ArcadiaREALTOR®The Official Publication of the Arcadia Association of REALTORS®

VOL. 17, NO. 9WWW.THEAAR.COMSEPTEMBER 2013

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

See page 9

“Put Your Gut in

Your Safety Toolbox”

See page 8

AAR to HostCIPS Institute

2

Arcadia Association of REALTORS®601 South First Avenue

Arcadia, California 91006626.446.2115

626.446.4072 FAXwww.TheAAR.com

2013 ASSOCIATION OFFICERSAndy Bencosme {President}

Mike Vachani {President-Elect}Joe Pacilio {Vice-President}

Jill Nelson {Secretary/Treasurer}

2013 ASSOCIATION DIRECTORSMicah Adams

Ryan AsaoRoy Blume

Kelvin ChangMargaret Garemore

John LeePaulina Lee

Sylvia RamosIrene Yamagata -Bermudez

2013 C.A.R. DIRECTORSRyan Asao

Andy BencosmeMargaret Garemore

George MonteRandall Traw

Mike VachaniKelvin Wong

ARCADIA 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 MLS Data Integrity, Supra & Social Media Brenda@TheAAR.com Jamie Hu Ext. 309 Administration Jamie.Hu@TheAAR.com

Stephanie Maertens Ext. 303 Director of Education, Publications & MLS Caravan Stephanie@TheAAR.com

Maria Roberts Ext. 305 Director of Membership & Professional Standards Maria@TheAAR.com Jane Shriver Ext. 301 Director of Association Services Jane@TheAAR.com

Andrew Cooper Ext. 308 Executive Vice President Andrew@TheAAR.com

{ Arcadia REALTOR® | September | Two Thousand and Thirteen | Volume Seventeen | Number Nine}09.13

ArcadiaREALTOR®

September 2013

REGULAR FEATURES

4 Events Calendar

4 From the EVP’s Desk Andrew Cooper, Executive Vice President

5 Attorney Comments Dave Freeman, AAR Legal Counsel

6 Market Matters

10 Through the Lens A Look at What’s Happening Around the AAR

11 Affiliate Corner “How Lenders Calculate Income...The Truth is Out There!” Scott Shimamoto, Franklin Loan Center

3

ON THE COVER8 “Put Your Gut in Your Safety Toolbox” September is REALTOR® Safety Month. Make sure you are equipped to keep yourself safe when you are with clients and showing homes!

9 AAR to Host CIPS Institute The Arcadia Association is hosting its fourth annual CIPS Institute at the Arcadia Doubletree Hotel October 21st through 25th.

ADDITIONAL CONTENTS3 Congratulations Maria! The Arcadia Association wishes to congratulate AAR Director of Membership, Maria Roberts on the birth of her twin daughters!

7 AAR New Members The AAR welcomes its newest REALTOR® Members.

10 AAR Staff Jane Shriver and Robin Allen Celebrate Anniversaries Director of Association Services, Jane Shriver and Director of Finance, Robin Allen recently celebrated their 23rd and 10th employment anniversaries, respectively, with the AAR.

12 Save the Date! Commercial Real Estate Day at the Races The AAR will be offering this fantastic education and networking event at the World Famous Santa Anita Racetrack on Friday, October 4th.

Arcadia REALTOR® Magazine3

Larry DavisMortgage Advisor

Direct: 626.513.7955Cell: 626.664.3106ldavis@firstcal.netNMLS# 168532

TOGETHER WE PROSPER, FIRST CAL DEALWORKS & Design, and FIRST CALIFORNIA MORTGAGE COMPANY are trademarks and the property of First California Mortgage Company. First California Mortgage Company is an Equal Housing Lender and is licensed through California Dept. of Corporations RML #415.0042 and CFL #6054270;

Don’t settle for a field goal, go for the touchdown!

Use Larry and First Cal on your next home loan.

Our game plan will help to keep the loan process

simple and make sure you close on time.

Congratulations Maria!

The AAR’s Director of Membership, Maria Roberts and her husband, Chris, previously the AAR’s IT Specialist, welcomed identical twin baby girls into their family on August

2nd. On behalf of the Board of Directors, the AAR staff and the entire AAR membership we

wish to congratulate Maria, Chris and their son, Christopher on the arrival of Sophia Rosa

Roberts and Capri Rosa Roberts!

4

FROM THE EVP’S DESK

The Future’s So Bright I Gotta Wear Shaded Google Glasses – Part 2 of 2

Last month’s article contained highlights of the AAR’s recent attendance at the Inman Real Estate Connect Tech Conference. This

month continues that article with Part 2 of the highlights of the conference. If you missed Part 1, please email me and I’d be happy to email you the article in its entirety: Andrew@TheAAR.com

Technology Products Coming in the Near Future ■ “Knock-key”. This is a device that fits on your door that will audibly recognize your secret knock and will unlock the door for you. It utilizes “open-source” technology and it can be programmed via Wi-Fi ■ Digital diapers. A data chip inserted into a baby’s diaper will help determine illness in children through bacteria counts, dehydration, and chemical imbalances, etc.

CEO Panel Talks About Future TrendsThis power-panel consisted of the CEOs from Trulia, Zillow, Redfin and Realtor.com. Here are the highlights of their very spirited and frank discussions when asked “What are the Trends for the next 5 Years?”: ■ The technology for real estate hasn’t even started yet – it’s going to explode. ■ Transparency. Online consumers want their Realtors® to be experts. They don’t want them to recite information they can already obtain online for themselves. ■ “Personalization” such as Google Now. This is new information being pushed automatically to someone based on their previous searches. ■ Consumer leads are up over 100% within the last 2 years. This is due to radical advances in predictive searching which are expected to improve even more. ■ The current online listing platform hasn’t changed in 17 years.  Look for instant sales data coming soon. ■ Agent ratings systems will become bigger and more widely used by consumers.   ■ Mobile technology is just beginning. Consumer demand will drive instant information and instant response needs from real estate professionals to their consumers.

State of the Asian Real Estate Market – Quick Facts and Figures ■ Over $10 billion was invested in US real estate from China in 2012. Keep in mind this is from the country of China exclusively, excluding all the other Asian countries. ■ For every $10 spent in U.S. real estate in 2012, $1.20 was from Chinese buyers ■ There were 853,000 millionaires in China in 2012.  This

2 AAR Closed in Observance of Labor Day

3 10:00 a.m.-12:00 p.m. - Beginning Zipforms Training

4 8:30 a.m. - MLS Caravan 9:30 a.m. - Events 4 Charity Auxiliary Mtg.

5 9:30 a.m. - Commercial / Investment Committee Mtg. 11:00 a.m. - Commercial Marketing Mixer

6 12:00 p.m. - 1:30 p.m. - Toastmasters

7 11:00 a.m. - 3:00 p.m. - AAR vs. CVAR YPN Softball Game

10 9:30 a.m. - 12:30 p.m. - “FHA/VA Loans: What Agents Need to Know” 11:00 a.m. - Tech Committee Mtg.

11 8:30 a.m. - MLS Caravan 8:45 a.m. - Affiliate Committee Mtg. 9:30 a.m. - MLS Committee Mtg. 3:30 p.m. - Equal Opportunity / Housing Affordability Committee Mtg.

12 10:00 a.m. - Global Real Estate Committee Mtg. 11:00 a.m. - Global Real Estate Class “Navigating the International Transaction”

13 9:00 a.m. - 12:30 p.m. - “Achieving Success in Real Estate: How to Get Listings in Spite of a Scarce Inventory”

16 10:00 a.m. - 3:00 p.m. - CRMLS Training AAR Annual Scott Burtz Charity Golf Tournament @ Glendora Country Club

17 10:00 a.m. - 12:00 p.m. - Intermediate ZipForms6 Training 2:00 p.m. - Education Committee Mtg.

18 8:30 a.m. - MLS Caravan 9:00 a.m. - 5:00 p.m. - “How to List and Sell More Income Property and Get Paid Working with Investors” 9:30 a.m. - Public Relations Committee Mtg. 1:30 p.m. - Local Governmental Relations Committee Mtg. 5:30 p.m. - 7:30 p.m. - New Member Welcome Reception - Invitation Only

15 9:00 a.m. - 10:00 a.m. - “Year-End Planning” 11:00 a.m. - 12:00 p.m. - Lunch & Learn Series Class

20 12:00 p.m. - 1:30 p.m. - Toastmasters

23 8:30 a.m. - New Member Orientation

24 9:00 a.m. - 11:00 a.m. - “The Basics of Social Media” 1:30 p.m. - Budget and Finance Committee Mtg.

25 8:30 a.m. - MLS Caravan 9:30 a.m. - Young Professionals Network Committee Mtg.

26 1:00 p.m. - 5:00 p.m. “Real Estate Contracts” YPN Poker Tournament

30 8:30 a.m. - Board of Directors Mtg.

September 2013

September Events

(Continued on page 9)

AttorneyComments

By Dave Freeman, Association Counsel

September 2013

1. UNLICENSED CONTRACTORS: With the advent of increased sales and increased prices, more people are electing to build new homes or remodel their existing homes. Some of these enterprises can be extremely expensive. Many property owners cut costs in the wrong places. Most notably, they fail to check the references and licensing of the general contractor or subcontractors doing the work on their project. Occasionally, unlicensed contractors will still operate under the license of another general contractor. Others will merely take on the job as if they are a general contractor. In any case, an unlicensed contractor supervising your valuable work of improvement is the formula for a disaster. In my experience, working with many clients over the years in this situation, those unlicensed contractors who do not take the effort or have the expertise to get a license are the same people who will not complete or not property supervise the work being done. Frequently, you will have to employ other, qualified workers and contractors to finish the botches work of this first unlicensed contractor. Almost always, this will be done at a great, added expense to the homeowners, and at great added delay. These unlicensed contractors usually have no assets for you to go after. Therefore, the added expense is a total loss to the homeowner. If you discover, midway or at the end, that the contractor is unlicensed, he can demand no more than $500.00 for his work or under the contract. So, if you still owe him $30,000.00, for example, he is out of luck and you benefit in this manner. Further, there is case law that states that you can sue for disgorgement:

the return of your money beyond the $500.00, previously paid to him. Always check licensing, bonding, workers compensation insurance, liability insurance (with you as an additional insured) and his record in the community (Building and Planning Department, Better Business Bureau and other folks for whom he has built). Do you rely on references the supposed contractor gives you. 2. ENCROACHMENT – EASEMENT CLAIMS: Sometimes, a neighbor/developer may claim the right to use your property for driveways, laying utilities (electrical, gas, water and sewer) or building. Demand that they supply you with property documentation of the right to use your property, most commonly in the form of a granted, recorded easement. They also must present to you permits from the City to do the work intended. Developers and contractors will frequently attempt to down you over with statements that the City has approved the project or given its permits and that they have an easement to do the work. Careful review of the documents the developer/neighbor supplies you may show that they have absolutely no right to use your property unless you grant them an easement at this time, and for a reasonable sum to be determined by you. Keep in mind that any easement or right you grant will usually be a permanent right, which will run with the land in the future.

3. HOMEOWNERS ASSOCIATIONS – RENTAL RESTRICTIONS: Many owners of condominiums and other Common Interest Development (“CID”)

properties intend to rent the units out. Many HOAs attempt to restrict renting of the units, in order to maintain a higher quality of living for the owners, and to prevent the future lenders from refusing to loan based on the percentage of rentals in the complex. Therefore, HOAs frequently modify their documents to prevent rentals of units. A relatively new law addresses this situation:

A. The law requires the owner of a CID unit to disclose to potential tenants whether or not rental restrictions exist in the governing documents of the HOA.

B. The new law states that the HOAs can no longer amend their CC&R’s to prevent rentals.

C. If they already had the rules in place prior to January 1, 2012, the prohibition of renting will apply to subsequent buyers only. Any owners who purchased prior to the HOA modification against renting will still be allowed to rent their units out.

Therefore in your sales transaction, be sure the seller discloses to the buyer whether or not rental restrictions exist regarding the property, be sure the buyer reviews the HOA documents thoroughly regarding rental restrictions and is clear on whether or not he intends to rent the property out.

Arcadia REALTOR® Magazine

DON’T MISSWHAT’S COMING!

For more information on upcoming AAR classes and more, visit www.TheAAR.com

and click “Upcoming Events”5

6

MarketMatters

Market Statistics for the San Gabriel ValleySingle Family Homes Condominiums SFR Only

City Zip Code

Sales of Single Family

HomesPrice Median SFR ($1,000)

Price % Chg from July 2012

Sales Count

Condos

Price Median Condo

($1,000)

Price & Chg from July 2012

Median Home Price/

Sq. Ft.Alhambra 91801 11 $520 -5.2% 13 $385 15.8% $363Alhambra 91803 6 $451 12.0% n/a n/a n/a $334Altadena 91001 58 $577 30.1% 4 $1,120 286.2% $409Arcadia 91006 29 $988 16.9% 6 $751 29.0% $500Arcadia 91007 26 $1,275 29.4% 17 $506 26.9% $581Azusa 91702 33 $315 18.9% 14 $248 22.3% $251Duarte 91010 16 $430 36.3% 5 $340 118.6% $310El Monte 91731 12 $362 44.3% 2 $438 75.7% $336El Monte 91732 16 $350 29.8% 10 $397 32.2% $287El Monte - South 91733 6 $338 38.9% 3 $350 n/a $323Glendora 91740 31 $370 9.1% 3 $280 1.8% $295Glendora 91741 38 $578 13.7% 6 $363 -4.5% $318La Cañada Flintridge 91011 35 $1,317 33.0% n/a n/a n/a $541La Verne 91750 25 $520 16.9% 4 $329 141.5% $286Monrovia 91016 39 $552 30.7% 7 $380 13.4% $384Pasadena 91101 n/a n/a n/a 11 $375 -5.1% n/aPasadena 91103 11 $471 41.7% 4 $490 8.0% $397Pasadena 91104 38 $568 2.7% 3 $350 -18.6% $448Pasadena 91105 16 $1,221 11.0% 8 $644 10.9% $494Pasadena 91106 15 $825 14.7% 30 $442 12.0% $516Pasadena 91107 37 $663 3.9% 6 $503 -5.1% $466Rosemead 91770 21 $420 20.0% 6 $342 20.5% $351San Gabriel 91775 17 $660 8.6% 1 $300 n/a $492San Gabriel 91776 13 $435 -8.7% 9 $386 18.8% $334San Marino 91108 21 $1,750 1.5% n/a n/a n/a $748Sierra Madre 91024 17 $775 -11.8% 3 $500 n/a $456Temple City 91780 29 $618 14.5% 8 $508 1.5% $425

Source: DQNews.com

July 2013

September 2013

7Arcadia REALTOR® Magazine

6

(626) 831-8862www.morrisoninspects.com 7

AAR New MembersThe Arcadia Association of REALTORS® formally welcomes our newest REALTOR® members!

AAR new members with Membership Committee Vice-Chairman, Cindy Shiao; Committee Chairman, Alma Aguilar and AAR 2013 President, Andy Bencosme are (in no particular order): Alice Andres-Reyes, ADHI Real Estate Incorporated; Mengquing Fan, Affinity Management, INC.; Elwin Wang, Castlewood Coorporation; Doris Reyes, Cecilia Milner Real Estate; Yolanda Padilla, Century 21 Ludecke, Inc.; Joseph Ciovare, Coldwell Banker Arcadia; Darrell Cheng, Coldwell Banker Dynasty Arcadia; Victoria Liu, Coldwell Banker Dynasty Arcadia; Oanh Le, Coldwell Banker Dynasty Temple City; Arthur Lin, Coldwell Banker Dynasty Temple City; Juling Wan, Coldwell Banker George Realty Arcadia; Julie Choy, Coldwell Banker George Realty Arcadia; DiFei Gu, Coldwell Banker George Realty Arcadia; Tina Wu, Coldwell Banker George Realty Arcadia; John Soltys, Coldwell Banker George Realty Arcadia; Rae Koo, Emerald 2000 Group; David Huang, Emerald 2000 Group; Judy Chen, Emerald 2000 Group; Jian Jiang, Highland Real Estate; Frank Chen, Highland Real Estate; Peijun Qu, Highland Real Estate; Lisa Guan, Highland Real Estate; Yuhong Lin, Highland Real Estate; Bei Zhang, Highland Real Estate; Xiaochun Zhou, Highland Real Estate; Danny Mayorga, HomeSmart Realty; Eric Lara, IRN Realty; Vincent Su, IRN Realty; Jessey Wang, IRN Realty; Lea Hu, IRN Realty; Kevin Dolan, J Star Investment Inc.; Joseph Ling, Keller Williams West Foothills; Jessica Zhu, Long Dragon Realty Group; Carolina Cheng, Long Dragon Realty Group; Bao Li Zhang, Long Dragon Realty Group; Bao Han, Long Dragon Realty Group; Chan Jing, Long Dragon Realty Group; Hsu Ming Hao, Long Dragon Realty Group; Tsuhao Yang, Provenio Realty and Investment; Melony Chang, RE/Max Omega; Yuan Tang, RE/Max Omega; Michael Su, Re/Max Omega; Yulin Hung, Re/Max Premier Properties Arcadia; Xiaoying Zhang, Re/Max Premier Properties Arcadia; Jack Leung, Real Estate Alliance; Ara Aprahamian, REMG Realty; Truman Wang, Truman Wang Broker; Chih Chen, Zip Realty, Inc. and Akbar Siddiqui, Zip Realty, Inc.

8September 2013

“Put Your Gut in Your Safety Toolbox”

By Tracey Hawkins, Realtor.org

What if I told you that there is a tool that could prevent you from being victimized? What if I told you that you already possess such a tool?

As a former agent who now works in close contact with agents, I know how important tools of the trade are to your profession. I know that you love the latest and greatest technology tools. Those tools are an important component to operating your business. They can even help protect you. However, right now I want to discuss an important tool that should always be in your “toolbox.” Especially when you are working in what the Department of Labor classifies as a high-risk occupation.

This tool issues a warning that tells you when you are about to make a dangerous mistake. This tool requires no batteries and is always “on.” What if I told you that this tool is free? You would be interested, right?

Gut. Intuition. Instinct. Sixth sense. That funny feeling. A small voice. No matter what you call it. It can save your life. Police officers and rape crises counselors state that when interviewing victims, over 99% of the time the victim will say, “I knew something was wrong,” “I knew better,” “I had a bad feelings,” and so on.

Gavin de Becker, author of The Gift of Fear, wrote an entire book about trusting our gut instinct and believing in intuition. Having been a real estate agent, there were plenty of times when I felt fear and wondered why I was in an empty house with a complete stranger or why I was driving strangers around in my car. Like you, I hushed that warning voice and focused on earning a commission. Ignoring your gut can get you hurt, killed, assaulted or robbed while working.

As a safety expert, I often get questions about what is the right or wrong way to do the job. There are right ways to show and host open houses, specific safety techniques, but in situations where there are variables and no clear right or wrong answers, listen to your gut. One of the most popular questions is: which is correct, locking the door or not locking the door when showing? The answer is listening to your gut, trust your instinct. It will tell you what the right

answer is for that situation (and actually any situation that you will find yourself in as agents).

According to Stacey Johnson-Cosby, a Reece and Nichols sales agent who works in Kansas and Missouri, her gut comes into play when she enters a house. She typically locks the door behind her. “I don’t know if it is from an earlier situation of walking into a house and finding evidence of a squatter and being terrified of what could have happened, or a voice telling me that a criminal may follow me inside as easily as being waiting for me inside.” Johnson-Cosby, a 25-year sales veteran says that sometimes the voice is more overwhelming, demanding that she lock the door. Other times, she doesn’t feel the serious need, but has made it a habit.

Agents often assure me that they work in a “safe” part of town, or never show after dark. Your gut, not the address, nor time of day, will dictate when you need to be extra careful. Criminals have cars, (often very nice cars) therefore they can go anywhere that you may be, even upscale neighborhoods, (especially upscale neighborhoods). Don’t let your preconceived notions get in the way of seeing criminals or potential criminal opportunities. Let your instinct guide you, not what you see or other prejudices you have. Oftentimes, you will not understand why your gut is sending you fear signals. You can’t determine what is wrong. Don’t try. Instinct sees something before you realize it. Don’t worry about being polite when your body tells you to flee and get out of a dangerous situation. Just go. Your safety is more important that hurting someone’s feelings. Prioritize.

Chantay Bridges, an agent with Clear-Choice Realty and Associates in Los Angeles, California, had an experience where her gut prompted her to do something logic would advise against. When preparing for an open house in a noted gang- and graffiti-infested neighborhood, she noticed

(Continued on page 9)

9

a group of unruly teenagers on the porch next door. She knew it wouldn’t be good for potential buyers to see them there. Instead of being scared, intimidated and leaving, her instinct told her that there was no danger. She approached them and recognized one of the youth. She was able to diffuse the situation successfully. “I wouldn’t recommend that to everyone. I happen to have experience working with youth.” She advised that agents take proper precautions, including having a partner host with you, carrying pepper spray, and utilizing safety apps.

Here are three things that you need to start doing today to respect that inner voice and to ensure that you are not victimized when you can avoid it:

1. Acknowledge that like all animals in nature, we all possess a gift that allows us to sense danger. However, we are the only ones who routinely ignore it in the interest of being polite. We all have a built-in survival mechanism that is hardly ever wrong. Think about situations where you had a “bad feeling”, or were uncomfortable. That was your gut warning you. Once you are aware of what that feels like, be in tune with it and learn to recognize it. Don’t try to figure

it out or to use logic. Just listen and escape the situation.2. Respect that inner voice and act on it without hesitation

and without questioning the validity. Once you get a bad feeling about a potential client, a showing situation, or even strange behavior in an open house, believe that feeling. Do some research on potential clients, find out

who they are and if they are legitimate clients. If you are unable to verify who they say they are, whether they really own the property, where they work or anything about them, be ready to let them go. Yes. Be willing to let a potential client go. You can’t put a price on working safely and just taking your chances and hoping that the bad feeling you get about these potential clients is wrong. Nothing is worth jeopardizing your safety.

3. Defend your right to put safety before politeness. Do not apologize to anyone who questions your safety practices. Do not waiver from those practices just because someone else thinks they are silly. Johnson-Cosby says buyers often laugh when they are leaving a house and find the doors locked. “I don’t mind. At least they know I take their safety seriously.” Crimes often happen when you relax regular safety practices out of convenience or embarrassment. Just that one time, is often the time something goes wrong.

“Put Your Gut in Your Safety Toolbox”(Continued from page 8)

year it’s estimated there will be over 1 million millionaires. ■ It’s estimated 16 million people will be coming to the U.S. to purchase real estate over the next 5 years

Websites / APPs ■ Hearsaysocial.com - Optimized for salespeople, empowering them to easily adopt leading social- selling techniques to attract prospects, retain customers, and grow business. Easy to use capabilities such as social signals alerts, scheduling, and libraries of ready-to-publish content provide everything sales representatives need to sell socially. ■ Homelight.com – Homelight is a consumer-driven website that ranks REALTORS® based on their past performance to help consumers find the best real estate agent for buying or selling their home. ■ Listglobally.com - ListGlobally promotes your real estate listings to over 60 million buyers and investors via a network of leading property portals around the globe. Upload your property to ListGlobally.com and you can potentially reach a global market for your clients. ■ Bombbomb.com – Bombbomb is the next step to email marketing by making it easy to create, send, and track the results of both traditional emails and video emails.

The AAR will endeavor to be on the leading edge of technology by bringing you news and updates and products that will better serve our valued members.

Yours in success and technology,

Andrew CooperExecutive Vice-President

(Continued from page 4)

Certified International Property Specialist

N.A.R.’s International Real Estate DesignationLearn how to work with foreign buyers - locally and internationally! Foreign buyers accounted for $82 billion of purchases in the United States in 2011. Join us to learn how you can get in on this ever-growing business! In these courses, you will learn how to work with people from various cultures of the world and learn what their buying habits are.

VENUE:DoubleTree Hotel

924 West Huntington DriveMonrovia, California 91016

For hotel accommodations, please call theDoubleTree Hotel at (626) 531-9221

NAR Global Instructors:

May Wan CIPS, TRC, SRES, CDPE

Fanny Chu CIPS, TRC, SRES, SFR

Oct. 21 Global Real Estate: Local MarketsOct. 22 Global Real Estate: Transaction ToolsOct. 23 Europe & International Real EstateOct. 24 Asia/Pacific & International Real EstateOct. 25 The Americas & International Real Estate

Dates: Time Each Day: 8:30 a.m.to 5:00 p.m.

* For Early Bird pricing, you must register on or before September 27th.

PLEASE MARK THE DAYS YOU WILL BE ATTENDING:

Complimentary Networking Reception on Thursday, October 24, 2013 from 5:00 p.m. to 6:30 p.m. for CIPS Institute students, current CIPS designees and Global REALTORS® (Elements Restaurant in the DoubleTree Hotel)

Registration InformationMAIL the form to: FAX the form to: (626) 446-4072 Arcadia Association of REALTORS CALL the Association office: (626) 446-2115 601 S. First Ave., Arcadia, CA 91006 E-MAIL the form to Stephanie@TheAAR.com Attn: Stephanie ONLINE at www.TheAAR.com under “Upcoming Events”

Total Amount Paid: $_______________Check _____Cash _____Visa _____Mastercard

CC#: __________________________________________________________ Exp. Date: __________ CID#: ______Name: _______________________________________ Company: ________________________________________Email: ____________________________________________ Phone#: _________________ Fax#: _______________Address: ________________________________________ City: _______________ State: _______ Zip: _________Signature: _________________________________________________ Date: _______________ NRDS#: _______________________

Coffee and tea service will be provided each day.

Lunch will be on your own. There are many options within walking distance.

COURSE PRICING:

$139 / $160 One Course$278 / $320 Two Courses$417 / $480 Three Courses$556 / $640 Four Courses$595 / $695 Five Courses - Special Savings!

Early / RegularBird* / Price:

10

A Look at What’s Happening Around the AARthroughthe lens

10September 2013

AAR President, Andy Bencosme receives

recognition for dedicated service to the Monrovia Library Board.

AAR Staff, Jane Shriver celebrates 23 years at the AAR

Annual Membership Survey Winner: Lanny Aplanalp displays his $100 VISA gift card.

AAR Staff, Robin Allen celebrates 10 years at the AAR

Annual Membership

Survey Winner: Quentin

Tang displays his $100

VISA gift card.

Annual MembershipSurvey Winner: Jill Nelson won free MLS fees for the entire year of 2014.

Annual MembershipSurvey Winner: Jane Zhang won free MLS fees for the entire year of 2014.

11Arcadia REALTOR® Magazine

Affiliate Corner“How Lenders Calculate Income...

The Truth is Out There!”By Scott Shimamoto, Franklin Loan Center

Hopefully, we’re all past the point of understanding why we are not doing stated income loans for conventional, FHA, and VA mortgages. Hundreds of billions of dollars of losses on mortgages that went south should be explanation enough.

Don’t get me started about niche lenders starting to offer stated income loans (if they can put 40% down) because if an applicant

“states an income” that is different than what is on their tax return, by definition, the person applying for the loan is committing fraud. If the lender does not care what the income is, then they should call it something else like “no ratio” and not put their clients (and themselves) in a position of committing fraud. As much as I hate government regulation, there are too many business entities that will push their business practices past the point of good ethics and this is a prime example.

In our full documentation world, calculating income CORRECTLY is a crucial aspect of the loan preapproval process. As a loan officer, I am well aware that I’m asking a lot of questions to borrowers and asking for even more documentation from them. Believe me when I tell you this. I would love to wave a magic wand over a borrowers paystub and instantly come up with an accurate preapproval, Unfortunately, magic wands only exist in places like Hogwarts!

So why do we ask for W-2’s, tax returns, AND have the borrower sign a 4506T form? It’s because the regulators, investors, and corporate loan executives have mandated that the loan files turn into the “X Files”. This means that lending companies have adopted a “trust no one” mentality like that old TV show! As all loan professionals know, the “truth is out there” in the documents we’re required to analyze!

First the good news on why we ask for all documentation. The reason the W-2’s are important is because we get to use the biggest gross number on that form for the base income figure. This figure is typically higher than what is posted on line 7 of the 1040 tax form because line 7 is the income net of the allowable deductions like 401k or pretax benefit packages. If we use the higher income figure, that allows the borrower to qualify for a higher loan amount. We can also add alimony, child support, pensions, disability payments, social security, rental income, side business income, depreciation paper losses, and other forms of income if there is a track record and it can

be documented that this income will continue for a minimum of three years.

Now the part that everybody gets tripped up on. Many people don’t realize that lenders are REQUIRED to deduct various items from the gross income to come up with a “usable” qualifying income. So what do we need to deduct? You know all those deductions that aggressive tax preparers use to lower a person’s tax bill? You guessed it. Those deductions comprise a lot of what we need to net out of the usable income. These deductions include: Job related expenses on the 2106 form; Schedule C losses, and losses related to rental properties that the applicant owns. We also need to deduct credit report liabilities which include: traditional debt obligations; Judgments; and court ordered obligations like alimony and child support.

This is why many self-employed borrowers have a difficult time qualifying for the loan amount they desire. Self-employed individuals tend to write off more than the average W2 employee. Unfortunately, a borrower cannot have it both ways. They either get the tax advantages of hefty write offs, or they get to use most of their gross incomes to qualify for a higher loan amount.

So why do we require that the borrower sign that pesky 4506T, which is a Request for transcripts of tax return form? As I stated before, it’s because the loan packages are the “X Files” and the industry standard is to “trust no one”. Basically, the lenders are required to obtain the tax transcripts of what the borrower filed with the IRS to make sure that they match the tax returns that were submitted for the loan process, and are true and correct. Copies of the tax transcripts and the tax returns analyzed are placed in the permanent loan file. There’s your smoking gun X-Files fans!

The “trust no one” should also apply to you as a REALTOR® when it comes to your prospect asking you to drive them all around town before they have been preapproved. Just because they SAY they make great money, it doesn’t mean that all of that income is usable from a loan approval standpoint. Don’t waste your time or gas until you have a PROPER preapproval from a loan professional who understands how to properly calculate income!

You can reach Scott Shimamoto at (626) 399-1525 or at scotts@franklinlc.com.

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www.DownstreamExchange.com

909 East Green Street, Pasadena CA 91106-2930

Phone: (800) 743-1031Fax: (626) 796-8222

C. Anthony Phillips, CPA President

We Provide A Complete Service To Successfully Accomplish Tax Deferred Exchanges

®

Pre-Exchange Tax Planning

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Post Exchange Tax Planning

Call for your free Exchange Tax Analysis

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

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(626) 869-8787

Call today for a free consultation

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