July 2010

Q. Tom, lots of people predicted that higher interest rates were inevitable by early summer yet it is apparently not the case. Aren’t interest rates more attractive now than earlier in the year?

The answer is a resounding YES!* And it just goes to show that no one can predict with certainty the ‘moving parts’ of a constantly evolving real estate finance market. I hesitate to try to explain the Federal Reserve’s role in keeping interest rates attractive and available because even I do not understand all the Freddie Mac/Fannie Mae intricacies but the bottom line is that the national housing sector is too important a piece of the economic pie for the Feds to ignore. As others have said (and I agree), broader economic recovery is just too dependent on housing. What we do know now is that fixed, 30 year, 5% money (with a 1 point loan origination fee or less) is available in ‘jumbo conforming’ amounts up to $729,750. On a $500,000 loan, the difference in payment between a 5% and a 6% interest rate is approximately $310 per month! My recommendation …stay in close contact with your preferred mortgage provider or real estate broker to be apprised of the best financing opportunities. Whether you are purchasing or refinancing, keep in mind that your credit rating, work history, financial reserves and home appraisal value will be vigorously reviewed during the process. *(at press time)

Q. I am considering selling my home; how much can ‘staging’ make a difference in the ultimate marketability and value of my property?

Staging can make a significant difference. However, it is rarely, if ever, a substitute for effective market pricing; in other words, staging will not make an overpriced home sell.
Staging is meant to be a complementary process to the other components essential to a successful home sale; those other components being appropriate pricing, desirable location and effective marketing. An effective stager will transform the living spaces of a home by suggesting and implementing cleaning, de-cluttering, painting, flooring, lighting, accessorizing, furnishing and/or landscaping improvements … that’s right – a great stager will ‘touch’ a home inside and outside! Essentially, a stager’s work should enhance a property with the objective to invite potential buyers to make offers. The best stagers understand the incremental return on investment of every enhancement they recommend so that the seller may net the most money possible. Lastly, not every home needs staging before coming to market; rely on your real estate agent for good counsel regarding any vendor’s pre-market assistance.

Q. When a home sells in my neighborhood but hasn’t closed escrow yet, I’ve noticed that some real estate agents hang a ‘Pending Sale’ rider on the sign post while others hang a ‘Sold’ rider. Why is that and what is the rule?

Good question! There is no “rule.” The decision to hang either sign rider is the personal preference of the real estate agent. Some sellers feel that a bold ‘Sold’ rider may discourage back-up offers especially during the contract contingency period; many agents, on the other hand, want to promptly proclaim their marketing success to the rest of the neighborhood. There are other minor factors but my experience is that neither sign impacts the outcome of the transaction or the reputation of the agent. What is important is that the real estate agent explains beforehand to the seller to avoid any surprises.

The annual Kings X Trivia Tournament was held June 28 at WPLJ in Walnut Creek. The competition was fierce. Any one of the six teams could have won. I am happy to say that my team “Outhouse Time Machine,” was the winner. As usual, it took a village to win, so my congratulations go to Tim Reagan, Scott Strain and Bob Canter. It was a grand group.
 
 Since I am in a “Mel” low mood, let’s go to work.
 

1. Who played Mad Max in the movie series of the same name?
2. He was the third Major League player to hit more than 500 homeruns. Who was he?
3. We knew him as the “Velvet Fog.” What was his name?
4. Who was the FBI agent credited with tracking down John Dillinger?
5. Who was the voice of Sy, the Mexican, on the Jack Benny radio show?
6. Who was the Yankee baseball radio announcer who always said “How About That”?

JUNE’S TRIVIA ANSWERS:
1. “Carousel” 2. June Jones 3. June Havoc 4. Beaver Cleaver of “Leave it to Beaver” 5. June Allyson 6. “How About You”

JUNE TRIVIA WINNER:
Roberta Montes of San Leandro

WIN LUNCH ON BEN!
The first person to email or mail, no calls please, the correct answers to all of the above questions will win a $25 gift certificate at The Uptown Cafe in downtown Danville, compliments of Ben Fernandez!
Entries must be received by May 20, 2010. In the event of a tie, the winner will be drawn at random. Please email your answers to info@aliveeastbay.com, or mail to ALIVE East Bay, 199 East Linda Mesa Avenue, Suite 10, Danville, CA 94526. Employees and family members of employees of ALIVE East Bay are not eligible. Restaurant may be changed without notice.

Statistically speaking, marriage is a leap of faith. About half of all first marriages end in divorce, and the rates for second marriages are only a little better. One of the biggest knots to untie when a marriage fails is financial, and that is where a Certified Divorce Financial Analyst like Nick Ventimiglio, CDFA, of San Ramon can help.

“Most clients come to me in a huge state of fear caused by uncertainty,” Ventimiglio said. “For some this uncertainty is coupled with grief and others it’s anger. Regardless, the common thread is fear. 

“Is my spouse hiding assets? Should I try to keep the house?  Will I have enough income after the divorce? Should I take assets in lieu of spousal support? How will I move forward and build a new life after my divorce?  Many times, the weight of this uncertainty is so heavy that without the proper support and professional guidance from an attorney and/or CDFA, the client avoids taking action, simply waiting for the entire ordeal to be handled by the opposing party.”

The ostrich-like approach of sticking one’s head in the sand and perhaps surrendering control to their soon-to-be former spouse is rarely effective. “Many times the attorney’s don’t have the specific training or background to know if the asset split  and other arrangements they are negotiating are actually in the long term financial interest of the client,” Ventimiglio explained.  “That is where a CDFA can be most beneficial – in supporting the attorney’s efforts and analyzing the potential outcomes of different arrangements (based on financial facts instead of emotion) before they are agreed to or suggested to the opposing party.

A CDFA is a financial analyst who specializes in the financial issues surrounding divorce. The role of the CDFA includes acting as an advisor to one party’s attorney, or as a mediator for both parties. A CDFA uses his or her knowledge of tax law, asset distribution, and short- and long-term financial planning to achieve an equitable settlement.

Ventimiglio had seven years of financial planning experience before becoming a CDFA. He was required to complete four separate specialized exams and a final written case study to earn his CDFA accreditation.

“Finding professional financial advice in the Bay Area is not hard. There are many well-qualified practitioners in every city. I saw professional financial guidance for those going through a divorce as an under-served niche. In most marriages, one party handles the finances and the other is mostly in the dark. I like helping the person in the dark see the light by providing them with the financial guidance needed to confidently move forward.”

Ventimiglio’s office is at 2010 Crow Canyon Place, Suite 100, in San Ramon. He can be reached by calling 925-824-3191, emailing nick@EastBayCDFA.com, or by visiting his website at www.EastBayCDFA.com.

Without question, July is one of my favorite months. It’s a time of simple pleasures, like bare feet on the packed wet sand of a Santa Cruz beach and feeling the silky wrap of front-porch-warm evenings. It’s also the month I celebrate the anniversaries of two of the happiest days of my life. Thirty-four years ago I scooped every other man alive by marrying the most beautiful woman on the planet and nineteen years ago she and I were blessed by the birth of a son who is, before our eyes, becoming a man of character of a sort that I aspire to.

Added to these, I share in the broader celebration with most Americans in the recognition of Independence Day—the fourth of July. Of course if you follow much of the media, you might be left with the impression that we have little to celebrate of late. Bad news sells, after all.

Ever contrarian, at ALIVE we do not share in the dire descriptions of our media comrades. Need a little boost in your patriotic pride for the American economy? Look no further than Damien Couture’s uplifting Market Watch article on page 49, as he does a terrific job in setting the record straight—when it comes to the economic engine of the world, America remains in front.

To be sure, we face a number of challenges these days, but we must remember that we have something of enormous power that we can depend upon to solve these issues—the “American Recovery Act.” Of course I’m not referring to the American Recovery Act of the billboard variety that politicians use to advance their personal agendas; the one I mean is the feeling in your gut if you are a person whose eyes still well when you hear our national anthem.

Our hope and our pride as Americans still come from the same place inside as it did for the great men and women who conceived this nation: That America is called the “United” States because it is, in the final analysis, a group united, ultimately made of collections of counties, then cities and towns, then neighborhoods, streets, homes, families and finally, freedom loving individuals.

Every July 4th we celebrate much more than our national liberation—we celebrate our independence as individuals as we enjoy the glorious blessing of freedom which our nation provides.

As I consider the many reasons why July is one of my favorite months, may God bless you and yours as you celebrate your independence. And may He continue to bless the United States of America.

It seems that the consensus opinion out there is that the U.S. is in decline, China is the new superpower and that our nation’s best times are behind her. We don’t “make” anything anymore. All of our jobs are being sent overseas. Sound familiar? This attitude is somewhat understandable given the financial crisis, severe recession, high unemployment rate, failed banks, bailouts, local and federal debt, housing bust, oil spill, etc., etc., etc. So yes, we have plenty of problems. However, there is plenty right with the good old U.S. of A. and the negative perceptions do not match up with reality. July puts me in a patriotic mood so read on.

The U.S. economy is still the largest and most productive on the planet. We account for about 25% of the world’s economic output despite only having 4.6% of the global population. Our economic output is larger than the next three largest economies (China, Japan, and Germany) combined. If you look at per capita income, China is only about 10% of that of the U.S.*

The U.S. continues to be a manufacturing superpower. Contrary to popular opinion, we still make a lot of stuff. In fact, we make more goods in a year than any other country. We are the world’s largest exporter. Yes, China exports more goods but that is only half the story. You have to also look at the export of services; things like accounting, data- processing, medical services, and telecommunications. When you add global service exports to goods, the U.S. tops all others. All together these exports totaled $1.5 Trillion in 2009, nearly 10% of the total globally. Germany ranks second with 8.5%. 1

The rest of the world continues to invest in the U.S. We are the preferred destination for foreign direct investment. Where did money flow during the financial crisis and just recently during the European debt crisis? This so called “flight to quality” went into the safety of U.S. government bonds. The U.S. dollar remains the world’s reserve currency. We lead the world in technology and innovation. We are at or near the top of scientific research institutions and corporate spending on research and development. Our higher education system is the best in the world and a top destination for foreign students. Over half of the world’s top global brands are American. *

I could go on and on but space dictates I stop here. All in all the U.S. is not a bad place to invest in, don’t you think? I sure do.

* Barron’s 6-7-10, Go Long America

Damien helps individuals invest and manage risk. He is a Certified Financial Planner™ professional and a principal of Walnut Creek Wealth Management. These are the views of Damien Couture, CFP® and should not be construed as investment advice. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Not all recommendations are suitable for all investors. Each investor must consider their own goals, time horizon and risk tolerance. Your comments are welcome. Damien can be reached at 925-280-1800 x101 or Damien@WalnutCreekWealth.com.