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| Real Estate Tidbits |
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| Sausalito Amazing View Home http://www.105cloudviewroad.com |
Articles and Advice |
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| Sellers, pay attention to lowball offers By Dian_Hymer Selling a home can be an emotional experience because most sellers have a lot more than money invested in their homes. So, it's understandable that sellers might be reluctant to respond to an offer that is for less than the asking price. Most sellers have a difficult time being objective about their homes. But, detachment is something sellers should strive for, particularly when the market favors buyers. To be a successful seller in a buyer's market, you need to be able to put yourself in the buyer's shoes. Ask yourself if you were a buyer if you would pay the price you would like to ask for your home. In a soft market, like we are currently experiencing in many parts of the country, buyers are prone to make a low offer on any listing that doesn't receive offers from more than one buyer. The exception is when a listing is priced so competitively that a buyer recognizes a good deal and buys the property before others have a chance. Some sellers might be inclined to inflate their asking price so that they will have room to bargain with a buyer. This is a risky strategy for serious sellers. In a buyers' market where there are a lot of homes for sale, the best listings at the best prices sell. The listings that don't sell usually need price reductions to get them to a marketable range. If the market is trending downwards, this could mean selling for a lower price than might have been possible if the listing had been priced competitively to begin with. HOUSE HUNTING TIP: Sellers whose homes are not competitively priced are prime targets for low offers. Even if your home is not badly priced, you could receive a lower-than-asking-price offer if market conditions are uncertain. Rather than being insulted by a low offer, sellers should view it as the beginning of a dialogue that could result in a sale. Pay close attention to the buyer's financial capability. Gone are the days where buyers could buy a home with little or no cash down, and without verifiable income. Today's buyers are subjected to far more financial scrutiny by lenders than they were a year ago. Ideally, buyers should be preapproved for the financing they need before they make an offer. If they are not, make sure there is a clause in the purchase contract that requires the buyers to apply for financing within a several days of acceptance. Find out what kind of financing the buyers are applying for and which lender they intend to use. Some mortgage lenders recently failed to fund buyers' loans at the last minute. Make sure your buyers receive underwriting approval from a bona fide lender. The number of days for lender approval should also be included in the contract. Sellers who receive an offer that is unacceptable regarding any of its terms and conditions -- not just the price -- should have their agent draft a counteroffer. Buyers and sellers often don't know in advance what price they'll accept until they're in the midst of a negotiation. For example, a seller who bought another home before selling might accept a lower price if his house has been on the market awhile and the buyer's offer is not contingent on the sale of another property, and if the transaction will close quickly. Likewise, a buyer could agree to pay more than he thought he would if interest rates were to drop. THE CLOSING: The counteroffer process can happen quickly or it can be long and tedious. Be prepared to explore all options before letting a negotiation fail. |
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| Green Your Home Six ways to make your existing home greener in our environmentally-consciou By Bridget McCrea There’s a movement underway to lessen the impact that homes have on the environment, and both new and existing homeowners alike are doing their part by taking simple steps in the right direction. If you’re not sure how to join in, here are six ways to make your own home a little greener right now: Switch to CFLs Go through your home and find all of the light bulbs that you picked up at the grocery store and replace them with compact fluorescent light bulbs (CFLs), which not only last longer, but also reduce the amount of greenhouse gas emissions coming out of your home and into the environment. A CFL bulb uses 75 percent less energy than a standard incandescent bulb, generates 450 fewer pounds of greenhouse gases from power plants and lasts 10 times longer than its incandescent cousin. Learn more about CFL usage online at: http://www.energystar.gov/index.cfm?c=cfls.pr_cfls Use ENERGY STAR® When it comes time to replace or upgrade that refrigerator or washer, select only ENERGY STAR® qualified products, which cost 10 to 30 percent less in operating costs to run. Using energy efficient products and practices, the ENERGY STAR® program saved enough energy last year to avoid greenhouse gas emissions equivalent to those from 25 million cars — all while saving $14 billion on utility bills. More than 50 types of products can earn the ENERGY STAR®, including appliances, lighting, home electronics and home office equipment. Find out which appliances qualify at www.energystar.gov. Avoid VOC-Based Paints Volatile Organic Compounds or “VOCs” have been a key component of the composition of oil-based paint, and can also be found in traditional latex based paints. Exposure to VOC's in paint can trigger asthma attacks, eye irritation and respiratory problems, nausea and dizziness, among other symptoms. Prolonged exposure has been linked to kidney and liver disease and even cancer. The good news is that alternatives are available, and are endorsed by the “Green Seal®” certification (based on VOC content, the absence of chemicals, durability and performance among other criteria). These alternatives include low-odor or low-VOC paint, zero-VOC paint and non-toxic or natural paint. Find out more about your healthier options at: http://eartheasy.com/live_nontoxic_paints.htm Harvest Rainwater Did you know that every inch of rain translates into nearly 600 gallons of water for every 1,000 square feet of roof? Environmentally-conscious homeowners are tapping this natural resource and reducing reliance on other water sources by using rainwater harvesting systems that are installed on a home’s roof, which serves as the catchment area. Gutters act as the conveyance system, while cisterns hold the water and are complemented by a pump-based delivery system and a filter- and/or purifier-based treatment setup. Such systems can be added to existing roofs, or installed on new homes, and used to minimize the 100 to 250 gallons of water that the typical American pulls from their municipal systems or private wells. Check out the Rainwater Harvesting Community for more information: http://www.harvesth2o.com/ Be Water Efficient Kitchens, bathrooms and laundry rooms are all hotbeds for excessive water usage. Cut the waste by installing low-flow showerheads and faucet aerators, both of which help save resources without sacrificing water pressure. Use front-end loading washing machines, which not only save water but also treat your clothing better because they lack a middle “spinner” that thrashes the garments around. Finally, consider installing dual-flush commodes, which use a variable amount of water, depending on how much is needed. See the U.S. Environmental Protection Agency’s Web site for more information on water efficiency: http://epa.gov/watersense/ Tune up Your Home Lessen your home’s impact on the environment by tuning it up in a few key areas: the HVAC system, windows and doors, and insulation. A professional HVAC checkup costs about $100 and can save you 5 to 10 percent on heating and cooling bills, while also cutting down on the carbon dioxide emissions coming out of your home. Don’t forget to clean or replace your filters monthly. Upgrade your windows and doors with energy-efficient models, improve their efficiency by replacing old weatherstripping, and make sure your home’s walls and attic are well insulated. If they are not, enlist a contractor who will use a “blown-in” insulation technique to fill in any voids that may be causing hot or cool air to escape. The California Energy Center provides more great ideas for homeowners at www.consumerenergycenter.org. |
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| What is an "as is" sale? Occasionally, listings are advertised as "as is" sales. To some buyers this signals a potential bargain property. For others, an "as is" sale carries a negative connotation. It suggests that the property might be tainted. Often, neither perception is accurate. It's difficult to know from an advertisement what "as is" means with respect to the sale of a residential property. It can mean that the property is being sold in its present condition and without a warranty. In other words: The seller makes no guarantees about the property's condition. In some states, like California, sellers may provide a general warranty of habitability when they sell a home. Generally, this means that the roof is free of known leaks and the dwelling systems like plumbing and electrical are in working order. With an "as is" sale, such a warranty probably wouldn't apply. Probate, trust and foreclosure sales are often "as is" sales. The sellers of these properties could have acquired them under adverse conditions (either because a relative died or because a buyer defaulted on a mortgage). In these cases, the seller might have little, if any, actual knowledge about the property's condition. In many cases, sellers of probates and foreclosures haven't even seen the properties. FIRST TIME TIP: Before you agree to purchase a property "as is", make sure that you have it thoroughly inspected. If it's a foreclosure, you might not be able to include an inspection contingency in the purchase contract. In this case you'll have to complete inspections before you make an offer. When several buyers are competing for a hot listing, the winner is often the buyer who makes an "as is" offer. Sellers usually prefer an "as is" offer because it relieves them of the responsibility of completing repairs before closing. The buyers take on the burden of repairs which cuts down the hassle factor for the seller. Just make sure that you include an inspection contingency in an "as is" offer unless you've had a chance to complete all necessary inspections before you made the offer. Sometimes purchase contracts are written "as is" for convenience in dealing with the buyer's lender. Let's say that the sellers had a termite inspection done before they put their home on the market. The termite report calls for the shower, floor and tub in the bathroom to be replaced. The cost of this work will run $5,000. The sellers are willing to pay for the repair work but the buyers would prefer to do the work themselves so that they can remodel the bathroom to their own specifications. So rather than asking the sellers to do the termite repairs before closing, the buyers write their purchase contract to be "as is" regarding termite work. And they ask the sellers to credit them $5,000 at closing. Buyers purchasing a property that they intend to renovate extensively often prefer to purchase the property on an "as is" basis. For example, if the house has a $25,000 termite bill and it needs a new $10,000 roof, the buyers might prefer to reduce the purchase price by $35,000 and buy the property "as is". An "as is" sale doesn't necessarily mean the property is a bargain, nor does is mean that the property should be dismissed as unacceptable. Find out the nature of the work required to put the property in good condition. Then decide if you're up for the project. THE CLOSING: If an "as is" property will suit your long-term needs when it's fixed-up, it might be worth considering. Dian Hymer is author of "Starting Out, The Complete Home Buyer's Guide," Chronicle Books. Copyright 1998 Dian Hymer |
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| Using CFLs have both pros and cons By Dinah Eng To many consumers, Compact Fluorescent Lamps (CFLs) are most commonly thought of as those squiggly light bulbs that offer energy-efficient lighting and are advertised to last at least six times longer than incandescent bulbs. Advocates say the biggest advantage of using CFLs is the energy savings and long life of the bulbs. When it comes to cutting electric bills, a CFL uses 75 percent less energy than an incandescent bulb. At the same time, while prices for incandescent bulbs can run as low as 25 cents each, CFLs may range from $2 to $5 each. “For long-term savings, one CFL bulb is the equivalent of replacing 6 to 10 incandescent bulbs,” says Gabrielle Boose, CFL product manager for General Electric. But CFLs also come with a cautionary warning -- an essential ingredient in the CFL’s glass tubing is mercury, considered a hazardous waste in large amounts. Exposure to mercury, which is a toxic metal, can affect the spinal cord, brain, liver, and kidneys, causing memory loss, trembling hands and difficulty moving. While CFLs are not legally designated hazardous waste, the U.S. Environmental Protection Agency urges consumers to dispose of the bulbs properly when they burn out. Retailers like Home Depot now offer recycling programs. “While Home Depot is the first to offer a national recycling program, there are many retailers, like Wal-Mart and Ace Hardware, who offer take-back programs on a local level as well,” Boose says. “Consumers should understand, though, that the amount of mercury used in CFLs is very small. Our average dose in a bulb is 3.5 ml, which fits on the head of a pin. In comparison, household thermometers may have 1,000 ml of mercury in them.” If recycling isn’t offered in your area, the EPA recommends placing the CFL in a sealed plastic bag and disposing of it as you would batteries, motor oil and oil-based paint at a local Household Hazardous Waste Collection Site. Caution should also be used if a CFL breaks in your home. Be sure to open windows so that any vapor that escapes can disperse, sweep up the fragments with a broom, and wipe the area with a disposable paper towel. Do not touch anything with your hands, and do not use a vacuum. Place all fragments in a sealed plastic bag and dispose as outlined above. There are many different types of CFLs now available, designed to look more like traditional bulbs, hiding that once bulky spiral element. Some CFLs even work with dimmable switches as well. Truly green-minded consumers are waiting for the development of LED (Light-Emitting Diodes) technology, which was invented by GE scientists in the 1960s. LEDs can offer up to 90 percent energy cost savings, minimal maintenance, and are not made with mercury. Common applications today include car taillights, cell phone displays, camera flashes and architectural accent lighting. “LED is the next future wave of lighting,” Boose says. “In terms of consumer use, LEDs are not ready to take the place of incandescent bulbs like CFLs are. They’re where CFLs were 10 to 15 years ago.” To find information on CFL recycling and household hazardous waste programs in your area, check Earth911.org, which will identify the nearest recycling facility. You also can call (800) 253-2687 for an automated hotline, or the local government entity responsible for household hazardous waste collection. |
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| Top ways to boost curb appeal By Pau Bianchina You've no doubt heard the term "curb appeal," which is the first impression that your home makes when a visitor arrives. Whether you have your home up for sale or just want things to look a little nicer when you or someone else pulls up out in front, the best place to start is by giving the front of your home a critical examination. Driveway: A driveway, by necessity, tends to be a fairly dominant feature, and it is often one of the first things that a person sees when they arrive at your home. If you have a concrete driveway that is oil-stained, check with your local home center for cleaners that can spruce it up. While you're there, get a crack repair compound and take care of smaller cracks before they become larger. For asphalt driveways, a seal-coat can often make a big difference in appearance and help prolong the asphalt as well. For concrete or asphalt that is badly damaged, it's time to be thinking about replacement. You can replace the driveway with the same material as before, or consider an updated look by using paving stones instead -- they hold up well in all types of weather, and can even be a very satisfying do-it-yourself project. Walkways: When someone arrives, is there a clear and safe path to your front door? You may not mind walking across your front lawn, but guests and prospective buyers would definitely prefer a walkway. There are lots of options for creating a new front walkway or replacing an existing one, so check out your home center or some landscaping magazines for ideas. Landscaping: Speaking of landscaping, do you actually have any? Is it well maintained? Few things look worse out front than an overgrown or neglected yard, and you can often remedy things with a little hard work and some minimal expense. Cut back or remove trees and bushes that have gotten out of control. Feed the lawn to get it to green up again, or consider removing all or part of it and replacing it with low-maintenance materials. If you have planter beds, be sure they're weeded and have fresh bark in them. Plan your landscaping to create a visual appeal by not having all the same type of plant. Intersperse some plants that provide spots of color at different times of the year, and mix plants for different heights as well. Shade Trees: Consider adding a couple of new shade trees in front. Trees are good for the environment in general; they help a home look more established and appealing; and they can help lower your summer cooling costs as well. Trees look best planted in odd numbers -- a grouping of three or five, for example -- and the folks at your local nursery can help you with proper spacing. Exterior Paint: There is probably nothing that will help or hurt the outside of your home as much as how your paint job looks. A fresh coat of paint in up-to-date colors works wonders, while old, peeling paint in a color scheme that went out of style when Eisenhower was president can really ruin a first impression. If the paint is in generally good condition and just has a few bad spots, spend a couple of hours with a paint scraper and a can of exterior primer to get things ready for touch up, then have your local paint store match you up a gallon of paint and touch up the primed areas so they blend in. You might also want to consider repainting the eaves or window trim in a fresh new color to liven things up a little. A New Entrance: Your front door is one spot that every visitor has to pass though, and it can make a lasting impression. A fresh coat of paint or stain can sometimes do the trick, but if your door is badly beat up you should consider replacing it. Check with a local company that specializes in doors (not a home center) and see about having a new door matched to your existing frame. The door company will cut the door, mortise the hinges, and drill for the locks using your old door as a pattern, so you can slip the new door right into place without expensive frame alterations or extensive carpentry. Whether you're getting a new door or working with your old one, make sure that there are no squeaks or groans when it opens, and that it fits well in the frame without binding. Check the operation of the door handle and deadbolt; check the condition of the weatherstripping; and don't forget the operation of any screen and storm doors. Cleaning: Last but far from least, clean things up a little. Pick up any trash that's accumulated, including dead leaves, cigarette butts and other small debris. Wash the siding to remove dirt, dust and cobwebs, and wash the windows. Hose off the walkways periodically, and make sure that all exterior lighting is operational. Finally, clean off the front porch -- including porch furniture and knick-knacks -- so that that area is clean and inviting as well. |
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| No such thing as a "green" car, but there are "greener" options By Amy Westervelt Unless you've been cut off from all forms of media for the last two years, you're aware of the fact that vehicle transportation is a major contributor to climate change. According to the Environmental Protection Agency (EPA), transportation accounts for 29 percent of total greenhouse gas emissions in the United States. Transportation also is the fastest growing source of emissions, accounting for 47 percent of the net increase in total U.S. emissions since 1990. And that's just getting from point A to point B -- the figures don't factor in the emissions created by manufacturing automobiles or refining fuel. On top of the environmental cost, the price of gas is not likely to come down too terribly much, and even oil companies’ scientists attest to the fact that we are running out of oil. All of which points to a crucial need for better public transportation and vehicles that are both fuel-efficient and low-emission. Thanks to our collective century-plus love affair with the automobile, U.S. public transportation systems still have a way to go before the majority of people can reliably get where they need to go without a car. Thankfully, from large automotive companies to small start-ups, we're starting to see a number of choices for fuel-efficient, low-emission automobiles, so much so that it can sometimes be confusing to pinpoint the benefits of each and the differences between them. Following, a simple breakdown of energy-efficient, low-emission vehicles: Hybrids Hybrids run off both an internal combustion engine and an electric engine with rechargeable battery. The battery is recharged when the car brakes. Because hybrids switch over to electric power at lower speeds, they make the most of gasoline, getting roughly 40 miles to the gallon, depending on the model. While hybrids have been the poster child for the "green" movement over the last few years, in reality they are only slightly better than conventional vehicles. Because they have two engines, the manufacturing emissions associated with hybrids are higher than those associated with conventional cars; furthermore, there are numerous conventional diesel vehicles in the European Union that get up to 70 miles per gallon. Plug-in Hybrid Electric Vehicles The next generation of hybrid vehicles, plug-in hybrids (PHEVs) run primarily off the electric engine and use the combustion engine for back-up. Their batteries are larger and more powerful, enabling them to run for longer without recharging. When they do need to be charged, they can be plugged into an electrical outlet. The result is much higher fuel efficiency, and much lower emissions, than a conventional hybrid. However, the electric engine comes with its own suite of environmental issues - first, it plugs into the grid, and "the grid" for most of us, is still powered by coal-fired power plants, which means your car use is still tied to a large amount of pollution. Then there's the manufacture and disposal of batteries. Finally, manufacturers are still working out the kinks of battery technology, which is why we're not likely to see PHEVs on the road until about 2010. By that time, hopefully more of the grid will be powered by sun and wind. Electric Vehicles Fully electric vehicles emit nothing when you're driving them, and get a range of about 120 - 200 miles per charge. Their primary environmental impact come from the electricity used to power them - if you're plugged into a coal-fired grid, there are still emissions associated with your drive. However, as more and more states add larger amounts of renewable energy to the grid, the associated emissions will go down. Currently available models are typically fairly high in cost, but more affordable models are coming on line in the next one to two years from Mitsubishi, GM, Ford, Nissan, and California start-up Tesla, which currently sells its high-end roadster, a fully electric high performance sports car. The manufacture and disposal of batteries, however, especially large batteries produced at a scale to supply all the current car drivers, is still problematic for environmentalists. Biodiesel-fueled Car Standard diesel engines can be converted to run on biodiesel -- fuel derived from various plants and/or waste oil from restaurants. There are even DIY converter kits that run about $600 (check out greasecar.com). Biodiesel is not a fossil fuel and is more fuel-efficient than conventional diesel, but it still emits greenhouse gases when burned. According to the EPA, biodiesel emits less CO2 and particulate matter than conventional fuels, but more nitrous oxide, which also is a greenhouse gas. Hydrogen-fueled Cars and Fuel Cells For a long time, many believed hydrogen fuel cell cars were the wave of the future. Cars that run off hydrogen fuel cells can feasibly run just as well as currently available vehicles, and emit only water, which could be used for other things (and guess what? we're running short on water these days too). However, there are numerous engineering obstacles to overcome with hydrogen - namely infrastructure (building hundreds of stations stocked with high-pressure hydrogen canisters is hard to imagine), cost (as with most new fuels, cost for hydrogen fuel is currently prohibitive), and safety (there are still concerns about how hydrogen fuel cells would react in an accident). However, companies such as BMW are continuing to make strides in these areas, while electric car proponents argue that the emphasis should be on increasing the range of existent battery technology. |
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| Despite lower jumbo rates, refi may be unwise By Dian Hymer Borrowers assumed when the conforming loan limit increased from $417,000 to $729,750 in high-priced areas like New York City, Los Angeles and the San Francisco Bay Area that lower rates on jumbo financing would follow. Unfortunately, the conforming jumbos (also called jumbo lights) were initially priced considerably higher than the conventional conforming loans. For example, on May 2, 2008, a $417,000 conforming loan was available with a 5.38 percent interest rate and one point. Points is the term lenders use for the loan origination fee. One point is equal to 1 percent of the loan amount. At the same time, a jumbo light was priced around 6.25 percent and one point. Mortgages are offered with or without points. The mortgage interest rate will be about one quarter percent lower if borrowers pay one point than it would be if they paid no points. On May 8, pricing on the jumbo light conforming mortgages was brought in line with the conventional conforming loans. This is good news for both home buyers and homeowners who need to refinance. A 30-year jumbo light fixed mortgage was offered at 5.625 percent and one point and 5.875 percent with no points on May 9. Conforming loans in amounts to $417,000 were offered for the same interest rate, with a 1/4 or 3/8 percent discount on the origination fee. Nonconforming jumbo financing is still running about 7 percent. With the recent rate reduction on conforming jumbos, borrowers searching for larger mortgages will be able to achieve a lower blended rate by combining a $729,750 conforming first mortgage with a home equity loan of up to $500,000 with an interest rate as low as 5 1/8 percent. Homeowners who purchased four to five years ago using a fixed ARM mortgage product have been worried about refinancing in today's difficult financing arena. It was anticipated that when the mortgage reset from fixed to adjustable, much higher mortgage payments would follow. Fixed ARMs are mortgages that have a fixed interest rate for a period of time (often three, five, seven or 10 years). At the end of this period, the loan converts to an adjustable-rate mortgage (ARM) with an interest rate and monthly payments that fluctuate. ARMs are tied to an index, which is a cost of funds. A margin -- usually in the 2-6 range -- is added to the index rate to determine the current mortgage rate. HOUSE HUNTING TIP: Many fixed ARMs are tied to either a Treasury or London Interbank (LIBOR) index. Thanks to the Fed's rate-cutting campaign, these indices are relatively low today. You may find that it makes more sense financially to keep your mortgage for now even though it converts from fixed to adjustable, particularly if you plan to move soon. On May 8, the 1-year LIBOR rate was 2.99 percent. If your mortgage reset on May 8 to an ARM that was tied to the 1-year LIBOR and had a 2 percent margin, your interest rate would have adjusted to 4.99 percent. To find out if it makes sense to refinance or not, look at your note. It spells out the terms of the loan such as the interest-rate adjustable schedule, the index that your interest rate is tied to and the margin. Your lender can provide you with a copy of the note. There are risks involved in waiting to refinance. If market values decline, your home might not appraise for enough at a later date to pay off your existing loan balance. Also, the Fed is watchful for any indication that inflation is getting out of hand. THE CLOSING: If inflation fears rise, the Fed will stop lowering interest rates, and could start increasing them again. |
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| Buying an existing home that’s “green” By Michelle D. Alderson With rising energy costs and growing awareness – and availability – of environmentally friendly products, it's no wonder that interest in purchasing green homes is rising. Green remodels on existing homes both save the environment and save homeowners money on monthly bills. As green home remodeling becomes more abundant, so does the demand to purchase these homes. This increased interest in existing green homes has created a need to educate buyers on what is really considered "green." Over the past several years, many organizations such as Build It Green, (http://www.builditgreen.org), an independent nonprofit organization, have been created to offer a third-party unbiased evaluation. Because of the growing desire to purchase existing green homes, states Bruce Mast, development director at Build it Green, "the Real Estate Council has been setting the stage to incorporate GreenPoint Rated results into MLS listings in several areas." What is GreenPoint Rated? Mast explains that, "GreenPoint Rated provides an independent assessment of a home across five categories: community design, energy efficiency, indoor air quality/health, resource conservation, and water conservation." Other organizations that have similar rating systems for homebuyers include the U.S. Green Building Council (http://www.usgbc.org), a non-profit community; and Green Globes (http://www.greenglobes.com), an assessment and rating system. The USGBC has created the REGREEN (http://www.greenhomeguide.org/guide_for_green_renovation/index.html) program in partnership with the American Society of Interior Designers' Foundation. Working with LEEDs for Homes, a LEED (Leadership in Energy and Environmental Design) certification offers an unbiased green home inspection for possible buyers. In addition, Green Globes boasts a rating system that has an easy-to-use online questionnaire for a minimal cost. Once the questionnaire is completed, the user automatically receives a report. All three organizations have online tools to answer questions and guide interested parties through the certification process. Part of this process includes understanding what different elements make a home green. The elements can range from simple re-landscaping to more complicated structure updates. But all share a common goal: to help preserve the planet and save on energy costs. The following are just a few examples of "greening" a home: • Buying ENERGY STAR (http://www.energystar.gov) appliances is the most popular way to go green. These EPA- and Department of Energy- approved appliances use less energy than conventional appliances. • Another easy way to green a home is by replacing standard light bulbs with energy-saving CFLs (Compact Fluorescent Light Bulbs), (http://www.energystar.gov/index.cfm?c=cfls.pr_cfls) which can be found at most supermarkets and drugstores. • Using VOC (volatile organic compounds) (http://www.epa.gov/iaq/voc.html) also receives green certification recognition. VOC paint is just one example of how this compound is used. • Installing low-flush toilets, solar paneling, and low-emittance windows helps lower water and energy bills. • Planting native vegetation and drought-resistant landscaping can save on water usage as well. When thinking about purchasing a green home, a buyer might wonder if it's really worth all the effort and cost. Aside from saving the planet, green remodels on existing homes have proven to be cost-efficient. Veronica Cortes, a homeowner in Northern California recently did an entire green remodel on her 1957 ranch-style home. Currently she pays $30 per month on average for her energy bill after installing solar paneling. In the winter months, her neighbors pay anywhere from $276 to $500. Cortes says all the heartaches of a remodel were worth it: "Our house nurtures us in ways that it never did before: … the place is flexible and its spaces can accommodate different uses depending on our needs, [and] it's cheap to run." |
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| The importance of housing permits Skirting laws can create big headache when it comes time to sell By Dian Hymer How would you feel if you bought a house that was advertised as a having four bedrooms, three baths with a large recreation room and later discovered that technically it was had only three legitimate bedrooms, two bathrooms and a basement? This scenario is not far fetched. In neighborhoods with older homes, it's common for properties to undergo several improvements over the years – and sometimes without the blessing of the local building department. It's easy to understand why a homeowner would decide to bypass the permit process. There are fees attached to building permits and time involved in waiting for building inspectors to show up. But, skirting permits can create a big headache if you ever intend to sell your home. For instance, in most cases the buyer of your home will have to get a mortgage to close the sale. This means that the property is likely to be scrutinized by a property appraiser sent by the lender to confirm that the buyer isn't overpaying. Most appraisers look at the public record to confirm the number of bedrooms, bathrooms and square feet of living space. Granted, the public record is often inaccurate, particularly in areas of older homes that have been renovated over time. But, some appraisers ask for verification that the improvements that are not reflected in the public records were, in fact, done with permit. If the sellers can't substantiate that the work was done with permits, the appraiser might not give full value for the improvements. If the house doesn't appraise for the sale price, the transaction could be in jeopardy. HOUSE HUNTING TIP: Even if you don't intend to sell now, you can enhance the value of your investment by making sure that your substantial renovations are done with building permits. Today's value conscious buyers are likely to pay attention to this important detail. However, buyers should not assume that an addition wasn't done with building permits just because it doesn't show up in the public record. Recently, Piedmont, Calif., homeowners put their home on the market. They had made a couple of additions to the property over the years that added 477 square feet of living space to the house. Even though the sellers had obtained building permits before they did the renovations and their property had been reassessed to reflect the cost of the improvements, the public record did not include the extra 477 square feet in the total square footage calculation. So the seller merely went to the county assessor's office and filled out a form to correct the public record. The sellers also had a recent appraisal of the property. The appraiser included the 477-square-foot addition in his overall square footage assessment. Appraisers will often include renovations in their square footage calculation even if that figure differs from the public record figure if the improvements were of similar quality to the rest of the house. Some homeowners do quality renovations that withstand the test of time. Others hire slipshod contractors or handymen to make improvements that don't hold up well. To ensure that you know what you're getting, check the public record of any house you're interested in buying. If you can't find permits for significant work that has been done to the property, ask the sellers for copies of the building permits. THE CLOSING: Also be aware that sometimes homeowners apply for building permits, but never receive a final sign off on the permit. This could mean that some work might not have been completed satisfactorily. |
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| How, What, Where, When: the 411 on Electronics Recycling By Michelle D. Alderson As conscious as consumers are becoming about recycling, every once in awhile it is easy to slip up. Maybe you didn't know where to recycle that AA battery, so you tossed it in the trash when nobody was looking. This is understandable. How much can one little battery hurt? According to the U.S. Environmental Protection Agency, each person in the United States discards eight dry-cell batteries per year. With a population of more than 305 million people, that adds up to a lot of batteries. And that's just the beginning. Think about all of the used cell phones, computers, CPUs, and other electronics languishing and leaching hazardous materials in landfills all over the country. At one time, the only option for recycling common household products was driving to a local Goodwill Store and hoping your used goods were salvageable. But what do you do with those used batteries or electronics that aren't? How do you ensure they don't end up in landfills? To find out where you can recycle these used goods in your neighborhood, we've put together a list of locations that offer recycling programs: AT&T Wireless (http://www.wireless.att.com): In addition to recycling used cell phones, PDAs, accessories, and batteries (regardless of manufacturer or carrier), AT&T Wireless has partnered with the charity Cell Phones for Soldiers (http://www.cellphonesforsoldiers.com/). Cell Phones for Soldiers collects and recycles wireless phones and uses the proceeds to buy free phone cards for United States military personnel and their families. Goodwill Industries (http://www.goodwill.org): In 2007, Goodwill Industries received more than 200,000 computers. Many are refurbished, but some are not. In response to the overwhelming number of electronics the organization receives each year, Goodwill Industries has created an E-Waste Initiative (http://www.goodwill.org/page/guest/about/howweoperate/recycling) to "seek economically and environmentally sound ways to recycle and reuse donated electronic equipment." Sprint PCS (http://www.sprint.com): The Sprint Project Connect (http://www.sprint.com/citizenship/communities_across/project_connect.html) program accepts used wireless phones, batteries, accessories, and connection cards, regardless of make, model, or service provider. All net proceeds go to benefit Internet safety for kids. United States Post Office (USPS) (http://www.usps.com): The USPS launched a new initiative in March to aid in recycling. Through its "Mail Back" (http://www.usps.com/communications/newsroom/2008/pr08_028.htm) program, customers can use free envelopes found in 1,500 post offices to return at no cost inkjet cartridges, PDAs, Blackberries, digital cameras, iPods, and MP3 players. Best Buy (http://www.bestbuy.com) recycles cell phones, ink cartridges, and rechargeable batteries. FedEx Kinko's (http://www.fedexkinkos.com) recycles inkjet and toner cartridges. Office Depot (http://www.officedepot.com) recycles used computers, monitors, digital cameras, fax machines, cell phones, and other electronics. OfficeMax (http://www.officemax.com) recycles inkjet and toner cartridges. Radio Shack (http://www.radioshack.com) recycles cell phones, NiCad batteries, and rechargeable batteries. Staples (http://www.staples.com) recycles used computer monitors, cell phones, PDAs, inkjet, and toner cartridges. T-Mobile (http://www.t-mobile.com): T-Mobile's recycling program accepts any make and model of wireless phones, batteries, PDAs, and accessories. In addition, 100 percent of refurbished product’s net proceeds go to charity. Verizon Wireless (http://www.verizonwireless.com): Verizon Wireless' HopeLine (http://aboutus.vzw.com/communityservice/hopeLineRecycling.html) phone recycling program donates cell phones, air time, and money received from refurbished cell phones to assist victims of domestic violence. The company also recycles used cell phones and equipment from all service providers. Walgreens (http://www.walgreens.com) recycles used dry-cell batteries, NiCad batteries, rechargeable batteries, and inkjet cartridges. If all else fails, a quick check on the earth911.org (http://www.earth911.org) Web site can help you find other recycling locations in your neighborhood. The Web site is very easy to use. Simply type in a ZIP code and the material/product you want to recycle, and find a list of local centers. |
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| Facing foreclosure: When must I move out? By Benny Kass DEAR BENNY: I am one of the unfortunate who has to deal with eventual foreclosure. Can you tell me how long I can remain in my home until legally having to vacate? –Constance DEAR CONSTANCE: Before the foreclose takes place, please talk to your lender -- and not just a low-level loan officer but someone high in the company. With all the foreclosures taking place throughout the country, lenders (at least the legitimate ones) do not want yet another foreclosure on their books. If no one buys at the foreclosure sale, the lender will be stuck with the house and will have to pay real estate taxes and insurance. Also, check with your county and state governments. Many governments now have programs to assist borrowers who are in trouble, so you may be able to save your house. How long do you have to stay in the house if it is foreclosed? Technically, you have to move out when the house is sold. But again, talk with your lender. They may be willing to let you stay for a period of time, if you can pay some rent. Lenders do not want houses to be vacant. If the home is scheduled for foreclosure, I would attend that sale. Find out who bought it -- it may be the lender itself if no one bids. Then discuss your situation with the buyer; once again, you may be able to strike a deal with that buyer. To my knowledge, although you have to move out, it has been my experience that many homeowners whose property has been foreclosed upon just stay in the house until eviction proceedings are brought, and then they move out. DEAR BENNY: I live in North Carolina and my neighbor recently planted trees, two of which are on my property. Where do I stand? –Brian DEAR BRIAN: I can't give you advice about North Carolina law because I don't practice law in that state. However, I suggest that you arrange to have a survey made of your property so that you will know exactly where your property line is. If your neighbor's trees are even one inch on your property, I would try to meet with your neighbor and discuss the situation with him or her. Be friendly; perhaps you can invite the neighbor over for coffee. If the trees are on your property, you have the absolute right to demand that they be removed. If you do not object to those trees, then perhaps you can reach an agreement that the neighbor will maintain the trees. And while it may be a very small amount of money, you may want to ask your neighbor to pay the percentage of your real estate tax on which the trees stand on your property. Finally, depending on your own state law, so long as you will not injure anyone or cause any property damage, you should have the right to cut down the trees if they are on your property. DEAR BENNY: I'm a 66-year-old female living in California. I'm divorced and own three homes -- two rentals and one primary residence. I plan to leave my children an equal interest in my real estate holdings upon my demise. I do not have any other investments, savings, IRAs or holdings worth mentioning. I need to generate a living trust, but keep postponing it due to the cost. I ran a search online and saw that one can order the necessary paperwork for the price of $149. I am a REALTOR® (retired) and would be able to obtain prelims on my properties myself. What do you think? Would it be binding? –Marianne DEAR MARIANNE: I cannot recommend that you use what is generally referred to as "off the shelf" legal documents that you can get on the Internet. These documents are general in nature, and may not be specific for your needs. Since you have the ability to assist a lawyer, I am sure that you can negotiate the attorney's fee. But I strongly recommend that you consult a local attorney who understands real estate and living trusts. DEAR BENNY: I presently have a Starker (Section 1031) exchange with my brothers invested in a rental property. We had this set up for about five years. If we sell the whole property, can it be divided into three shares with each one of us owning one share for another exchange? It is hard to work with three owners when we live in different areas of the country. –Marilyn DEAR MARILYN: If the property is in the name of a partnership -- instead of in your three individual names -- then when the property is sold, you either have to pay the appropriate capital gains tax or do another exchange. The new property (called the replacement property) must be in the name of the partnership. If, on the other hand, the property is titled in your individual names, then when it is sold, each of you has the right to enter into another exchange on your own (or pay the tax and keep the balance of one-third of the sales proceeds). If the property is in the name of a partnership, here's a tip: In the year before the property is sold, formally dissolve the partnership and put the property in the name of the three of you. Then, next year, you each have the right to do with your one-third as you so desire. DEAR BENNY: I purchased a townhouse in my brother's name until I resolved my financial difficulties. He already owns several properties. I am not really benefitting from this transaction. My intent is to have him transfer ownership to me this summer. How do I get my name on the deed and the mortgage? –Janet DEAR JANET: Your brother will have to deed the property to you. You and your brother will have to explain the situation with the current mortgage lender. They may be willing to allow you to assume the obligations of that mortgage, and they may also release your brother from his obligations. Much depends on the lender and the kind of loan currently on the house. If it was an ARM (adjustable-rate mortgage), the lender may be willing to cooperate with you. On the other hand, if the existing mortgage contains a lower rate of interest than is currently available, the lender will probably not allow you to take it over. If you have cleared up your credit, and can qualify for a mortgage on your own, then it may all work out alright. If you are unable to qualify, ask your brother if he will guarantee the loan. This may convince the lender to allow the transaction to take place. But your brother should consult a tax accountant to determine any tax consequences he may have when he transfers the property to you. DEAR BENNY: My tenants are divorcing. I received a 30-day notice from the husband. His spouse was not part of the 30-day notice. She would like to continue renting the property. My concern is that she does not have a job, and will be able to afford the rent only from monies received from spousal or child support. Her mother (who lives out of state) has offered to cover the rent if this becomes necessary. What should I do: create a new month-to-month tenancy? Who would be named? What precautions should I take? –Monica DEAR MONICA: I would recommend that you enter into a new lease with both the current tenant and the mother named as the tenants. Make sure that the lease states that the tenants are "jointly and severally" responsible for paying the rent. This means that each tenant is legally obligated to pay the full monthly rent. How long a term should you have? That really depends on you. If you think that the tenant will take good care of the house -- and that with the assistance of her mother, the rent will be paid timely -- then why not consider a year's lease? The mother may be concerned that a month-to-month is too short a period of time. DEAR BENNY: Are title examination and loan origination fees legitimate or just junk fees? –Lee DEAR LEE: There are some consumers who believe that most, if not all, of the lender's charges are "junk" fees, which means that they are not necessary for the settlement (escrow) process, but are primarily used to increase the lender's profits. For years, lenders would charge between $50 and $75 for a credit search. As a result of litigation on this matter -- and the fact that everyone can get a free credit report at least once a year -- lenders now charge a lot less for the credit search. Loan origination fees are, in my opinion, junk fees. But in most cases, if you want to get a loan, you will have to pay this to the lender. You should try to negotiate this fee as well as all other charges when you begin the loan application process. The title examination, on the other hand, is legitimate. The mortgage lender is going to give you a large sum of money and wants to make sure that your house will serve as good collateral to secure the loan. You will sign a deed of trust (the mortgage document), which will be recorded among the land records in the county where the house is located. This document gives the lender the right to foreclose on the house if you cannot make the monthly payments. But if there are other lenders -- or other clouds such as tax liens or mechanic's liens -- on title, the new lender will not have the security that it needs. So a title search must be obtained to satisfy the new lender that it will be in first position against your house. Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. |
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| Will shopping multiple lenders hurt credit? By Dian Hymer It's not uncommon for home buyers to talk with several mortgage brokers or lenders to compare loan products and interest rates. One buyer who shopped around was scolded by a mortgage broker when he found out she was talking to more than one broker. He told her that she was ruining her credit score by allowing multiple credit inquiries. Too many credit inquiries can negatively affect your credit score, but you can control the damage. And, credit inquires make up a relatively small part of your credit score. For example, the FICO credit score from Fair Isaac Corp. that is widely used by mortgage companies for qualifying borrowers uses five types of information to calculate a credit score. Each type counts as a percentage of the total credit score. They are: payment history (35 percent); amounts owed (30 percent); length of credit history (15 percent); new credit (10 percent); and types of credit in use (10 percent). Credit inquiries fall into the "new credit" category, which accounts for less than 10 percent of your credit score. Only voluntary inquiries are taken into account, such as the inquiries made at your request when you shop loan rates. Loan agents usually need to know your credit score before they can quote you an interest rate. The FICO credit-scoring model ignores all mortgage inquiries made within the last 30 days, so they will have no impact on your credit score. An older version of the scoring formula uses a 14-day time span. A newer version uses 45 days. The lender decides which version of the scoring model it wants to use. There's no need to panic if you don't line up your mortgage in 30 days. The scoring formula looks for mortgage inquiries older than 30 days. It counts all the mortgage inquiries within a certain period, which varies depending on the scoring model used, as one inquiry. For some borrowers, one inquiry might not affect their credit score at all. If it did, it should be less than five points off your score. Let's say you talked to four lenders during a week in September. You authorized each to check your credit. Then you postponed buying until November, when you shopped rates again within 30 days prior to closing the sale. The most recent credit inquiries wouldn't affect your credit score. The four that were made in September would count as one inquiry. HOUSE HUNTING TIP: There’s a wide range of rates being quoted. This is a time when it could pay off to shop carefully for the best rate and mortgage product to suit your needs. For example, one mortgage broker quoted 6.75 percent on a conforming loan (to $417,000) for a 5-year, interest-only, adjustable-rate mortgage (ARM) with no points. (One point -- a loan origination fee -- is equal to 1 percent of the mortgage amount). Another broker offered a 5-year ARM that is fixed for the first five years at 5 7/8 percent with no points. And, this rate was available for loan amounts up to $650,000. Nonconforming jumbo financing for mortgage amounts over $1 million is still high -- in the 8 to 9 percent range. Some buyers are achieving a lower blended rate by combining a conforming jumbo (to $729,750) with a second loan. Borrowers who have good credit and an established banking relationship with a lender might be able to arrange a preferential rate. Before you authorize a credit check, find out what kinds of mortgage products a lender offers and provide a brief summary of your financial situation. Try to focus your rate shopping within a 30-day time period. THE CLOSING: Don't authorize a credit check until you've narrowed your search down to likely prospects. |
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| Pest repairs are turnoff for buyers By Dian Hymer In a perfect world, houses wouldn't deteriorate over time. In reality, the wear begins as soon as a house is built. Older houses tend to have more maintenance issues. But even new homes can develop problems within a few years if they were poorly constructed. Most homes are inspected for damage caused by wood pests -- such as dry rot, termites, fungus, decay and wood-boring beetles -- before they are sold. Who pays to correct the damage -- buyer or seller -- is often subject to negotiation. In a hot seller's market with a high percentage of multiple offers, buyers frequently buy "as is" regarding known defects to better their chances. This was common several years ago when home prices were rising rapidly. At that time, owning a home was more important than the condition of the property. One problem with buying "as is" with respect to pest work is that it's easy to overlook the fact that the work needs to be done. Many buyers who bought "as is" in recent years have not taken care of the pest repairs. These buyers who are trying to sell in today's market may find they have less equity than they thought they had. Not only have home prices declined in many areas recently, but today's home buyers are unlikely to buy "as is" regarding a large pest bill that was passed on from the previous owner. HOUSE HUNTING TIP: In soft markets, buyers are more prone to factor in the cost of curing deferred maintenance into their price. Ideally, sellers should have pest work done before they put their homes on the market. This removes the need for negotiation over pest repairs. Plus, the houses in the best condition that are priced right for the market are the ones that sell. It's not always possible for sellers to have pest work done before marketing their homes, either due to shortage of time or funds. In this case, make sure that you have presale inspection reports done before you market the property and price it to take into account the cost of the repair work. Also, you should make every effort to have the house looking as good as possible. In a soft market, sellers have a lot of competition from other sellers. Even if you can't replace a shower or a rotted mudsill before you market the property, at least have it showing at its best. This will get buyers interested in the property, particularly if the list price reflects the work that needs to be done. There is nothing wrong with buying a property in its "as is" condition as long as you have complete knowledge of the work that needs to be done. But, it is essential that you factor in the cost of the necessary work and ongoing maintenance. Many buyers overlook this and later discover that they can't afford to continue to own their home. It's rare that every item on a pest report needs to be done immediately. But, at some point the deferred maintenance needs to be corrected. Ask your inspector to prioritize the items on the report in terms of urgency level. A deck that's rotted to the point that it's unsafe should be replaced as soon as possible. However, if the bathroom floor needs replacing, but poses no danger, you might want to hold off having this work done until you remodel the entire bathroom, if that is in your game plan. THE CLOSING: In fact, in this case, replacing the floor would be a waste of money. |
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| Benefits of green building It's more than just helping the environment By Paul Bianchina "Green building." You've probably heard the term, and perhaps even considered the use of certain green materials or green building concepts for your new home or remodel. But what exactly is green building and how can it benefit you and the world around you? Green building encompasses many different areas of construction, and as such there is no single definition that sums it all up. Basically, the concept of green building is any structure, whether it's residential, commercial or industrial, that is designed, constructed, renovated or operated in such a manner as to minimize its impact on the environment, protect the health of its occupants and utilize resources efficiently. That's a tall order at first glance, but green building concepts are easier to achieve then you might think. Thanks to a growing consciousness among consumers and manufacturers of how building techniques and materials impact all of us, the cost of many of these products has come done as well, making green building not only smart, but cost effective as well. ENGINEERED BUILDING MATERIALS If you have built or remodeled recently, there's a good chance you may have already incorporated one important green building concept in your home: the use of engineered building materials. Plywood, oriented strand board, glu-laminated beams, I-joists and many other similar products make use of smaller, fast-growing trees harvested from tree farms like any other crop. The result is stable, uniform and structurally solid building materials that minimize the impact on existing old-growth and even second-growth forests. Another area where this concept is seen with increasing frequency is in decking. Once solely made from solid-sawn lumber, more and more decking is now being made from recycled wood scrap, plastic and other materials. Even insulation is seeing an increase in the use of recycled materials in the manufacturing process. OCCUPANT HEALTH It has long been acknowledged that the air inside a building can be worse, sometimes considerably worse, then the air outside. This is due in part to gasses, primarily formaldehyde, that are emitted from certain building materials after they are installed in the building. Certain floor coverings, particle board, insulation and other materials that utilize formaldehyde in their makeup can all contribute to this problem, and green building practices make extensive use of products that do not contain formaldehyde. Volatile organic compounds (VOCs) are another problem. Paints, finishes for floors and other components, some types of adhesives and other materials commonly found in building construction may cause VOCs that can be harmful to building occupants, and here again, the green building concept aims to utilize materials that are manufactured without VOCs. KEEP IT IN MIND WHEN YOU BUILD When considering the construction of a new home, there are several green building things you can do. Orient the building with a good southern exposure. This allows for passive solar heating in the winter that reduces your heating bills and the impact your home has on the utility infrastructure. It also can greatly improve natural lighting, which in turn also reduces your energy usage. Select a builder and a designer who are knowledgeable about green building design and construction techniques. Passive orientation, selection of materials for the home's exterior shell and even the interior design and layout can all contribute greatly to the home's efficiency. Know what materials are being used in the house. Through discussions with your builder, designer and material suppliers, inform yourself on what your options are for everything from structural lumber to the paint on the walls, and make choices that are good for both you and the environment. When building a room addition or doing substantial remodeling to an existing building, utilize the same concepts of orientation and smart material choices. |
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| Sellers use disclosure to their advantage By Dian Hymer Forty years ago, seller disclosures weren't part of the home-buying process. The rule of the game was buyer beware. Now most states have seller disclosure requirements, although they vary from one state to the next. Consult with a Realtor, the Department of Real Estate, or a real estate attorney in the area where you're buying or selling if you have questions about what a seller is required to disclose. Seller disclosures came into being in order to protect home buyers. However, seller disclosures can also protect sellers. For example, a seller of an older home in the hills of Oakland, Calif., disclosed in writing that the basement flooded during heavy rains. A few months after the sale closed, the listing agent received a call from the buyer. He was upset that there was water in the basement following an overnight rain storm. He insisted that no one had informed him of this situation before he purchased the property. The listing agent reviewed the transaction file. The sellers had disclosed in writing that the basement flooded during heavy rains. The buyer had signed to confirm receipt of this information before he removed his inspection contingency from the contract. What could have been a nasty lawsuit disappeared immediately. During times when it's difficult to sell, sellers may be tempted to conceal negative information about their homes for fear that it will keep the home from selling. Sellers should resist this temptation. Concealing a material fact can have severe consequences. Another seller stated in his seller disclosures that he had never had any water problems at the house. He had also remodeled the basement and presented it as a usable family room. Not long after the buyers moved in, bad weather set in. So much water ran into the basement that the cozy family room was uninhabitable. The buyers sued the seller and recovered a hefty sum. HOUSE HUNTING TIP: Think of disclosure as damage control. Although this may seem counterintuitive, you want any negative information affecting the property to be revealed before, not after, the home sale. If buyers know that the roof is at the end of its life, they can make a determination before buying about how much they can pay for the house, or if they can even afford to buy it without help from the sellers. Problems arise when sellers withhold this sort of information. A less-than-candid seller was sued successfully by the buyer when the roof leaked soon after closing. The seller's disclosure statement mentioned no problems with the roof. The new owner became friendly with his next-door neighbor who told him that the seller had talked to several roofers and was planning to re-roof the house before the rainy season. What you choose to conceal could be disclosed for you by a neighbor. The goal in selling your home is to sell for the best price and on the best terms possible. You defeat the purpose if you end up having to pay back part or the entire sale proceeds to settle a lawsuit. It's not always clear if a fact is material. For example, the sellers of a home in the trendy Rockridge neighborhood in Oakland knew that a cleaning person who worked for the past owner had been raped in the house. The seller, who was an attorney, decided to disclose this fact. This caused a nervous single woman to decide against buying the house. But, it made no difference to the ultimate buyer. THE CLOSING: And, the disclosure had no negative impact on the selling price. |
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| It pays to sell home before buying another By Dian_Hymer An Oakland, Calif., couple had wanted to change their lifestyle for years. Like many people who want to make a move from the home they own to another they hope to own, this couple put the cart before the horse. They started by researching what it would cost to buy the next home before investigating how much cash they would net from the sale of their current home. When they consulted with a local real estate about the probable sale price of their current home, they discovered that it wouldn't sell for enough to enable them to afford the lifestyle they envisioned. So, they delayed their relocation plans. They hoped that the housing market would improve and their house would sell for more during the next year. Unfortunately, the resale market in their area took a downturn, putting them further away from their dream. Fortunately, however, they did not buy the dream home last year before selling their current home. This would have been a risky move financially. HOUSE HUNTING TIP: A risk of buying a new home before selling the current home is that you may be inclined to base the list price of the home you're selling on what you need to sell for and not on what the market will bear. If you fall into this trap, you could end up listing at a price that's too high for the market. After months on the market with no offers, you'll have to drop your price to attract buyers' attention. You could end up selling for less than what your home would have sold for if it had been priced right for the market to begin with. The couple mentioned above has decided to wait no longer for the market to give them a "go" sign. They are ready to get on with their lives. They have decided to sell their house now. It's impossible to time the real estate market, but it is possible to minimize your risk when buying or selling a home. Another couple came close to making an offer on a home that was located in a better school district. When they looked at the cost of carrying two homes, which was a likely prospect if they bought before selling, they decided against buying first. If their current home took a long time to sell or if it sold for less than anticipated, they could find themselves over their heads in debt. Instead, they are planning to sell their current home first. If need be, they are prepared to rent until they can find a home to buy. Contingent sale offers still aren't popular in some niche markets. In these desirable markets, sellers are able to sell if they price their home reasonably for the market and properly prepare it for sale. Unless you can afford to own two homes and verify that a lender will qualify you to do so, you need to sell first or stay put. There are a couple of ways to buy time to find the next home. Sellers are more receptive to offers from buyers whose home is sold, but not yet closed. This is especially so if all contingencies have been removed. Also, you may be able to rent back your current home for a time after closing in order to minimize the possibility of making an interim move. However, there are benefits to renting an interim home. One benefit is that you don't feel rushed to buy. THE CLOSING: Also, if prices are declining, you might pay a lower price in several months than you would now. |
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