Monday, September 30, 2013

When Does a $870,000 home cost less than a $800,000 home?


Would you believe that it can cost less to purchase and maintain a home that costs $70,000 more than a less expensive property? It is true. When could this possible occur? When the more expensive home is equipped with full electric solar, owned by the property owner.

I know that it is hard to believe, but the monthly out of pocket expenses for that $870,000 property is less than an identical $800,000 home that does not have solar. Take a look at the following comparison:

Without Solar 1
Cost of Home                 800,000.00
20% Down Payment       160,000.00
Loan Amount                  640,000.00
Monthly Pmts (4.25%)         3148.42
Monthly Property Taxes         800.00
Average Electric Bill               450.00
Final Monthly Payment        4,398.42

Cost of Home                  840,000.00
20% Down Payment        168,000.00
Loan Amount                   672,000.00
Monthly Pmts (4.25%)         3,305.84
Monthly Property Taxes          840.00
Average Electric Bill                450.00
Final Monthly Payment         4,595.84

Cost of Home                  870,000.00
20% Down Payment        174,000.00
Loan Amount                   696,000.00
Monthly Pmts (4.25%)         3,423.90
Monthly Property Taxes          870.00
Average Electric Bill                  55.00
Final Monthly Payment         4,348.90

The charts above shows the monthly payments that will be made by a home purchaser when a house has solar, as compared to two properties that do not have solar. The assumptions are that they are substantially the same house in the same neighbor hood, the buyer is making a 20% down payment and the interest rate is 4.25%.

The monthly payment on the loan for the $800,000 house is about $275 less than the more expensive home, and the property taxes are about $70.00 less, for a total difference of $345 less than the more expensive property. However, the home with solar has electric bills, on average, of at least $395 less per month. The owner of the $870,000 home actually pays a total of $50 less per month.

Since the increase bank loan interest and the property taxes of the more expensive home is about $3,255 higher per year, that owner has a higher tax deduction. Depending on the income of the home owner, that could be $1,000 to $1,500 less is tax payments per year, actually increasing the monthly savings.

Unfortunately, this type of analysis is not given to potential buyers by their real estate agents, often times because they simply do not understand the actual savings. They will sometimes direct their client to a home priced a little lower, not realizing that they are costing their clients thousands of dollars per year.

An example would be two homes in South Livermore, one with solar and one without, but the same floor plans just a couple of blocks apart. The one with solar is on the market for $869,500 while the one without solar is on the market at $829,000. The less expensive home will cost almost $200.00 more monthly than the more expensive home. That number could increase, as electric rates continue to climb. The buyer of the less expensive home will actually lose $2,400 per year plus the additional tax deductions.

If you are in the market for a home and you come across one that has full solar installed, don't just compare the prices between two properties. Take the time to do an analysis of the overall savings that you might have with a solar equipped property. Ask the seller for a year if electric bills in order to see what they are actually paying. Don't confuse price with cost.  You might be putting thousands of dollars into your own pocket simply by paying a little more.

Ken Koenen is a real estate and taxation attorney in Pleasanton. He is also a licensed real estate broker. He can be contacted at 925-924-0100 or by email at ken@lawken.com

Wednesday, August 21, 2013

Who Are the Real Racial Profilers?

I am amazed how people put forth facts regarding the Zimmerman-Martin tragedy that are pure make believe, or could not possibly be known by anyone today. Much of the rhetoric comes from the likes of Al Sharpton and Jessie Jackson (I will not call them "Reverends" because reverends do not provoke anger like they do), the real "Racial Profilers" in America.

I can just imagine the dialogue that goes on with their research staff as they scour the news articles in the newspapers and the internet. It would go something like this:

Black kills black .... No
Black kills black .... Nope
Black kills Hispanic .... Nah
Black kills black .... No
Black kills white .... Yawn
Black kills Hispanic .... No
Black kills black .... Can someone bring me some coffee?
17 year old black kills 13 month old white child in stroller .... He probably threatened him with is rattle.
Black kills black .... Nope
White man kills black man .... "Oh my God, the outrage! This racial animus against blacks has to stop! Al! Jesse! Come look at this!"

Let's not forget President Obama ("He would look like my son!") and Maxine Waters ("He was hunted down like a dog.") That last remark creates visions of George Zimmerman walking around with his gun drawn, peeking behind every wall and bush, trying to track down a wanton criminal.

I also like the multiple statements about a "child" carrying Skittles and Iced Tea, innocently walking through the community. Perhaps I missed it, but I heard no evidence that Zimmerman had X-Ray vision that would allow him to determine what Mr. Martin was carrying. Furthermore, that "child" was a 17 year old young man who was taller, and possibly stronger than Mr. Zimmerman. That is the same age as the young man who shot a 13 month old in the head while the baby's mother watched. I wonder if the baby threatened him with his rattle, justifying self-defense. That is not my definition of a child.

We would be remiss if we did not compliment Beyonce, JayZ, Madonna, and all of the other celebrities who have condemned the verdict, even though they have no clue about the actual evidence, and have threatened to never perform in the State of Florida until the state does away with the "Stand Your Ground" law. Obviously, they have been playing their music too loud without ear plugs, because their brains must have been severely damaged. Stand Your Ground was never part of the case, and had no bearing on the decision by the jury. I would suggest that we all boycott any venue at which any of these people have performed. They do nothing by harm America, both with the words of their songs and their opinions.

The rhetoric spouted by the media, the black activists and others is completely contrary to the facts that were brought at the trial. Let's take some examples:

1. "Zimmerman was told to stay in his car, but got out anyway to follow Martin." A review of the transcript of the 911 call does not support that. For some reason, people choose to believe this without reading the entire transcript. The dispatcher never told Zimmerman to stay in the car. They asked if he was following Martin and, when he replied that he was, they said, "We don't need you to do that." He replied "OK", and then they talked about where he would meet the police when they arrived.

2. "This young man was just walking through the neighborhood minding his own business." How do those making that statement know what was in Martin's mind? He was, according to the transcript, walking slowly in the rain. I know that when I am caught in the rain, especially without an umbrella, I walk as quickly as I can to get to where I was going so I could get out of the rain.

3. "Martin was armed only with a bag of Skittles and some iced tea." That is true, but how was Zimmerman to know that? Since no one has demonstrated that Zimmerman had X-ray vision, he had no idea as to whether or not Martin was armed in any way.

The reality is that Zimmerman lost sight of Martin, and was headed back to his truck. Martin had more than four minutes to leave the area and go to the house at which his father was staying. I am guessing that I could cover a quarter mile (4.4 football fields) walking in four minutes. Since he was concerned about this "cracker," why didn't he get out of there. There is substantial evidence to support Zimmerman's story.

I was watching two black women debating the Oprah Winfrey issue in Switzerland. One said that Oprah was too sensitive. The other said, "You weren't there and I wasn't there, so we have no right to make that judgment." A month earlier, that same woman was critical of the Zimmerman verdict, even though she was not there, had not heard all of the evidence in the court room, and had no right to make a judgment in that matter, either. Apparently, she only has the right to judge negatively against white people.

If Mr. Sharpton and Mr. Jackson want to make a difference for the black community, they will go to the Chicago's and Oakland's in the country to work on building self respect for the lives of other blacks, the discipline to stay in school, and the desire to succeed through becoming smarter and of more value to society and the market place. They need to convince the black community to stop looking in the rear view mirror of the past, and start looking in a regular mirror to identify the problem. Then, to look to the future to create their own decent life in this land of opportunity, not of handouts.

Of course, if that happens, Sharpton and Jackson might be out of a job, so it is in their personal best interest to keep the unrest and divisiveness alive.