424 $371 $500 $465 $748 $545 n/a $715 $647

SFR Only

Price & Median Chg from Home Price/ Feb. 2017 Sq. Ft.

-7.4% 0.5% 12.6% n/a -14.9% 1.6% -31.0% -5.6% n/a 4.9% n/a n/a -12.8%

$549 $535 $404 $484 $464 $466 $420 $534 $567 $476 $834 $575 $511

Source: CoreLogic.com

Attorney Comments

By Dave Freeman, Association Counsel

Homeowners Associations (HOA) Homeowners Associations (HOAs) must comply with the law regarding record keeping, budgets, reserves and disclosures. This can be burdensome and confusing for non-professional individuals and small management companies. Many small HOAs cannot afford the management companies, and yet must still comply with the law.

When you sell a property that has an HOA or represent a buyer in such a situation, you must be sure to supply all mandated documents to the buyer at an early stage in the transaction. Strongly encourage your buyer to review the documents with their real estate attorney and CPA, to be sure the buyer can live within the rules and regulations (renting, pets, parking, children, pool rules, etc.) The CPA can determine if the reserve requirements are being met (What happens when the buildings require new roofs, and the HOA doesn’t have the money?) The buyer will receive a large assessment that must be paid, or become a lien on their property.

Bedbugs, Cockroaches, Rats and Other Undesirables Whether these critters invade your home, that of a tenant of yours, or your client’s tenant’s home or unit, you want to act as quickly as possible to eradicate the pests. The situation will not get better, but will deteriorate, sometimes quickly.

Bedbugs, in particular, have been invading some of the nicer hotels, homes and apartments. They are normally brought in, via clothing, baggage or other items, after travelling. They are small, and very difficult to eliminate. They multiply quickly.

If you or your client is the landlord, when an infestation occurs, you must act quickly to remedy the situation. It is the landlord’s responsibility, even if the tenant brought the bedbugs in or lured the roaches in by filth and food particles left out. Consultation with a good exterminator who specializes in the particular pests that are invading will let you know the best action to take, and the action necessary to prevent return events.

Lawsuit Used for Negotiation Technique We are all familiar with the method of “Bargain, bargain, bargain, until the deal is signed.” Most are also aware that some use, “Once the deal is signed, the serious bargaining begins.” But there is one more, similar irritant: “Once the escrow closes, sue!”

Recently an old house with a very large lot was sold, and was demolished immediately after close of escrow. The buyer then sued the seller for failure to disclose various items. The matter was quickly thrown out of court because: A. The Seller disclosed everything in writing, and kept copies with the Buyer’s signature on them.

B. The Seller kept photos and videos of the house, inside and out.

C. The Seller kept records of the permits, improvements and repairs he had done.

D. The Seller, before close of escrow had witnesses view the property, so they would be able to testify.

E. The Seller, when he saw the property was demolished, secured photos and witnesses of the fact the property was immediately demolished, for use in court, which might occur at a much later date.

MARCH/APRIL 2018 · ARCADIA REALTOR®

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THROUGH THE LENS A Look at What’s Happening Around the AAR

npermitted U le d n a H How to on Issues Constructi

Events 4 Charity Bingo Night

Annual Papershred Day

Dan Chapman, Commercial Mixer Sponsor

AAR Director Jim Maceo (above) & Affiliate Mark Wu (below)

er Egg Hunt Monrovia East

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ARCADIA REALTOR® · MARCH/APRIL 2018

We shredded a record 24,860 lbs of paper!

AAR 2018 President Margaret Garemore

Recent FHA Changes To The HECM Program May Spur Seniors To Sell Their Home The Home Equity Conversion Mortgage (HECM), otherwise known as the FHA insured Reverse Mortgage, was first introduced in 1987 to help homeowners 62 and older access the equity in their home. Homeowners use this loan to pay off their existing mortgage(s), eliminate their monthly mortgage payment, and/or receive cash for their retirement. Since the loan does not require monthly mortgage payments, the loan balance, interest, and mortgage insurance are paid back when the home is sold. Now, the FHA insured Reverse Mortgage was not the first of its kind- the private sector had been providing reverse mortgages since the 60s. FHA implemented its own version of the Reverse Mortgage because it wanted to provide stability and standards that would benefit both lenders and consumers.

Since the inception of the FHA insured Reverse Mortgage in the late 1980s, there have been many changes made to the guidelines that lenders must follow when underwriting the loan. While changes are made to help the loan perform better, sometimes it comes at a cost. With the most recent changes in the past five years, that cost was that it made it much more difficult for older homeowners to obtain a Reverse Mortgage. Some of the most recent and significant changes affected the Principle Limit Factor Tables and the added a Financial Assessment. The Principle Limit Factor Tables are used to determine what loan amount will be given to a borrower and the Financial Assessment added more underwriting conditions.

1. Principle Limit Factor: Over the past 5 years we have seen 3 mortgagee letters that made changes to the Principle Limit Factors. The net effects of these letters have resulted in lower loan amounts for borrowers. For example, based on a 5.06% interest rate in September 2013, a 65 year old borrower could have been approved for a loan amount of $382,200 on a home valued at $600,000. Now, fast forward to November 2017, the same borrower would only be approved for a loan amount of $258,000, which is $124,200 less. Now, let’s say the homeowner owes more than $260,000 on their current mortgage. In this scenario, the Reverse Mortgage proceeds will not be enough to pay off their current balance, and the borrower would need to look for other options. For many, that option will be to list their home for sale.

In the case where the client either has a small existing mortgage balance or is free and clear, they might decide that getting a $258,000 Reverse Mortgage against a $600,000 still does not provide enough benefit and will continue to look for alternatives, such as selling their home. This large reduction in available Reverse Mortgage proceeds from 2013 to 2017 is causing homeowners to consider selling their home as a more viable option.

2. Financial Assessment: One of the requirements that a FHA insured Reverse Mortgage borrower must follow is to continue paying their property taxes and homeowners insurance. Starting on April 27th, 2015, FHA wanted to make sure that borrowers had the financial capacity

and willingness to pay said housing expenses. To implement this, they required applicants to go through a Financial Assessment. This assessment looks at their income and their history of paying their bills to determine if they meet the new guidelines. With Financial Assessment in place, we see that a client who would have qualified prior April 27th, 2015 might have a tougher time qualifying after April 27th, 2015.

The cumulative effects of just these two changes are forcing many homeowners 62 and older to sell their homes instead using a reverse mortgage. The latest estimates show that homeowners 62 and older hold over 6 trillion in equity and now more of this equity will be showing up in the form of real estate listings. With this in mind, real estate agents can help these homeowners by not only listing their homes but helping them find replacement housing.

Understanding the needs of older homeowners can help a real estate agent become a valuable resource to them. Here at Reverse Mortgage Educators, we have been helping real estate agents learn what those needs might be. By becoming informed, real estate agents can put themselves in a good position to be trusted by homeowners 62 and older that are looking to sell or purchase homes. We offer complimentary classes that you can attend at the Arcadia Association of REALTORS® (AAR).

To learn more, or to sign up for a class:

1-888-242-5959 Real Estate Broker - CA Bureau of Real Estate LIC #01932729 - NMLS #1064287

MARCH/APRIL 2018 · ARCADIA REALTOR®

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AFFILIATE Corner “Help Your Clients Protect Their Assets”

By Sam Wright, State Farm Insurance It takes hard work and often, a number of years to reach that point where you feel confident about your financial future. There’s a way to keep that feeling, even if the unexpected like a large liability claim occurs. Protecting the life you’ve worked so hard to build has a simple and reasonable solution called a Personal Liability Umbrella Policy (PLUP). This policy provides excess liability protection beginning at limits in increments of $1 Million. The PLUP, just as the name implies, provides protection above the underlying limits provided by your Homeowners, Autos, Boatowners and Rental Dwellings. Here’s how it works:

A. Homeowners Policy - Underlying limits required are $100,000 liability B. Autos - Underlying Limits required generally are $250k per person/$500k per accident bodily injury liability and $100k for property damage liability… ie.. $250/$500/$100 C. Boatowners - Underlying limits required are $100,000 liability D. Rental Dwellings - Underlying limits required are $300,000 liability

The PLUP is activated once the underlying limits are exhausted for each of the above policy types. Surprisingly, it doesn’t take much to encounter a situation where PLUP protection could be needed. Just a couple of examples of possible claim situations are: (1) Homeowners - A visiting family’s small child wanders thru an open gate into the pool area at your home and sustains serious injuries resulting in very large medical bills (2) Boat - While operating your boat you hit a water skier you simply didn’t see causing damages well above the underlying limits (3) Auto - While on the freeway, you changed lanes cutting off a car you didn’t see causing a chain reaction multicar accident. Eyewitnesses confirm you are the negligent party resulting in your liability for bodily injury and property damage for all autos and occupants involved.

The examples above basically show just how easy it is to get beyond the underlying limits required by a PLUP. Properties with pools are subject to a greater degree of care because they are considered an “attractive nuisance” and are subject to the rule of law known as The Attractive Nuisance Doctrine. An “attractive nuisance” is an item that in particular would attract children. A pool is the classic example of such an item. Boat owners are held to a higher degree of operation on the waterways; their liability responsibilities follow the same pattern. Automobiles are the single greatest exposure that any of us have to a large liability claim. Serious automobile accidents and/or multicar accidents pose the greatest threat and therefore promote the need for a PLUP for most of us. It’s not hard to see how the underlying limits on an auto policy can be easily exhausted thus providing a need for a PLUP. Protecting your client’s assets and helping them to feel confident about their financial future isn’t complicated. Your clients respect the opinions you offer and as such you’re in a great position to provide direction. The simple solution is the addition of the Personal Liability Umbrella Policy to help them handle the unexpected and “protect that life they’ve worked so hard to build”.

Should you need more information about Personal Umbrellas, please feel free to contact me directly at my office via email. My email address is sam.wright.b33g@statefarm.com.

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ARCADIA REALTOR® · MARCH/APRIL 2018

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ARCADIA REALTOR® · JANUARY/FEBRUARY 2015

365 NEW DAYS, 365 NEW OPPORTUNITIES No matter what kind of home loan your clients are in the market for, PrimeLending is your go-to lender. With our wide variety of loan options, we can help your clients with the right mortgage that’s tailored to their needs.

We also value our business partners, and that’s why we offer a streamlined home loan process, joint marketing support, a mobile app that provides you with real-time loan status updates, and more.

MAKE 2018 YOUR YEAR. Call us on how we can help you close more sales.

Diane Balsamo Gonzales Sr. Loan Officer NMLS: 482962

626-755-5764 dbalsamo@primelending.com diane4homeloans.com

Nikki Felix Sr. Loan Officer NMLS: 482963

626-233-1144 nikki.felix@primelending.com nikki4homeloans.com

420 S. Myrtle Avenue, Suite B Monrovia, CA 91016

Not intended for consumer distribution.

All loans subject to credit approval. Rates and fees subject to change. Mortgage financing provided by PrimeLending, a PlainsCapital Company. Equal Housing Lender. © 2018 PrimeLending, a PlainsCapital Company. PrimeLending, a PlainsCapital Company (NMLS: 13649) is a wholly owned subsidiary of a state-chartered bank and is licensed by: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act- lender lic no. 4130996.

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12/12/17 8:32 PM

MEMBER BENEFIT!

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CALL AAR FOR DETAILS! 626.446.2115 10

ARCADIA REALTOR® · JANUARY/FEBRUARY 2015

MARK WU 626-281-6854 CA Insurance Agent #: 0720074

Welcome, New Members!

NEW REALTORS® APRIL 2018 Nuvia Alvarez, Century 21 West Coast Brokers; Maria T. Bitonti, Dilbeck Real Estate; Sarah Chan, Dilbeck Real Estate; Lisa Huichu Chang, Conquest Realty; Angeline Chen, Angeline Chen, Broker; Jill Chen, Coldwell Banker Dynasty T.C.; Weili Chen, Coldwell Banker George Realty; Chee Seng Chiew, IRN Realty; Dennis G. Coe, Coldwell Banker George Realty; Antoinette Contreras, Keller Williams Realty; Justin De La Nuez, Keller Williams Los Feliz; Brianna L. Galvan, Moon Realty; Lin Guo, Supreme Investment Corp.; Donna J. Hernandez, United Real Estate L.A.; Hanh Hoang, RE/MAX 6000 Realty;

Carolean S. Hotoyan, Moon Realty; Xinqiang Hu, IRN Realty; Ruby Kornijczuk, HomeSmart Realty; Raul T. Kwon, Keller Williams Realty; Victor Lai, Re/Max Titanium; Chen Li, Supreme Investment Corp.; Yuchang Li, Supreme Investment Corp.; Jeffrey S. Lim, Moon Realty; Charles Lin, Coldwell Banker Dynasty T.C.; Yingjie Liu, HomeSmart Realty; John Pham, Century 21 Dynasty; Zhenhong Piao, Highland Real Estate; Lizeth Sanchez-Delgado, Century 21 Village Realty; Kevin H. Shih, Keller Williams Executive; Victor Shum, Century 21 Ludecke Inc.;

Sarah R. Stark, Berkshire Hathaway Home Service; Hojung Sung, Keller Williams Realty; Felicia M. Tausig, Moon Realty; Joseph Tran, Coldwell Banker Dynasty T.C.; Heros Vartanian, Coldwell Banker Arcadia; Jennifer K. Wang, VasTree Real Estate; Rui Wang, Coldwell Banker George Realty; Vivian P. Wang, Long Dragon Realty Group, Inc.; Maan Westberg, Moon Realty; Meilin M. Wong, REGA Managment; Camille Wyatt, Century 21 Adams & Barnes; Xiaobo Emma Xu, Supreme Investment Corp.; Bill F. Xun, Coldwell Banker Dynasty Arcadia; Fan Yang, ADAK Pacific Inc; Jingzhe Zhang, Keller Williams Realty;

Two Supplemental Tax Bills Supplemental taxes represent the difference between the new assessed value and the prior assessed value on the tax roll. If change of ownership or new construction takes place between January 1 and May 31, TWO supplemental tax bills are issued. The first supplemental represents the difference in value which affects the current fiscal tax bill that was issued in October, and whose second half covers January 1 through June 30. The amount will be prorated for the number of months remaining for that fiscal year.

The second supplemental reflects the increase for the new tax bill that will be issued in October, which is for the next fiscal year. The tax bill issued in October will reflect the prior values, which is the reason for the second supplemental. This is very confusing for homeowners, so please alert your Buyers so they are not surprised when they receive these bills. For further information, please contact your local assessor’s office or visit www.assessor. lacounty.gov.

Article Submitted by Diana “Speedy” Rafeedie, North American Title Company MARCH/APRIL 2018 · ARCADIA REALTOR®

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COMMITTEE HIGHLIGHT Commercial/Investment Committee

By David Chen, Committee Chairman The AAR Commercial/Investment Committee has worked tremendously hard in the past few years to bring relevant programs in education to open up the commercial real estate sector to our REALTOR® base. This year has been no different. Recent changes in state and national policies have made it critical for commercial real estate practitioners to keep abreast of these issues to start or grow their businesses.

Our future educational events related to the legalization of Cannabis in California and how it will affect commercial real estate, as well as our event on Airbnb and the shared economy are examples of how we continually bring relevant programs to educate our members. Events are created not only to educate the new agent, but also provide valuable knowledge for the seasoned agent.

Each year our Committee also plans a “Commercial Day” and this year we will be taking a new approach by hosting a Commercial Real Estate Expo. We anticipate many local commercial real estate companies, affiliates, consultants and related professionals to join as exhibitors. This event will be free to the public and hopefully bring more tangible value to our members and the local community. Keep an eye out for more information on this exciting event coming in October.

As our industry continues to evolve, we welcome all new agents and experienced agents to join our Committee to network, learn and contribute to AAR’s as well as their own success. The Commercial/Investment Committee meets the first Thursday of every month at 9:30am at the AAR.

COMMITTEE HIGHLIGHT Education Committee

By Frank Spencer, Committee Chairman As a group, the Education Committee believes that it is our obligation to provide a high quality, high value, educational curriculum to our members. We are determined to see that our membership is the best-educated group of professionals in our industry.

To achieve this lofty goal, we carefully review and select only the most relevant and timely materials and information to pass along to our membership. We are excited at the progress that our committee has made. And, proud to support the goals of the Arcadia Association of REALTORS®.

It is our mission to be the pre-eminent training organization in the greater San Gabriel Valley region. If you are interested in joining us, we meet at the AAR on the second Thursday of every month at 10am.

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ARCADIA REALTOR® · MARCH/APRIL 2018

Buying a Home With a Purchase Reverse Mortgage

By Maureen McCune, Mortgage Loan Consultant, The Mortgage Group

What is a Purchase Reverse Mortgage?

Did you know that a reverse mortgage can be used to buy a home? This can make it easier for your clients to downsize to a house that better suits their needs, improve their financial situation by not draining their assets, or to move closer to their family. With a purchase reverse mortgage, your client will never have a mortgage payment as long as they live in the home. However, the homeowner must maintain the property, pay property taxes, hazard insurance, and any homeowner’s association fees. *Fyi, if the borrower would like to make a monthly payment, they can repay as much or as little as they like OR make NO monthly principal and interest payments. It’s their choice.

Who qualifies for a Purchase Reverse Mortgage?

Any US citizen or permanent resident , age 62 or older can purchase any single family home, manufactured home, FHA approved condo, townhomes or PUDs, and multi-family home up to 4 units. To qualify for the loan, either spouse will need to be at least 62 years old, have a cash down payment of approximately 50%, which can come from the sale of existing property, and/or retirement account, or other verified funds.

What cost and fees are required?

Loan closing costs for a purchase reverse mortgage are the same as what you would pay for a traditional “forward” mortgages like origination fee, appraisal, escrow and title fees, hazard insurance, inspections recording fees. Most closing costs can be financed as part of the mortgage.

What are some of the advantages?

You will never owe more than the value of the home, even if the value of the home declines. If the heirs decide to sell the home, all they pay off is the full loan balance. You will continue to own your house and never be forced to leave as long as the home is maintained and the property taxes and insurance are paid.

What are some of the disadvantages?

You may use up a part of the home equity over time and have less to leave as inheritance to the family. If the homeowner has not lived in the property for more than a year, the loan balance will need to be repaid.

Why a reverse mortgage can be good

This is not just another mortgage product. It’s a financial, cash-flow tool for retirees. It gives retirees more purchasing power if they don’t want to drain all their assets. A reverse mortgage for purchase allows older Americans to buy a house that better suits their needs without draining all their retirement assets into it which would be the case in an all-cash transaction. It also lets them avoid dipping into their monthly fixed income, which would occur if they took out a traditional mortgage.

MARCH/APRIL 2018 · ARCADIA REALTOR®

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Home Equity Building Strategies

By Martin Mesa, President & Broker, Rate One Financial, Inc. Often, managing your home mortgage is not just about lowering your payment. It can be more about paying off your home faster. There are different ways to do that. If you can afford it, one obvious way to do that is to send more money than your normal payment to the lender. Any amount that exceeds your normal payment gets directly applied toward a principal reduction.

Doing it that way is an option for some if they can afford it, but even if they can afford it, it sometimes isn’t the smartest way to do it. Depending on how high your current interest rate is and how many years you have left on the term of your loan, this can be an expensive way to work on getting your loan paid off faster.

Oftentimes, a more effective and efficient way to do this is to refinance into a lower interest rate and shorter term loan.

For example, if you have a 30 year fixed and let’s say, you have 25 years left on your mortgage, you might be able to refinance into a 15 year fixed and with such low rates today, your new payment might not change much compared to what you’re paying now (it may even go down!) and you’ll be on track to pay your house off 10 years sooner.

Sometimes refinancing into a shorter term loan is not practical. Even though the interest rate would go down by a good amount, the new payment is still higher than what you’re paying now and you couldn’t afford the higher payment. In such a case, it often makes more sense to refinance into a new 30 year fixed if you can get an interest rate reduction which will lower your mortgage payment. If you do it this way but continue to send the same amount to the new bank for the new loan that you’re already used to sending every month with your current mortgage, you will pay your home off faster than if you don’t refinance and stay with the current loan.

If you want to compare the numbers and see if this strategy might benefit you, contact your preferred mortgage professional and they can guide you through this, oftentimes, eye opening exercise.

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ARCADIA REALTOR® · MARCH/APRIL 2018

15YEARS

RETIRING AFTER

The AAR Global Real Estate Committee Presents:

THE SHIP HAS LANDED! Friday, June 8 9:30am - 12:00pm

Arcadia Assoc. of REALTORS® 601 S. First Ave. Arcadia, CA 91006

Cost:

AAR Members: $20 & Non-Members: $30

Missed out on the cruise? No worries because we are bringing the cruise to you, on land, at the Arcadia Association of REALTORS®!

Learn About International Real Estate From

Ginni Field, CIPS, GRI, ABR, CRB, SRES, SFR, HAFA “Lead Generation on a Global Level: How Do I Find Them and How Do They Find Me?”

Michael Brooks “International Tax Issues”

Register online at www.TheAAR.com by clicking the event name under “Upcoming Events”. For questions, call the AAR at (626) 446-2115.

It’s a bittersweet time for the AAR. 15 year Director of Finance, Robin Allen, is retiring after 15 great years with the Arcadia Association of REALTORS®. We will miss her astute financial acumen and at the same time we certainly wish Robin and her husband Michael a well-deserved retirement as they embark on the next exciting chapter of their lives. So Robin, on behalf of the 10’s of thousand members, directors, staff and volunteers during your remarkable 15 year career, we all sincerely thank you for your years of loyal service Happy Retirement!!

www.TheAAR.com ~ 601 S. First Ave. Arcadia, CA 91006 ~ 626-446-2115 ~ Fx. 626-446-4072

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walk together, we are bigger than cancer.

JOIN US

Saturday & Sunday, June 9 - 10 11:00 am - 11:00 am

Santa Anita Park (Race Track/In Field) 285 West Huntington Drive Arcadia, CA 91007 To Join the Arcadia Association of REALTORS® Team or Make a Donation visit www.TheAAR.com & click on the “Relay for Life” Banner. For more Information please call the AAR: 626.446.2115

Celebrate. Remember. Fight Back. ® www.TheAAR.com ~ 601 S. First Ave. Arcadia, CA 91006 ~ 626-446-2115 ~ Fx. 626-446-4072

MARCH/APRIL 2018 · ARCADIA REALTOR®

15

Earthquakes: Is L.A. Next?

By John A. LaRocca, LaRocca Inspections

A veteran property inspector and Post-Earthquake Evaluator of Buildings gives agents and buyers the vital data needed about retro-fitting buildings for earthquake safety The recent earthquake in Mexico City is a clear example of the kind of death, devastation and despair a major seismic event can cause. Hundreds of buildings were damaged, many collapsed, 275 people killed, millions displaced from their homes and left desperately searching for their missing loved ones. Our hearts go out to them and we pray for things to get better for them very soon.

Typical pre-1978 “soft-story” wood frame buildings in Los Angeles

The wood frame variety is most commonly an apartment building over street level of parking or a multi-level commercial building built over shops, restaurants, hotel lobby or other large open use, like a dance studio.

What is non-ductile concrete? Non-flexible reinforced and non-reinforced concrete structures.

Recent earthquake damage in Mexico City

Honestly, most of those deaths could have been avoided had the buildings not collapsed on top of them. It’s hard to think about this kind of tragedy and we shutter to imagine how overwhelmed they must feel in the midst of all that horror. This is exactly why the City of Los Angeles passed a law mandating that all wood frame “soft-story” buildings built prior to 1978 and non-ductile concrete buildings built prior to 1977 must be retrofitted to resist that kind of ground shaking.

Pre-1977 “soft-story” non-ductile concrete structures that require earthquake retrofitting includes schools, hospitals, department stores, offices, theaters and parking structures.

What is a “soft-story” building? It’s a multi-level structure which has a large open, minimally supported lower floor.

Typical pre-1978 “soft-story” non-ductile concrete structures

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ARCADIA REALTOR® · MARCH/APRIL 2018

Retrofitting

The retrofitting of a building is a costly endeavor starting as low as $60,000 but could potentially cost millions depending on the size and construction of the building.

Since this is a mandatory upgrade, the city officials allow the building owners to pass half of the retrofit costs to tenants through rent increases over a 10-year period, with a maximum increase of $38 per month.

When Los Angeles experiences its next significant seismic event the economic impact to the city and its residents is potentially overwhelming. Thousands of buildings could be destroyed and millions of people could be left homeless and without basic services. It’s a simple calculation really, the cost of rebuilding structures and lives in the wake of such a catastrophic event far outweighs the costs to upgrade now, prior to the next major temblor. Weak structures can hurt and kill people, this has been proven time after time. The time to act is sooner not later.

Typical pre-1978 “soft-story” non-ductile concrete structures

When a wood frame building is cited for retrofitting, the clock starts ticking for the owner to comply with the following mandated requirements:

Phase 1:

The owner has 2 years from the date of the order to submit proof of Previous Retrofit, or Plans to Retrofit, or Plans to Demolish.

Phase 2:

The owner has 3.5 years from the date of the order to obtain a permit to Retrofit or Demolish.

Phase 3:

The owner has a total of 7 years from the date of the complete construction (or destruction) and Obtain Certificate of Compliance.

The owner of a non-ductile concrete building or structure has a different time frame:

Phase 1:

3 years to submit completed checklist for review to determine if building is a non-ductile concrete building.

Phase 2:

10 years to submit proof of previous retrofit, or plans to retrofit or plans to demolish building.

Phase 3:

25 years to complete construction or demolition.

Unable to precisely predict the strength of the next major quake, the L.A. City engineers have a difficult time agreeing with the retrofit designs and calculations submitted by the owners and their engineers. It can be a time consuming, cumbersome and expensive process just to get to the point of knowing how much to budget for the upgrades. To help streamline the process, consider hiring a company experienced with this process and capable of taking the project all the way from design to Certificate of Compliance.

That fact that this is such a time consuming and costly process makes opening an escrow tricky for the realtors, sellers and buyers in that it starts with unknowns. How long will it take to know the cost of the retrofitting? How will the cost of the retrofitting affect the deal? How much time do we need for the escrow? These are just a few of the issues that need to be addressed when handling these transactions.

This is the new reality in the real estate industry in the City of Los Angeles. To research if a building is on the list to be cited, contact the Soft-Story Retrofit Unit at (213) 482-SOFT (7638) This ordinance has not yet been adopted by other cities in Los Angeles County. When preparing to buy or sell this type of structure in other cities, it would be wise to check with that city’s planning office for any requirements that may be imminent which could affect the deal.

By John A LaRocca johnalarocca@yahoo.com laroccainspections.com/resources (818) 951-1795 MARCH/APRIL 2018 · ARCADIA REALTOR®

17

Arcadia Association of REALTORS® 601 South First Avenue Arcadia, California 91006

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