What Does the Fed Rate Hike Mean to You?

What Does the Fed Rate Hike Mean to You?

“I believe the message is still how low interest rates are compared to the average over the last 10 to 15 years. Affordability is still above 30% in California which means 30% of the families in California can still qualify for a mortgage based on their income.” – Bill Facendini, President & CEO

Source: The Los Angeles Times

The Los Angeles Times advises potential home buyers to “proceed as planned” after the Federal Reserve Board announced Wednesday that it would raise interest rates.

The Fed raised the interest rate by 0.25 percent, and the next step for consumers depends on which side of the saving-borrowing divide they stand. The Times answers pressing questions from homeowners, home shoppers, and investors.

Making sense of the story

  • If you’re all set to buy, don’t let moderately higher mortgage rates worry you. Proceed according to plan. Although the long-term outlook seems to indicate steadily rising interest rates, we’re building on very low ground. You know that whole “historically low mortgage rates” thing you’ve heard for the last few years? Yeah, we’re still there.
  • Yes, your buying power can be affected by higher interest rates, but that can also be offset by the better wages and greater employment opportunities of an improving economy.
  • Thirty-year fixed mortgage rates rose more than half a percentage point in the four weeks after the election of Donald Trump, according to the NerdWallet Mortgage Rate Index. Rates are solidly over 4 percent for the first time this year. On a 30-year fixed-rate mortgage for $300,000, each half-point increase adds close to $100 a month to your payment.
  • With additional Fed rate hikes expected next year, mortgage rates may have as much as another half a percentage point to go. That would put home loan interest rates just under 5 percent by the end of 2017. Refinance activity has already taken a hit because rates have climbed to their highest levels since July 2015.
  • If you have an adjustable-rate mortgage, you’ll probably see your payments increase over the next year, depending on how often your rate resets. Keep an eye on mortgage rates and consider moving to a fixed-rate loan. You may want to begin the mortgage shopping process soon if you intend to stay in your home for a few years.


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Source: Terra Firma

Water-Conserving Plumbing Fixtures Now Required

Water-Conserving Plumbing Fixtures Now Required

 All I want for Christmas is… a low flow shower head?

Ok, not as catchy of a jingle but humor us… Beginning on January 1, 2017, California law requires property owners (for properties built before 1994) to install water-conserving plumbing fixtures by 2017 for single-family properties and by 2019 for other properties. Additionally, if a property is altered or improved after 2014, then water-conserving plumbing fixtures must be installed as a condition of final permit approval. (Cal. Civ. Code section 1101.4)

In 2012, the Transfer Disclosure Statement was expanded to include a check box for water-conserving plumbing fixtures. As explained in the TDS itself, the check box does not create a point of sale requirement. (Cal. Civ. Code section 1102.6.)

Beginning in 2017 a seller of a single-family property will also be required to disclose whether the property is in compliance with the law. This same disclosure requirement will apply to other types of properties beginning in 2019. Even then, the law creates no point of sale requirement. (Cal. Civ. Code section 1101.4 and 1101.5.)

However, lenders could decide to make water-conserving plumbing fixtures an underwriting requirement, to be addressed via the appraisal, similar to the carbon monoxide detector requirement. The bottom line: if you are considering selling your house in 2017 or doing any bathroom remodeling, you will definitely want to consider installing water-conserving plumbing fixtures. There are some links below that can help, as well as some FAQ’s/additional information.

Here are some helpful links for public programs to assist with the cost of installing water-conserving plumbing fixtures:

City of Santa Rosa

City of Petaluma

Sonoma County Water Agency serving: Airport/Larkfield/Wikiup Sanitation Zone, Geyserville Sanitation Zone, Occidental County Sanitation District, Penngrove Sanitation Zone, Russian River County Sanitation District, Sea Ranch Sanitation Zone

Marin Municipal Water District

City of Napa


Source: CAR.org

Q 1. What is the purpose of the water conserving plumbing fixtures law (“WCP fixtures law”)?

The legislature thinks that water conservation is a cost effective approach to the challenges created by not having enough water. Those challenges include future economic health; environmental health; growing urban areas; water reliability; waste water treatment; energy and other resource costs; and protecting and restoring aquatic resources. All of these issues were cited as reasons behind this effort to promote water conservation.

Q 2. Does the water conservation law create any point of sale requirements?

No. There is nothing in the law that requires the installation of water-conserving fixtures as a condition of sale.

Q 3. What is the significance of it NOT creating a point of sale requirement?

Because the WCP fixtures law does not create a point-of-sale requirement, there is no obligation on either agents or brokers to ensure that sellers or buyers install WCP fixtures. However, as in all transactions, agents should impress upon the seller the necessity of carefully and accurately completing the appropriate disclosure forms.

Q 4. If there are no point of sale requirements, then what is required?

The law will require owners of real property to install water-conserving fixtures simply because they own the property regardless of whether they are selling it. The requirement for installation is not immediate, but will take effect in later years depending on the type of property or whether improvements are made. For single family properties built before 1994, the installation requirement takes effect on January 1, 2017. For multi-unit residential property and any commercial property, these requirements will apply starting January 1, 2019. See questions 25 and 26 below.

Q 5. I’m a homeowner selling my pre-1994 single-family house. Are there any installation requirements under this law?

There is nothing in this law that requires installation of WCP fixtures as a condition of sale. However, if you haven’t already installed water conserving plumbing fixtures on your pre-1994 single-family house, then beginning January 1, 2017, as an owner of the home, you will be in violation of the basic requirement of the law to have water conserving plumbing fixtures installed.

Q 6. Under the law WCP fixtures are not required as a point of sale. However, isn’t it possible that lenders may require it as a condition of the loan?

Yes. It’s possible. Lenders may make their own underwriting decisions regardless of what the law technically does or does not require. If a lender requires the installation of WCP fixtures as a condition of the loan, that is his or her right to do so. At this time, however, we are unaware of any lender requiring it.

Q 7. What does the law require a seller to disclose regarding water conservation plumbing fixtures?

Presently, the law only requires the seller to check the box on the TDS as to whether there are water conserving plumbing fixtures. Commencing January 1, 2017, for single family pre-1994 houses, the law will require a seller to disclose to the buyer the requirement of water conserving plumbing fixtures and whether the real property has any noncompliant fixtures. This same requirement will come into effect for multi-unit residential and commercial property starting January 1, 2019. See questions 25and 26 below.

Q 8. Are there any forms that allow the seller to meet their disclosure obligations?

Yes. There are a few.

First, the TDS will allow the seller to disclose to the buyer the legal requirements of the law. That’s on the second page of the TDS in the fine print. Secondly, with the 2016 December forms release, the Seller Property Questionnaire (Form SPQ) will be revised to ask the seller whether they are aware of any non-compliant plumbing fixtures. Thirdly, on those transactions which are TDS exempt, the Exempt Seller Disclosure (Form ESD) will be amended to facilitate both disclosures. (Since for TDS exempt properties, neither the TDS nor the SPQ is used). Finally, with the December forms release there will be an optional disclosure form for “Water conserving Plumbing Fixtures and Carbon Monoxide Detector Notice” (Form WCMD). This form will provide an explanation of the technical requirements of the law. It is not actually a new form, but instead, is a revision of the existing “Carbon Monoxide Detector” form. Although, it is an optional form, agents should check with their broker to see if the brokerage requires its delivery.
Q 9. The TDS was changed to include a check box asking if the property has any water-conserving plumbing fixtures. Does that make it a point of sale requirement?

No. In fact, the TDS box has an asterisk to the second page that says, “Installation of a listed appliance, device, or amenity is not a precondition of sale or transfer of the dwelling.” (Cal. Civ. Code section 1102.6.)

Q 10. If the seller checks the box indicating that there are some water-conserving plumbing fixtures, is he or she representing that the fixtures are in compliance with this law?

No. The TDS specifically says, “Fixtures in this dwelling may not comply with Section 1101.4 of the Civil Code.” (Cal. Civ. Code section 1102.6.)

Q 11. Should this box on the TDS be checked if the seller is uncertain about whether there are WCP fixtures installed?

If the seller is uncertain, its best to leave it blank.

Q 12. How should a seller answer the question on the SPQ (or ESD if TDS-exempt), “Are you aware of any non-compliant plumbing fixtures?” if they are uncertain?

A seller who is uncertain should probably err on the side of caution by checking “yes” and stating that they are aware of noncompliant plumbing fixtures.

Q 13. How can a seller know for sure if the property has non-compliant plumbing fixtures?

A CAR form WCMD states the technical specifications of non-compliant fixtures. However, if the seller is unsure then they should consult with someone who has expertise in the matter such as a contractor, plumber or retrofit compliance company.

Q 14. What do agents need to know about compliance with the WCP fixture law?

Agents should be aware that beginning January 1, 2107 owners of single family properties built before 1994 need to replace non-compliant fixtures with WCP fixtures – whether or not the owners are selling their property. And also, starting at the same time, sellers have certain disclosure obligations as discussed above in question 6 through 14.

However, generally agents do not have the expertise of contractors or plumbers, and therefore it is prudent to not offer definitive advice on whether there are or aren’t non-compliant plumbing fixtures on the property.

Q 15. If the seller would like, at his or her option, to install WCP fixtures as part of a sale, where on the California Residential Purchase Agreement (Form RPA-CA) should this be indicated?

Paragraph 7D under “Other Costs” is the appropriate place to indicate this.

Q 16. Is there sample language that could be used to negotiate for the installation of WCP fixtures?

Yes, A seller or buyer may use the following language: [Buyer or Seller shall pay for]… the installation of water-conserving plumbing fixtures per Civil Code § 1101.3 if required by law not to exceed the cost of $________.

The phrase “water-conserving plumbing fixtures” is defined to mean plumbing fixtures in compliance with current, new-construction, building standards (Civ. Code 1101.3(e)). The suggested language on the contract, “if required by law,” would leave open the possibility that the plumbing fixtures already meet the standards of the Civil Code and thus, there would be no obligation to upgrade them.

Q 17. What is the definition of “water-conserving plumbing fixture”?

Water-conserving plumbing fixture means any fixture that is in compliance with current building standards applicable to a newly constructed real property. (Cal. Civ. Code section 1101.3.)

Q 18. What is the definition of “noncompliant fixture”?

The law calls for installation of water-conserving plumbing fixtures only when the existing plumbing fixtures are “non-compliant.” Noncompliant plumbing fixture means (1) any toilet manufactured to use more than 1.6 gallons of water per flush (2) any urinal manufactured to use more than one gallon of water per flush (3) any showerhead manufactured to have a flow capacity of more than 2.5 gallons of water per minute (4) any interior faucet that emits more than 2.2 gallons of water per minute. (Cal. Civ. Code section 1101.3.)

Q 19. Does the water conservation law apply to all types of property?

No. The law only applies to property built and available for use on or before January 1, 1994. (Cal. Civ. Code section 1101.2.)

Q 20. Why does it only apply to buildings built before January 1, 1994?

Under federal law, all residential toilets manufactured after January 1, 1994 must use no more than 1.6 gallons per flush. In California ultra-low flush toilets have been required in all new construction since January 1, 1992.

Q 21. When must the water-conserving fixtures be installed?

It depends on what kind of property you own, and whether you make improvements. The law sets up three categories: “single-family residential real property,” “commercial real property,” and “multifamily residential property.”

Q 22. What is a “single-family residential” property?

A single-family residential property means any real property that is improved with, or consisting of, a building containing not more than one unit that is intended for human habitation. Therefore a condo, even a single condo occupied by only one family, is not a single-family residential property under this law. (Cal. Civ. Code section 1101.3.)

Q 23. What is a “multifamily residential real property”?

A multifamily residential property means any real property containing more than one unit that is intended for human habitation. This would include the residential portions of a mixed use property. (Cal. Civ. Code section 1101.3.)

Q 24. What is a “commercial real property”?

Commercial real property means any property that is not in the above two categories and includes hotels and motels. (Cal. Civ. Code section 1101.3.)

Q 25. If I own a single-family residential property, what are the requirements and when do they take effect?

Beginning January 1, 2017 all single family property owners will be required to replace noncompliant plumbing fixtures with water-conserving fixtures regardless of whether any improvements are made and whether or not the property is being sold.

Beginning January 1, 2017 a seller must disclose in writing to the buyer the requirement of water-conserving fixtures and whether the real property has any noncompliant fixtures.

However, if you do any improvement requiring a permit after January 1, 2014 on a single-family property, the permit will not be issued unless all noncompliant plumbing fixtures have been replaced with water-conserving fixtures. (Cal. Civ. Code section 1101.4.)

Q 26. I own a multifamily residential property or a commercial property, what are the requirements and when do they take effect?

Beginning January 1, 2019 all noncompliant plumbing fixtures in any multifamily residential real property and any commercial real property shall be replaced with water-conserving plumbing fixtures.

Beginning January 1, 2019 a seller of these types of properties must disclose in writing to the buyer the requirement of water-conserving fixtures and whether the real property has any noncompliant fixtures.

However, after January 1, 2014, if you do any improvement which either costs at least $150,000 or increases total floor area by more than 10, then all nonconforming fixtures must be replaced with water-conserving plumbing fixtures. And replacement of nonconforming fixtures will be a condition of permit approval or certificate of final completion. However, if you only do improvements requiring a permit in a room then you only have to replace nonconforming fixtures in that room. (Cal. Civ. Code section 1101.5.)

Q 27. Who is required to make the disclosure as to whether the property is or isn’t in compliance, the seller or the listing agent?

The seller. The law specifically says a seller or transferor shall make the disclosure in writing. Earlier drafts of the bill attempted to make agents responsible for the disclosure, but these were removed from the final law.

Q 28. Are there any exemptions?

Yes. There are exemptions for historical sites; property where it isn’t technically feasible to install water-conserving fixtures; buildings where the water is permanently disconnected; buildings slated to be demolished; and a special exemption for a city (or county) itself that has an existing retrofit law. (Cal. Civ. Code section 1101.7.)

Q 29. Can I comply with this law by just putting a brick in my toilet?

No. The law defines as nonconforming any toilet manufactured to use more than 1.6 gallons. Therefore, displacing water in the tank will not put you in compliance with the law, even though you might be saving just as much water.

Q 30. I am a landlord, and I want to install or test my water-conserving devices in the rental unit. Can I enter the property for that purpose?

Yes, as long as you give the proper written notice for entry of a dwelling. (Cal. Civ. Code sections 1101.5, 1954.)

Q 31. I own a property in city where there is an existing retrofit law for water-conserving fixtures as a point of sale requirement (such as Los Angeles, San Diego or San Francisco). Are those retrofit laws still in force?

Yes. Local laws passed before July of 2009 requiring retrofit of plumbing fixtures remain in effect. The state law also allows a locality to pass more restrictive requirements at any time.

Q 32. Can a city or county require greater water savings than the state law? Or have local laws now been superseded by the state law?

No. A city, county or a retail water supplier has the authority to enact local ordinances or establish policies that will result in a greater amount of water savings than those provided under California’s statewide law on water-conserving plumbing fixtures (Cal. Civ. Code section 1101.8).

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Source: Terra Firma

8 Reasons Why December is a Great Time to Sell

8 Reasons Why December is a Great Time to Sell

There’s this myth out there that the real estate market slows or even stops in December. It may seem counterintuitive, but the holidays are actually an excellent time to sell your home!

Here are 8 reasons to buy or sell a home during the holidays:

1. Serious Buyers: People who are looking to buy a home during the holidays are serious about finding their new residence! There may be fewer of these folks out there in general, but the ones who are looking are ready and wanting to buy, and they’re not messing around.

2. Low Supply: Typically, there are fewer homes for buyers to look at around the holiday season, which means there’s less competition for the attention of those buyers! When the holiday season ends and the new year begins, the supply of homes goes up. More inventory can mean more competition, longer days on market and potentially less money for your home.

3. Sell High, Buy Low: If want to buy a home in the 2016 spring market, selling now (and potentially renting short term) gives you the chance to be a non-contingent buyer when you’re ready to purchase in the spring. This is ideal. Since the spring time will bring more buyers into the marketplace for you to compete with, now you are set up as a “great buyer” who can compete with anyone, without a house sale contingency!

White cup of tea and warm woolen things near fireplace on wooden table. Winter and Christmas holiday concept.
4. Holiday Decor: The holidays tend to bring out the best in a home, when it’s all decorated and dressed to the nines! Your home will show beautifully, decked out in wreaths, red bows, and white lights! I particularly love the winter scents of pine, cinnamon and the toasty feel of a fireplace. Plus, the holidays can provide that emotional connection to a home that will help a buyer feel more attached and pay your asking price.

5. More Time: While your first instinct might be that people are too busy during the holidays to look at homes, think again! Many buyers may have less demanding schedules during the holiday season, or time off during Christmas as opposed to a normal work week. This is especially the case for relocation buyers… one of the best opportunities for a seller. They need to purchase and only have a short time to find their next home before the new year. (See #8!)

6. Scheduling Control: Don’t worry—if you’re selling, you can still enjoy the holidays as usual! You can limit home showings to when you’re comfortable. You stay in control!move. lots of cardboard boxes in an empty new apartment

7. Move in the Spring: You can sell during this prime holiday time, but still not have to worry about moving until January through March, well after the holiday season is over. You can negotiate a longer closing period or an extended use and occupancy.

8. Capture the Relocating Buyer: January is often a time when employees begin new jobs. Oftentimes, when someone is transferred to a new position, they need a home, and they need it ASAP! This means they can’t necessarily wait until spring to buy, and that means you need to be on the market during the final months of the year to capture this unique buyer opportunity.

A big thank you to Tracey Reynes from our Sonoma Office for bringing us this great insight!

headshotFor Tracey Reynes, she attributes much of her success as a Realtor to the time she spent in the culinary and event planning fields and her Culinary Arts degree from the acclaimed California Culinary Academy. She spent years learning and fine-tuning organizational, customer relations, and project management skills, as well as the attention to detail and follow-through.

In addition, as a California resident for nearly three decades and a Wine Country home owner for several of those years, she possesses vital, in-depth knowledge of the local real estate market, as well as of schools, services and other aspects of life in the Sonoma and Napa Valleys. She is a Director and Secretary of Sonoma League for Historic Preservation, and is an active volunteer with the Sonoma Community Center and Sonoma Film Festival. She is a Board member of Sonoma Valley High School Boosters Club and Sonoma Little League. When prospective clients choose to work with Tracy Reynes, they are assured it is not only a Realtor who represents them, it is a respected professional who is also a valuable and contributing member of their community.

Tracey works out of our Sonoma office. She can be reached via email at TraceyReynes@gmail.com or via phone at 707-775-7654. Also, check out her website at www.livelovesonoma.com.

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Source: Terra Firma