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| Fixing to sell: Don't go overboard By Dian Hymer Fixer-uppers with upside potential were in high demand when the market was appreciating at a fast pace. Once depreciation took over, speculators disappeared until 2009, when low-end foreclosure properties in some areas became hot properties -- particularly if they were selling at a 50 percent discount from the peak in summer 2006. In California, 70 percent of the homes bought by investors in 2009 were distressed-sale properties, according to the CALIFORNIA ASSOCIATION OF REALTORS®. Some were stripped of appliances and fixtures. But, at half price, there was profit potential for buyers who were up for a redo -- especially seasoned investors buying multiple homes to fix up and resell, or rent out. Fixers priced over $500,000 aren't as easy to sell today. Most buyers in higher price ranges are buying a home to live in. They want a home in move-in condition that will suit their long-term needs. There are exceptions. In high-demand market niches with few listings, there is occasionally a fixer-upper that draws a lot of attention. Usually, these fixers sell to buyers who will live in the property and fix it up themselves to save money. Often this is the only way they can afford to move into the neighborhood. Sellers of fixers in such neighborhoods should make their property as presentable as possible by cleaning out clutter, both inside and out. Many homebuyers can't visualize a property's potential. It's often worth a modest investment to show the house at its best advantage. Cosmetic improvements, such as painting, replacing outdated floor covering, or refinishing worn hardwood floors can pay off. Some fixers are staged, even though the property needs a lot of work, so that buyers can envision themselves living there. Presale inspections will help buyers make a decision about whether or not to tackle the project. Make reports available to buyers before they make an offer to avoid having to put the home back on the market if the deal falls apart because the buyer's inspectors discover defects not previously disclosed. HOUSE HUNTING TIP: How much you spend preparing a fixer for sale depends on several factors. How much did you pay for the property? How much do you owe against the property? Is there demand for fixer-uppers in your area? Finally, how much does your real estate agent think you can sell the home for given current market conditions? Sellers who have equity in their home and cash to invest in fix-up for-sale work should consider making cost-effective renovations, like a kitchen upgrade, but not an entire renovation. Ask your agent what the home would sell for with and without these improvements before doing anything to it. The investment may not yield a profit, but could recover the costs when the home sells. In areas where fixers aren't selling, sellers might need to enhance the property to sell at all. A good real estate agent should be able to provide references for reliable, reasonably priced professionals who can do the jobs for sellers who haven't the time or expertise to do the work themselves. Buyers who bought at the peak may not be able sell for even close to what they paid. One possibility would be to rent the property, if it makes sense financially. You may need to fix up the property somewhat to attract a good tenant. Consult with a certified public accountant about the tax consequences of converting a single-family residence to a rental. Another option, if you don't have to sell now, is to stay put for awhile and fix the property up gradually over time. Avoid investing a large amount of money in the hopes of getting a bigger return. THE CLOSING: The housing market in your area may be too uncertain for speculation. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author. |
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| Going solar: Is it right for your home? By Michelle D. Alderson Just a short time ago, saving the planet took precedence over saving a dollar. Times have changed, but in today’s economy homeowners are still trying to find ways to do both. Just ask John Shipman, an energy analyst at Energy Efficiency Management (http://www.energyefficiencypro.com/) and a green home performance contractor with Energy Star (http://www.energystar.gov). Shipman states that his company’s "whole-house energy audits have increased three folds" since President Obama has taken office. The President’s stimulus package has made energy conservation a priority with initiatives that focus on energy-efficiency upgrades to homes and businesses. One of the most hyped government energy-conservation initiatives is the use of solar energy. In fact, the stimulus package was signed after the President visited the Denver Museum of Nature & Science, which boasts 465 solar panels on its rooftop. The federal government’s stimulus package helps with the cost to install solar panels on existing homes, with the hope that this cost savings will help stimulate energy conservation and boost employment in the industry. With the new stimulus package, homeowners will receive a federal tax credit of 30 percent off the total cost of installing solar panels on their homes. According to the Energy Star Web site, the tax credit is also good for geothermal heat pumps, solar water heaters, small wind energy systems, and fuel cells. This federal tax credit is in addition to any tax credits or discounts a homeowner might receive from the state. Each state has its own rebate programs, including California. If a homeowner in California wants to install solar panels, a good place to start is by checking out the website created by the California's Public Utilities Commission and Energy Commission. The California Solar Initiative Web site (http://www.gosolarcalifornia.org) "provides consumers a 'one-stop shop' for information on rebates, tax credits, and incentives for solar energy systems in California." In a nutshell, existing homeowners that choose to install solar panels would receive an up-front rebate from the state government. The rebate would be "based on expected performance, and calculated by equipment ratings and installation factors (geographic location, tilt and shading)." What does that mean to the average homeowner? If you live in the Pacific Gas and Electric Co. (http://www.pge.com/myhome/saveenergymoney/solarenergy/) area, for example, the state rebate would be $1.55 per watt for existing homeowners (you can check out your local electric company’s Web site for their cost savings). According to Vote Solar (http://www.votesolar.org), a non-profit initiative, "a typical home solar system generates about 3 kilowatts of power." The installation cost in California averages roughly $8.10 per watt. The state rebate is currently $1.55 per watt for homeowners in Pacific Gas and Electric Co. territory. Therefore, the average state rebate is worth $4,650, in addition to the 30 percent cost savings from the federal government. That means the original estimated cost would be around $24,000, but after the rebates a homeowner could pay under $14,000. Shipman thinks homeowners need to go one step further before going solar. "Solar is a fantastic renewable energy and there are a lot of advantages to it, however you need to do the basics before you put solar panels on a house. It’s like cooking the turkey with the oven half open." What he and others in the industry believe is the first step to energy conservation in existing homes is to consider the "whole house approach." For instance, installing energy-efficient windows is just one of the many ways a house can conserve energy before going solar. The effort to save money and the planet by a well-intentioned and discounted solar installation can be thwarted by old windows that leak heat and cool air. If any homeowner is thinking about installing solar panels or doing any type of energy-efficiency upgrades, it is important to do the homework. There are several companies, both profit and non-profit that can do a home evaluation, as well as Web sites that discuss solar installation. For more information, visit the CALIFORNIA ASSOCIATION OF REALTORS® Green Web Site (http://green.car.org/). |
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| Design tips for updating 1950s tract home By Paul Bianchina Q: Our house is a nondescript 1950s ranch tract home with a light-gray composition shingle roof. It's currently a dated white with blue trim, and we'd like to update the paint job. We're also relandscaping with drought-tolerant tropical and contemporary plants, and not much grass -- mostly bark and flagstone walkways. Is there somewhere where I can see other updated tract homes? Do you have any color suggestions? A: I would begin in your own neighborhood, and just start driving. Wander different streets around where you live, and then slowly branch out from there. Keep a local map handy, and whenever you find an area of homes that looks interesting, highlight it on your map for future exploration. Ask your real estate agent, for exploration suggestions, as well as others you come into contact with, such as the landscaper. While it's nice to look at homes that are similar to your own, you don't need to be limited to just those either. I would suggest going through new housing tracts of starter-level homes, and see what is currently being done in the way of colors and exterior amenities. As to color choices, there are three simple things I can suggest. First of all, make a visit to your local paint store or home center and pick up some brochures on exterior paint colors. Many of these brochures offer suggestions of colors that work well together, and you might see some combinations that appeal to you that you wouldn't have otherwise thought of. Some paint stores have computers with paint-scheme programs that are free for customers to play with. You can browse through a library of common house styles until you find one that looks similar to yours, add a roof color that looks like yours, and then use the computer to add different body and trim color combinations to see what they look like. If your local paint store doesn't have one, you can also find places online that do the same thing -- there may be a small charge, but it's well worth it. My third suggestion is to take a digital photo of the outside of your home, then print it out on your computer in black and white, making several copies. Using colored pencils, color in the roof in a shade that's as close to yours as possible, then, referring to some of the color combinations you liked from the paint store brochures, color in the front of the house and see what you think. You can also do this more accurately with programs such as Photoshop, but that might be more time-consuming and involved than you would like to get. Final suggestion: Don't limit yourself to just paint. There are any number of ways that you can really dress up the outside of a plain tract house and set it apart from the others in the neighborhood, without spending a fortune. You can add some different trim treatments around the windows, change the front door, add some shutters, and add some door trim, just to name a few. Home shows, decorating shows on TV, magazines and your neighborhood wanderings should all be sources of inspiration. Q: I would like to use the cable railings (on my deck railing) except for the high price. Do you think it would be possible to substitute a thick, strong wire instead of the cable? These wires keep in huge farm animals ... so their strength is comparable to cable ... well over 1,000 pounds in breaking strength. I would appreciate your thoughts. A: You can actually construct a deck railing out of any materials that comply with the requirements of whatever building codes are in effect in your area. I have seen some very nice railings made from square-grid and rectangular-grid wire livestock fencing set into wood frames, as well as wood dowels, metal conduit and other materials. Whatever you choose needs to be strong enough and secured tightly enough to meet the building codes, and also has to be spaced closely enough together -- most codes require a spacing of no greater than four inches. You also want to avoid materials with sharp edges or ends, as well as materials that won't weather well. Finally, you want to select a material and an installation method that is safe, pleasing to your eye, coordinates well with your home's style, and maintains your resale value. |
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| Inherit home, refi immediately? By Benny Kass DEAR BENNY: My husband and I inherited a home from my husband's uncle who passed away a few weeks ago. Will the lender expect us to refinance the home or can we just assume it even if it is a conventional loan? –Karen DEAR KAREN: Unless the existing loan was from a private person, it is most likely covered under the Garn-St. Germain Depository Institutions Act of 1982. This federal law puts restrictions on the ability of a lender to exercise the "due on sale" clause that exists in most mortgages (also called deeds of trust). One of these restrictions reads as follows: "With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon ... (5) a transfer to a relative resulting from the death of a borrower. ..." Accordingly, you should advise the lender of the death, and just continue paying under the terms and conditions of the old mortgage. However, do you know what the interest rate is on that property? Rates are currently very low, and if you can get a better rate -- and assuming that you and your husband can qualify for a new loan -- you should consider refinancing. DEAR BENNY: My father co-signed on my mortgage approximately 12 years ago. We are both listed on the title/loan papers, although I have been the only one actually paying the mortgage all this time. If one of us died would the property automatically go to the other party or do we need to make further arrangements for that to happen and stay out of the probate process? Any help that you could give me would be greatly appreciated. –Kimberly DEAR KIMBERLY: The answer depends on how title is held. This answer must be general in nature, because different states have different procedures. If you were married, you and your spouse would generally hold title as tenants by the entireties; on the death of one, the survivor would own the entire house. But clearly you are not married to your father. Thus, you can hold title as joint tenants with rights of survivorship -- which means that on the death of one joint owner, the survivor owns the entire property, and probate regarding the house is not necessary. However, if you and your dad hold title as tenants in common, on the death of one owner, his/her share of the property will have to go through probate. On the death of one tenant in common, his/her share is distributed according to the last will and testament, or if there is no such will, then according to the laws of intestacy in your state. But probate is required for this type of title. 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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| Find property problems before you buy By Dian Hymer To avoid a bad experience that could end up in a legal battle with the sellers over property problems, make sure your purchase agreement includes an inspection contingency. Your mission during the inspection contingency period is to find out as much as possible about the property and surrounding area, insurability of the property, permit history, zoning issues and cost to repair defects. Investigate any issues that could affect whether or not the property will suit your long-term needs at a price you can afford. Most states have home seller disclosure requirements. If you are buying in a state that doesn't require sellers to disclosure material facts, ask the sellers to disclose in writing any property defects or neighborhood issues they know about. Also, find out if there are systems that require routine maintenance, such as the furnace, drainage system, skylights and roof. After you clear the inspection hurdle, ask the seller to provide you with contact information for any people who have worked on the property that the sellers would recommend. Find out when major components were replaced and when the house was last painted. Find out how much the sellers pay for utilities. Ask for copies of proposals and paid invoices for any significant work done on the property. Basically, you want to know any problems the seller had with the property, what was done about it, by whom and when. If the roof was recently replaced, find out if it's covered by a warranty and if it's transferable to you. You may feel uncomfortable asking the sellers to provide additional information at the time you make the offer, particularly if there are multiple offers. In this case, ask the sellers for answers to your questions during the inspection contingency time frame. Questions will undoubtedly come up during your inspections. HOUSE HUNTING TIP: Even if the sellers have provided presale inspection reports and disclosures, have your own inspectors give the property a thorough exam. Some buyers hire the seller's home inspector to meet them at the property to explain the presale report and ask questions. This may save you money. But, saving money should not be the primary goal when having a property inspected. Buyers of newly built homes should ask the sellers for any construction-related documents like the geotechnical report, engineering calculations, and letters to the planning department confirming that the geotechnical engineer monitored the construction and confirmed that the house was built according to his recommendations. Ask the seller to leave the architectural plans, if they're available. Verifying livable square footage is a big issue in today's cautious mortgage environment. Many lenders won't count additions or renovations that add square footage in the appraised valuation of the property. If the sellers can't provide the supporting documentation, such as copies of approved permits, the property could appraise for less than you agreed to pay. This might jeopardize the transaction if the lender approved a lower mortgage amount than you requested. It's a good idea to check the permit history at the planning department yourself if the sellers can't provide copies of permits for work done. This should let you know if renovations were done with permits and if the permits received final approval. You should have this information before removing the inspection contingency. Many planning departments won't issue a new permit if there is a permit on record that never received final approval. The new owners might incur fees to clear up any outstanding permits before they can move forward with new improvements. THE CLOSING: With probate and REOs (bank-owned properties) you will receive minimal, if any, information about the property condition. Be extra careful with your due diligence investigations. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author. |
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| Transferring loan on inherited home By Benny Kass DEAR BENNY: I recently inherited my mom's home, valued at $136,000. Unfortunately, she had a home equity line of credit (HELOC) on it for $66,000. Apparently, a relative talked her into getting this loan to start a small business. Of course she was stuck paying the loan, and the payments are current. I would like to move into the home but have had no luck with the lender in transferring the loan to my name. What are my options? I really do not want to refinance because her interest rate was 3.25 percent, which is fantastic. I am at a loss. I am maintaining all the expenses of this home but receive no benefits. --Sheila DEAR SHEILA: First, have you probated your mother's estate? Depending on how she held title to the house, you may have to go to probate to make sure that the house is really in your name. If title was held in both your names as joint tenants with rights of survivorship, then you will automatically own the house. (Note: Not all states use the same terminology, so you should consult a local attorney for clarification of who currently owns the house.) But if the house was in your mother's name only, then title is in "legal limbo." In other words, until a probate court issues a final order, you cannot do anything with the house legally. You state that the current interest rate is 3.25 percent. Have you reviewed the legal documents relating to the HELOC? Although I have not seen those papers, I suspect that the interest rate is variable -- in other words, it may be readjusted periodically, possibly every year. Now to your specific question: Back in 1982, Congress enacted what is known as the Garn-St. Germain Depository Institution Act. Although this law deals with a lot of subjects, one of them relates to your situation. In most mortgages, there is a provision known as a "due on sale" clause. This means that if a house is sold or transferred, the new owner cannot automatically assume the old loan. However, the 1982 law imposed a number of restrictions on lenders who want to use that due-on-sale clause. Specifically, the language is as follows: "With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon ... a transfer to a relative resulting from the death of a borrower." You appear to fall under this exemption. You are a relative who inherited the house from your mother. I would talk to bank representatives and refer them to this law. If they continue to object, I suggest that you retain a lawyer to assist you. You can also file a formal complaint with the Office of the Comptroller, a federal agency that regulates national banks. 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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| What is post-consumer content? By Michelle D. Alderson What is it? You've most likely heard of the common green jargon: energy-efficient, recycled material, reusable -- the list continues. However, the term post-consumer content might be new to you. You may even be using products that are made with post-consumer content already and you just don't know it. Earth911.org (http://www.earth911.org) defines post-consumer content as "a material that has served its intended use and instead of being disposed of it is being reused in a different product. If a product is labeled 'recycled content,' the material might have come from excess or damaged items generated during normal manufacturing processes-not collected through a local recycling program." Simply put, products made with post-consumer content are items you can buy that have been made with recycled material. Why is it important to buy it? Probably the most common post-consumer content product you will find is paper goods: toilet paper, paper towels, envelopes, napkins, etc (http://www.nrdc.org/land/forests/gtissue.asp). The following are just a few examples of other products that can be made with post-consumer content: paint, carpet, mulch, bathroom and office partitions, office furniture, printing ink, corrugated cardboard boxes, cleaners, and hardwood floors. You might ask why it is necessary to buy these products when regular toilet paper seems quite fine. It is important to know that recycling doesn't just end when you put a can in a blue bin. It truly is cyclical. Buying post-consumer content products keeps the country's growing recycling programs afloat. If consumers don't buy products made with recycled materials, companies won't waste their time making them. In essence, buying such products keeps the landfills lean, the recycling business running, and inevitably helps the environment. How much will it cost? In today's economy, some consumers might fret over purchasing post-consumer content products because of cost. Is it better to help keep the environment green or keep that green in your pocket? If you are buying a post-consumer content product like used office furniture, you will see a significant discount, but new post-consumer content products can cost a little more. According to greenguardian.org (http://www.greenguardian.org), some products, such as post-consumer content recycled paper can cost about 10 percent to 20 percent more than regular paper. The good news is that as the demand for post-consumer content products grows, the price for such goods continues to drop. In addition, supplier competition often can create bargains for the consumer. The key is to search for the best price. |
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| Pros' guide to window screen replacement By Paul Bianchina It's getting to be that time again. The windows are open, and the bugs are clamoring at the window screens, trying to come in and join the party. If a few too many of these uninvited guests are getting in, it's probably time to get that damaged screening replaced. Luckily, this is a great do-it-yourself project that you can take care of in no time. To do your own window screen replacement, all you'll need is some new screening material and a simple re-screening tool, both of which are available at home centers and hardware stores. Screening is available in both fiberglass and aluminum, but the fiberglass is much easier to work with and is the preferred choice for most applications. It's available in different widths, so purchase one that's a minimum of 2 inches wider than the screen frame itself. Remove the window screen frame from the window, and set it on a workbench or work table. You'll notice that one side has a groove running around all the way around it that the screen is tucked into that. Place that side face up. Look closely at the groove. What you'll notice is a gray or black vinyl spline that's tucked down into the groove, holding the screening in place. Look for the end of the spline, which is usually in one corner. With a small screwdriver or a utility knife, carefully pry up the end of the spline until you can get a hold of it. Lift the spline out of the groove all the way around, and then remove the old screening. Clean the groove with a screwdriver tip or some compressed air to remove any dirt and debris. Now examine the spline. If it looks fairly flexible and seems undamaged, you can clean and reuse it. If it's worn, stiff or cracked, you'll want to replace it with a new one. Splines are available at the same place where you purchased the screening -- take the old one into the store with you to be sure you get the same size. With the screen frame lying flat on the workbench, unroll the new screening over it. Make sure that you have minimum of 1 inch of overlap on all sides, and then cut the screening off the roll. You'll be installing the new screen into two adjacent sides of the frame, then stretching it across the frame and installing it into the other two sides. Make sure that the new screening material is lying straight on top of the frame before you start. Begin at one corner, and press about an inch of the spline part way into the groove with your fingers, trapping the screening in the groove. Next, you'll be using the screen roller tool. The roller has a wooden or plastic handle, with a plastic roller at each end. Using the roller with the concave (inward-curving) edge, set the roller on top of the spline. Pressing down with moderate pressure, use the roller to press the spline about halfway down into the groove. Continue across the entire first side of the frame, rolling the screen and the spline into the groove. With the first side in, check again to be sure that the screening material is sitting square on the frame. If it gets off, the screening will appear to run diagonally across the screen frame, rather than vertically and horizontally. Turn the corner with the spline, and use the roller to set the screening into the second side, adjacent to the first. Try not to stretch the spline too much as you set it. With the first two sides set, lightly stretch the screening material across the frame with one hand while continuing to set the spline in place with the roller. Don't worry about stretching the screening too tight or if you have some minor wrinkles – those will come out in the next step. However, if the screening is really loose or is crooked in the frame, simply pull out as much of the spline as necessary, reposition the screening, and try again. When you get to the final corner, you may find that you have more spline then you need, even though you're reusing the original spline. That's the result of stretching the spline as you install it, so simply cut off the excess with a utility knife. You now have all the screening and spline installed, with the spline about halfway down into the groove in the frame. Using the roller tool, carefully work your way around the entire frame again, rolling and pressing the spline the rest of the way into the groove. This will finish stretching the screening, and should leave you with a tight, smooth installation. The final step is to cut off the excess screening. Use a sharp utility knife, and place the tip of the knife between the spline and the outer edge of the groove. Hold the knife relatively flat in relation to the screen, and work your way around the entire frame, slicing off the excess. |
| Death of a real estate deal By Dian Hymer Take a proactive approach to buying or selling a home. By anticipating what could go wrong with your real estate transaction, you can take care of potential problems before they derail the deal. Years ago, inspection issues were the likely culprit if a home sale fell apart. Defects were uncovered during the buyers' inspections that weren't known to them before they went into contract to buy the property. Sellers can reduce their exposure to transaction failure by ordering presale inspections before the property goes on the market. Many of today's buyers use FHA financing, backed by the Federal Housing Administration. If your home is in great shape, there is a lower probability that FHA will require that work be done before closing. In one case, the work required by FHA couldn't be done in time and the sale failed. HOUSE HUNTING TIP: Financing has become the biggest headache in the current market. Lender tightening on buyers' qualifying criteria and on appraisals continues to stymie many deals. And, the tightening isn't over yet. FHA is popular with low-cash-down buyers. The default rate on these 3-5 percent cash downpayment loans is rising. It's almost certain that FHA will modify their qualifying requirements this year. Buyers can save themselves a lot of grief by making sure they're qualified for the financing they need before making an offer. Have your credit checked. Credit reports often contain erroneous information. This can keep you from qualifying for the best mortgage at the lowest interest rate. Repair your blemished credit report before your application goes to underwriting. Expect the unexpected. Recently, homebuyers received underwriting approval and were told their loan documents would be ready to sign in a few days. Next, they were told that one more piece of information was needed before their loan documents would be drawn. This is not uncommon. You can reduce the chance of this happening by working with a good loan agent or mortgage broker who has a lot of experience working with today's mortgage lenders, and who can anticipate what underwriting will require. Make this documentation available as soon as possible. An offer made contingent on the sale of the buyers' home is riskier than one that's not contingent. Before sellers accept a contingent-sale offer, they should make sure the buyers have a salable home that's priced right for the market. If the buyers' home doesn't sell, it could waste a lot of time for nothing. Low appraisals are common in the current market and can make a transaction unworkable. Lenders want to make sure there's enough equity in the property in case home prices drop further. Buyers and sellers should be aware of the fact that the appraisal on the property may come in low, even if there are multiple offers at a higher price. It doesn't mean the property isn't worth the higher number. In this market, market value won't necessarily match the appraised value due to lender's cautiousness about lending. Buyers and sellers should be prepared to renegotiate if the appraisal comes in low and the lender won't lend the buyers the amount they need to close. This could involve the seller accepting a lower price and the buyers putting additional cash down. If they can't come to agreement, the deal is off. About one in three short-sale transactions don't close. These are sales where the lenders agree to accept less than the balance owed. The sales are subject to lender approval and lenders may reject the buyer's purchase contract. THE CLOSING: It's a good idea for buyers and sellers involved in a short sale to keep a cash reserve that can be offered to the lender as a last-ditch effort to obtain lender approval. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide." |
| Why real estate price padding doesn't work in today's market By Dian Hymer Many sellers are in denial about the current value of their home, particularly if they bought within the past five to six years. The market peaked in the summer of 2006, and home prices dropped significantly in most areas from 2007 through 2009. Sellers often see no harm in asking a higher price -- one based on their needs or desires rather than what the market will bear. "We can always come down" is a common refrain. Letting your home sit on the market at a price that's too high can result in price reductions and a lower sale price, especially if the market is still declining. Today's homebuyers are nervous, pragmatic and well educated about the market. Not only are buyers cost-conscious, fewer buyers can qualify for a mortgage than was the case in 2006 due to recent credit tightening. Many who bought in 2006 couldn't qualify for the same mortgage today. There is a smaller pool of motivated, financially qualified buyers than there was several years ago. These buyers have an edge in most markets. Buyers want to know how long a listing has been on the market. If it has been on the market for some time, they wonder why it hasn't sold. Is there something wrong with it? A high price can signal that the seller isn't motivated. Buyers don't want to waste their time. Don't waste yours as a seller if you aren't serious about selling at current market price. No one knows for sure when the housing market will turn around. Many economists think we've hit bottom or are close to it. Analysts also forecast that home prices will bump along the bottom for some time. They don't expect a quick rebound. There isn't an urgency to buy before prices rise; buyers are taking their time to find the right long-term home. They are not overpaying. Even in low-inventory markets where multiple offers can occur, the price is usually not bid up radically, unless the listing was considerably underpriced. Interest rates are low. Buyers' nervousness about the housing market has thawed recently. The combination of lower home prices and interest rates has made housing more affordable than it has been in years. There is a risk that interest rates will increase to around 6 percent by year end. If so, this will affect the affordability equation and could have a downward influence on home prices, depending on the condition of the job market and the economy. HOUSE HUNTING TIP: To take advantage of this window of opportunity to sell, your home needs to be priced competitively. There was a time when sellers padded their list price so that they'd have room to negotiate. That strategy doesn't work in this market. Your house needs to look great and be priced competitively so that buyers realize they have to jump before someone else does. An analysis of data from the multiple listing service for Piedmont, Calif., properties listed in 2009 provides an insight into the importance of pricing right for the market. During 2009, the listings that didn't sell were listed on average 26 percent higher than the listings that sold. The market is constantly changing. If you find after your home is on the market that it's not receiving the interest you'd anticipated, ask your agent for feedback from agents who showed the property. Find out if similar listings in the area have sold recently. Did buyers who looked at your home buy other listings instead? The market will tell you quickly if your home is priced too high. THE CLOSING: Lower your price as soon as you discover it's too high so that you don't lose marketing momentum. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author. |
| Legacy wiring sparks questions By Paul Bianchina Q: My wife and I are looking at buying a home that was built in 1955. Some of the wiring is paper wrap. We aren't sure how much. I was wondering if any of the paper wrap was ever made with a ground wire. Also I was wondering about the safety of paper wrap. We have to travel about 750 miles to look at this home and would like to know if it should be a big concern. A: There's no easy answer to this one. Some of the cable you refer to did not have a ground wire, and some of it did. Also, older wiring such as this was not as heat resistant as the jackets used today, and it's not unusual to find wiring that has heat damage to it, especially behind light fixtures. Finally, a house that is more than 50 years old is almost certainly going to have had some remodeling work done, and it's impossible to know what different homeowners, contractors and electricians may have done with the wiring. If you are seriously considering buying the house, you need to have a qualified electrician examine the wiring and determine its condition, as well as determining whether subsequent repairs and remodeling were done correctly. The electrician can also determine if the house is safe and up to current code and, if not, what would be required to get it there. Incidentally, I would suggest the services of a licensed electrician for this -- not a home inspector. Because the house is so far away, if you are working with a real estate agent in that city perhaps he or she could arrange to have the electrical evaluation done for you and save you a trip. That way, if the work is too extensive you can have the opportunity to reevaluate your purchase plans, or perhaps talk with the sellers about a price reduction. Q: We remodeled our kitchen a few years ago. We replaced the recirculating stove hood and installed a better system that vents to the roof. I don't recall if they used six- or eight-inch piping but it was the size recommended by the manufacturer. The total amount of piping is probably about 12-15 feet from fan to roof vent. I think the bigger problem is that this ventilation piping takes a few turns via a few 45-degree turns before it exits the roof. The fan mounted in the stove hood was very powerful (based on the manufactures specs), but I think the turns and pipe lengths are impeding the airflow and it's an inefficient system. The amount of air that leaves the stove vs. the noise it produces makes it easier to tolerate the smoke. Reconfiguring the vent piping is nearly impossible, although access to the attic is very possible. I was considering a rooftop ventilator. Instead of attempting to push out the air through a fan, this device works more like a vacuum and pulls the air out from the roof. A little extra power and noise would not be a problem because it would be mounted outside on the roof and the existing vent pipe would remain. The old fan would come out and the metal filters would remain. Any recommendations or am I wasting my time? A: First, let's look at the situation with the existing range hood. Contained within the instructions and specifications that came with the hood will be a chart of some sort that lists the maximum length of duct that is allowable for that particular unit. The chart will also tell you how much equivalent length is taken up by a fitting -- for example, it may say that an elbow is the equivalent of four additional feet of duct. So if you add up the actual number of feet of duct and then factor in the number of feet that's added by the fittings, you can determine if what you have exceeds what the manufacturer recommends. You mentioned "they used," so I assume you had this done by a contractor. If the contractor did not install the hood to the manufacturer's specifications, you may have some recourse there for getting them to make some repairs or adjustments. All that being said, however, you may still not get the type of exhaust results you're hoping for with the existing hood, even if the duct is redone to fall within the manufacturer's specs. This leads us to your idea of an exterior vent motor, which I think is a great idea. (I've had one for years with very good results). Exterior vent motors that pull instead of push work very well, for the two reasons that you mention. Because they're outside, the motors can be considerably larger than what's possible inside a range hood. And the exterior mounting means that the noise the larger motor generates is not nearly as much of an issue. It's why you almost always see restaurants and other commercial applications utilizing exterior vent motors. The downside is typically one of cost. The exhaust motor is more expensive, and it requires more labor to cut and flash it into the roof, and to run the necessary ducting and wiring. If an exterior vent motor fits into your budget, then I would certainly recommend making the change. |
| Short sale success strategies By Dian Hymer Some buyers have made offers on short sales, then waited as long as six months to a year, only to be denied lender approval. Approval from the seller's lender(s) of current loans secured by a short-sale listing is necessary if the proceeds from the sale aren't enough to pay back the lender and cover the seller's closing costs. About one in three short-sale listings never sell. The Obama administration is encouraging lenders to do short sales for their financially distressed borrowers rather than let the property go into foreclosure. Incentives are given to lenders who approve short sales. Slowly, the process has been improving, but it still involves more time and uncertainty than a conventional sale. The benefit of buying a short sale is that you might get a break on the price and be able to afford to buy in a neighborhood that would otherwise be unaffordable. HOUSE HUNTING TIP: A critical component to buying a short-sale listing is to pick the right property and the right agent to represent you. You don't want to set your sights on one of the short-sale listings that will never close. Your agent can help you make the decision about whether or not it's worth it to pursue a certain listing. Make sure that you select a real estate agent to work with who is up for the challenge of the short-sale process and understands how it works. A lot of agents have had little or no experience. Furthermore, many of them don't want to do short sales. You could be steered away from a property that might work for you just because the agent doesn't want to get involved. If you discover that you're missing out on short-sale listings that sell for a price you would have paid, ask your agent or a colleague who purchased a short-sale listing to recommend an agent who is willing and able to work with short-sale buyers. Before even looking at a short-sale listing, have your agent collect background information from the listing agent. You will have a better chance of closing a short-sale deal if the listing agent has experience doing short sales and has a plan for how to accomplish a sale. Have your agent find how many loans are secured against the property and if the sellers are in default. If there are more than two loans secured against the property, it will be difficult to close a short sale. The time clock is ticking if the property is already in default. Short sales have been approved the day after the property is sold to someone else on the courthouse steps. Find out if the sellers are mentally prepared to sell their house short -- because many sellers aren't. Does the listing agent have all the supporting documentation from the sellers that will be needed to submit a package to their lender after you and the seller reach agreement on the purchase contract? The documentation a lender will require from the sellers includes such things as a hardship letter, financial statement, copies of bank statements, IRAs, 401(k)s, W-2s, pay stubs, and an authorization letter giving the listing agent the authority to negotiate with the lender on the seller's behalf. A seller who hasn't provided this information to the listing agent may be uncooperative. Sometimes, concessions have to be made by buyers and sellers in order to obtain lender approval of a short sale. To close a recent short-sale transaction, the buyers needed to raise their purchase price by $5,000 and the seller had to contribute $9,000. THE CLOSING: Closing a short sale requires cooperation from all parties involved. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author. |
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