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| Real Estate Realities in Contra Costa & The Greater East Bay |
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Articles and Advice |
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| It still pays to remodel By Dian Hymer The home-sale market has taken a beating in the last few years, which begs the question: Does it makes sense financially to invest in home improvements? Remodeling Magazine's annual “Remodeling Cost vs. Value Report for 2009-10,” published in agreement with the NATIONAL ASSOCIATION OF REALTORS®, indicates that remodeling still pays off, but more so on less expensive projects. Most high-end remodeling projects don't return dollar for dollar on the investment even in a good market. That is, unless homes are appreciating at a fast clip. In this case, you might get your money back due to appreciation. But the profit on the sale might not be as much as it would have been if you hadn't done a high-end renovation. Just as today's homebuyers are making pragmatic decisions, so are today's homeowners when it comes to making improvements. Most of the remodeling projects with the largest return were for such things as replacing exterior siding and windows. On average the cost involved was less than $14,000, according to Remodeling Magazine. These projects returned from 71 to 83 percent nationally depending on the materials used. The project that paid back the highest return was a midrange front-door replacement that cost approximately $1,200 and returned an average 128.9 percent nationally. Sellers may wonder why it would make sense to invest in an improvement just for the sake of selling if it won't repay the amount invested. In today's challenging home-sale market, these improvements may be warranted for the home sell at all if there is a lot of inventory in your neighborhood. Buyers expect more for their money and gravitate to listings that are in the best condition for the price. HOUSE HUNTING TIP: Be judicious about how you spend your money fixing your home up for sale. For example, if your kitchen is a disaster, it makes more sense to do a midrange than an upscale renovation. According to the “Remodeling Cost vs. Value Report,” a midrange minor kitchen upgrade will return an average of 78.3 percent nationally. A major upscale kitchen remodel will pay back only 63.2 percent. The national average returns on remodeling investments do not give an accurate picture of the renovation returns that might be typical in your neighborhood. For instance, the payback for Honolulu homeowners for most of the 18 remodel projects analyzed returned 100 percent of the investment. San Francisco was close behind with 10 projects paying back the full investment. The cost versus value report recommends the following cost-effective improvements you might consider to prepare your home for the market: tidying up the kitchen cabinets using organizers will make your cabinets roomy; add an inexpensive tile backsplash to a tired kitchen, and use inexpensive tile to give an old bathroom a new look; add a breakfast bar by cutting an opening between the kitchen and family room; and install granite tile rather than slab. Other suggestions include: Replacing outdated light fixtures; freshening up the basement; giving the kitchen cabinets a new look by reconditioning and adding new knobs or having cabinet doors and drawers replaced; updating a bathroom without replacing tile by changing the medicine cabinet, light fixtures, vanity, cleaning the grout or replacing it and adding glass shower doors. The findings of this report were based on a survey sent to 150,000 appraisers and real estate agents in the summer of 2009. The survey included information about the cost and description of the remodel projects and median price data for the 80 metropolitan areas surveyed. Some 6,233 survey respondents estimated how much value the improvements would add to the house at resale in the current market. THE CLOSING: Before starting any fix-up-for-sale projects, seek your real estate agent's advice so that you don't waste money on improvements that won't pay back much in your area. 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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| Mortgage payoff in a divorce By Benny Kass DEAR BENNY: My wife and I are in the process of getting a divorce. I am prepared to give her the family home so that our children will not be disrupted any more than they already are. I know that our mortgage lender will not relieve me of our joint obligation to make the monthly payments, but hopefully that will not be a financial problem for us. We have been advised that a lender can use the "due on sale" clause in the mortgage documents to block this transaction. Can this happen? --Tom DEAR TOM: The short answer is no. Federal law permits certain real estate transfers even though the loan documents contain the "due on sale" clause. Let's look at this concept. Mortgage lenders are in the business of making money, and obviously they do not like to allow people to assume a low interest rate when rates are much higher. While this scenario sounds unlikely in today's marketplace, many readers will recall the excessively high mortgage interest rates during the past decade. Thus, many years ago, the mortgage industry came up with the concept of "due on sale." Most mortgage loan documents contain language to the effect that if property that is secured by a mortgage is sold or transferred without the lender's prior written consent, the lender has the right to call the entire mortgage due, and insist on payment in full. This is known as the "due on sale" clause. There has been much litigation over this concept throughout the country, and the great majority of the court cases have upheld the lender's right to enforce the due-on-sale concept. In 1982, however, Congress enacted the Garn-St. Germain Act (12 UCA 1701j-3), which imposed certain restrictions on the enforcement of this clause. This law contained nine specific exemptions where a lender was not permitted to exercise its option pursuant to a due-on-sale clause. When there is a real property loan secured by a lien on residential real property containing fewer than five dwelling units -- including a lien on the stock of a cooperative housing corporation or a residential manufactured home -- a lender cannot enforce the due-on-sale clause under the following circumstances: • a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; • a transfer where the spouse or children of the borrower become an owner of the property; • a transfer to a relative resulting from the death of a borrower; • a transfer by operation of law on the death of a joint tenant or tenant by the entirety; • a transfer into an "inter vivos" trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property (i.e., the so-called "living trust"); • the creation of a purchase-money security interest for household appliances (i.e., where you pledge your house in order to replace your heating and air conditioning system); • the granting of a leasehold interest of three years or less not containing an option to purchase; • a subordinate lien that does not involve a transfer of rights of occupancy in the property, and • any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board. I highlighted your situation by listing it first on the list. Clearly, if you and your spouse enter into a formal, legal separation agreement, or actually have a court order granting a divorce -- which contains language reflecting the house transfer -- you are protected under the law and the lender cannot exercise the due-on-sale clause, which I suspect is contained in your mortgage documents. However, here are some suggestions before you proceed to transfer the property to your wife: First, before the divorce is finalized, arrange to transfer the house. Normally, when real property is sold or transferred, there is a transfer and recordation tax that has to be paid to the local jurisdiction. For example, in the District of Columbia, where I practice law, if the property is appraised at more than $400,000, the local government will want to collect 2.9 percent of the appraised price. Normally, if you sell to a third party, each side will split these costs, paying 1.45 percent. (If the property is worth less than $400,000, the taxes are lowered to 1.1 percent each). However, if you are married and transfer the property to your spouse, you do not have to pay either of these taxes. You pay only a nominal fee to record the deed -- usually less than $30. So discuss this with your attorney and arrange to transfer the property before the divorce decree becomes final. Second, what is your current mortgage interest rate? Rates are quite low today, so you might want to consider refinancing first, so as to take advantage of that lower rate. After that, you can have the property transferred to your wife. You will, of course, have to explain your pending divorce situation to the lender, but if you can qualify, there could be substantial monthly savings. Finally, I strongly recommend that you advise your lender of your plans. Legally, it has no legal right to contest your decision, but it always makes sense to keep lenders informed before you take any steps to change the ownership. |
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| Tax time over, but many credits still available By Paula Hess If you’re a homeowner, it’s a given that you claim the mortgage interest deduction on your tax returns. If you are a green-minded homeowner, you may be eligible for a federal tax credit if you purchase or have purchased (keep those receipts) an energy-efficient product or a renewable energy system for your home. These credits apply to the following if purchased between Jan. 1, 2009, and Dec. 31, 2010: Biomass stoves; insulation; heating, ventilation, and air conditioning upgrades; windows and doors; roofs; and non-solar water heaters. The credit allows homeowners every two years to claim 30 percent of the cost of the system, for a maximum credit of $1,500. This credit expires Dec. 31, 2010. Please note that some of these tax credits do not apply to installation costs, and not all ENERGY STAR products qualify for the tax credits. Please consult http://www.energystar.gov/index.cfm?c=tax_credits.tx_index for specifics. If you’ve decided to purchase small wind turbines, a geothermal heat pump, or a solar energy system for your principal residence or a new home construction, you have until Dec. 31, 2016, to make the purchase. You also can receive a tax credit of 30 percent of the cost (no upper limit). Check out the following resources: • Database of State and Federal Incentives for Renewables & Efficiency (http://www.dsireusa.org/): Provides a comprehensive list of all local, state, and federal rebates, tax credits, and property tax reductions for green enhancements to homes and new construction. • Better Than a Credit: If you participated in the Cash for Clunkers program and purchased a more fuel-efficient car, remember, your $3,500 or $4,500 rebate is not considered taxable income. If you actually purchased a hybrid, you may qualify for an energy tax credit (http://www.fueleconomy.gov/Feg/tax_hybrid.shtml). Cars purchased after Dec. 31, 2010, are no longer eligible for the energy tax credit. • ENERGY STAR Rebates and Partners: Type in your ZIP Code and find tax exemptions, rebates, or discounts on ENERGY STAR-rated products in your local area--everything from DVD players to water heaters at http://www.energystar.gov/index.cfm?fuseaction=rebate.rebate locator. |
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| Divorce leads to default By Benny Kass DEAR BENNY: I bought a home with my husband in 2002. We are both on the mortgage. When we got divorced in 2006, he bought me out and I signed over the quitclaim deed of the house to him. He was to pay me $50,000, of which I've collected only $25,000. We continue to remain in contact for the sake of our son. I decided to leave my name on the mortgage loan because his income alone would not qualify him to refinance on his own. He has been good in keeping up with the mortgage payment until six months ago, when he defaulted on the home loan due to an unforeseen financial hardship. The house is upside down and three years of unpaid property taxes are due. I've made a big mistake in helping him and now my credit is ruined. The bank refused to remove me from the mortgage loan. I know I wasn't very smart in handling this situation and now I'm paying the price. What can I do at this point to protect myself? I've gone on to purchase a home with my boyfriend. I don't want to drag him down with me, but I know he will be affected one way or another when it comes time for us to refinance our home. My credit score has always been 700-plus. Is there a way for me to get out of this with my credit intact? --Amie DEAR AMIE: It will not be a consolation to you, but many former spouses are in the same boat. But we should never look back. There are many options available to you if your ex will cooperate. Both of you should first talk with the lender. I know this often is difficult, but most lenders have "remediation" departments that are created to try to resolve situations such as yours. Next, look at all of the various state and federal government programs designed to assist homeowners like you. These programs can be located on the Internet, or by contacting your elected officials. Explore such avenues as short sales, and deed-in-lieu of foreclosure. While either of these two programs will, unfortunately, impact your credit rating, it should not be as disastrous as filing for bankruptcy relief -- or letting the house go to foreclosure. Ultimately, you may not have any alternative but to let the lender foreclose. Keep in mind, however, that legitimate lenders have so many foreclosed houses in their portfolio that they don't want any more foreclosures. There are housing counseling services that can also try to assist you. Contact your local U.S. Housing and Urban Development Dept. office or your U.S. senator or congressman for more details. DEAR BENNY: I live in Phoenix, Ariz., and found a great short-sale condo. The bank accepted my offer and I had a home inspection. Everything was going fine until the lender got a copy of the association accounts. These condos were sold at the height of the housing bubble, which means that a good number of them are "underwater." Nearly everything offered for sale in the complex is either a short sale or property foreclosed by the lender. My lender backed out of the purchase and said nobody is going to lend money on these units under these circumstances. The association is about $350,000 underreserved. It's too bad because I already spent the money for an inspection. My REALTOR® also says that nearly all the condo complexes in Phoenix are either in or are going to be in that position. She tells me that when the association runs out of money, the pools will be empty, the grounds won't be maintained, etc. My next foray into condo sales will begin with a reading of the association balance sheet and reserves balances. I also own a condo in Florida where there are strict laws regarding funding reserves. I don't know what Arizona laws are, but you can't squeeze money where there is none to be had (special assessments, increased dues, etc.). Do you have any advice in terms of what I should look for when shopping for a condo? Should I give up on buying a condo in Phoenix? --Patty DEAR PATTY: I normally do not tell readers where the question came from. However, since you presented a comparison between Arizona and Florida laws, I thought it would be good material for my column. I can't comment on the financial situation in Arizona, but can tell you that many communities throughout the country are facing similar situations. There are lots of delinquencies, which means that associations do not have enough money to properly operate the association. As a result, many areas find themselves in a downward spiral, with property values plummeting. I also cannot confirm the laws in either state. However, quite recently several of the major secondary mortgage lenders -- Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA) -- have imposed very strict reserve requirements in order for homebuyers to get a mortgage. For example, on Nov. 6, 2009, FHA issued a guidance letter requiring associations to have reserve accounts equal to at least 10 percent of the association's annual budget. Accordingly, if you plan to buy a condominium unit -- either directly from the owner, by a short sale or at a foreclosure sale -- you must read and carefully analyze the association's budget. If it's not up to date, I would look for another association. DEAR BENNY: Our home borders a 3/4-acre lot owned by the corporation that also owns the private neighborhood swimming pool. The land around the pool is not being mowed. When I called the president of the pool, he said we were more than welcome to maintain the property, as most of the other neighbors whose property borders the "commons" do just that. I attended a couple of meetings and suggested several ideas. Could they give us a pool membership? Could our 13-year-old son get paid $20 per week to mow? Could we find additional volunteers and we would gladly be in a rotation say once a month? All of our ideas were shot down and they would just like us to mow it and be done with it. While we don't want to cause a disturbance in the neighborhood, we also do not want to spend two hours a week maintaining the property. What are our options? --Kathy DEAR KATHY: I understand your concerns. The private corporation does not take care of its property, and leaves an eyesore that you have to look at on a daily basis. One suggestion: Have you contacted your local city or county government? Perhaps they can put some pressure on the company to take care of its own property. Additionally, while I know it is distasteful for you to have to mow someone else's lawn, what is stopping you from pursuing your suggestion that you recruit volunteers from surrounding properties to rotate mowing the property? 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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| Backup offers give sellers a Plan B By Dian Hymer Every seller's dream is to receive offers from more than one buyer. Although multiple offers were scarce last year, in some markets and price ranges listings that are priced right are receiving multiple offers, particularly in the low-end foreclosure markets. Most sellers are inclined to accept the highest-priced offer, but this isn't always the best offer. For example, a seller of a hot property in the hills above Oakland, Calif., received six offers. The two highest offers were close in price, but the seller decided to accept the higher of the two. Fortunately, the seller's agent suggested countering the next best offer for backup position. The buyer in primary position had 10 percent cash for a downpayment. Some issues came up during inspections that were going to be costly to repair. The buyer didn't have more cash to pay for the repairs, so he asked the seller to lower the price. The seller said no and the backup offer became the primary offer. The backup buyer made a large cash downpayment; he wasn't cash-strapped like the first buyer. He had enough cash to pay for the repairs. In this case, the backup offer, which wasn't originally the highest offer, turned out to be the best offer both in terms of price and financing. Before making a decision about which offer to accept, it's important to review all of the terms and conditions of the contracts, not just the price. In another case, a seller received two offers. One was quite a bit higher than the other. After reviewing the highest-priced offer, it turned out that the price wasn't as high as it seemed. The agent representing the buyers was from out of the area and didn't know how fees associated with a home sale were customarily shared between the buyer and seller. In terms of net proceeds to the seller, the offer price was $10,000 less than it would have been if the offer included an allocation of fees that was according to local custom. HOUSE HUNTINTG TIP: Sellers who receive multiple offers often are tempted to counter for a higher price, even when the offer prices are for more than the list price. This is risky. In one case, a seller received two offers. The highest-priced offer was for more than the list price. The seller countered this offer at an even higher price. The buyer thought the seller was unreasonable and withdrew his offer. The seller ended up selling for much less. Don't let greed rule your decision-making. The financing proposed in the offers should be scrutinized carefully. In general, the more cash a buyer puts down, the better. Recently a seller reviewed two offers on her house. One of the buyers offered to make a 40 percent cash downpayment. The other was putting five percent down. It's far easier for a buyer to get loan approval in the current market place if the downpayment is 20 percent or more of the purchase price. Close of escrow can be an important factor for some sellers. It can be beneficial for a seller to accept a lower price if the buyer can close quickly. This is particularly so, if the sellers have already purchased and closed on another home. An offer made contingent on the buyers' home selling is riskier than an offer from a buyer who doesn't need to sell in order to buy. Depending on the seller's situation, it might be wise to consider a lower-priced offer that is not contingent on a sale. THE CLOSING: It's a good idea to counter the next-best offer for backup position in case the first deal falls apart. 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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| 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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| Closing costs vary by location By Dian Hymer Closing costs, the costs associated with buying or selling a home, can add up. It's wise to get an estimate of how much you're likely to pay in closing costs before you make an offer to buy a home or accept an offer to sell. Closing costs reduce the amount the seller nets from the sale. Buyers need to know in advance of entering into a home-purchase contract that they have enough cash to cover both the downpayment and closing costs. Closing costs vary with location. Often who pays what fees -- buyer or seller -- is dictated by local custom. For instance, in Northern California, buyers usually pay the title insurance premium, while sellers usually pay the premium in Southern California. HOUSE HUNTING TIP: Some real estate agents use 1 percent of the expected selling price to estimate a seller's closing cost. This might be close to accurate in some cases. But, there are so many variables that can affect the closing costs in any given sale transaction that it's preferable to have your real estate agent give you an itemized list of the costs you are likely to pay. Sellers' closing costs can include such things as the real estate broker's fee; transfer taxes, if there are any; costs associated with any mandated compliance requirements; title insurance, in some places; attorney fees, in some cases; closing or escrow agent fees; inspection fees, unless they were paid directly to the inspectors; a home warranty, if applicable; fees for drawing, notarizing, and couriering documents; recording fees; property taxes (if seller has overpaid, the buyer will credit the seller that amount); and homeowner association dues, if there are any. In addition to the closing costs listed above, the sellers pay off the liens secured against the property and any outstanding interest owed at closing. When you make a mortgage payment, it pays interest owed for the previous month. So, if you were to close on March 1, you would owe the lender interest from Feb. 1 through the date the lender receives the funds, which may not be until a day or so after you close. With short sales, where the sale price is insufficient to pay off the liens and closing costs, additional closing costs may apply, such as a short-sale process fee charged by the escrow or closing agent. If a third-party short-sale negotiation company is involved, there could be a fee as high as 1 percent of the sale price charged at closing. Sellers who live in an area where a property survey is required and who customarily pay the cost might have significantly higher closing costs than would a seller in Oakland, Calif., for example, where there aren't any expensive point-of-sale compliance requirements. Buyers' closing costs customarily cover such things as the fees associated with the buyers' new mortgage; transfer taxes, if there are any; title insurance, depending on the area; homeowner insurance premium for the first year (usually required by the lender); buyer's broker fee, if appropriate; attorney fees, in some cases; escrow or closing agent fees; miscellaneous fees for document preparation and notarizing signatures; and proration of property taxes and homeowner association dues, if there are any. Buyers' closing costs can differ significantly depending on how many points their lender charges. "Points" is a term used for the loan origination fee; one point equals 1 percent of the loan amount. On a $600,000 mortgage, one point would add $6,000 to your closing costs. It would add only $1,500 if you paid 1/4 point, but your interest rate on the loan would likely be higher. THE CLOSING: Even though local custom usually prevails, who pays a particular closing cost is negotiable. 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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| Six ways to boost curb appeal By Paul Bianchina If you're thinking of listing your home this spring, now is the time to be thinking about one of the most important elements of real estate marketing: Curb appeal. It's your one and only chance to make a first impression on a potential buyer, so make it a good one! Here are some suggestions to make your home stand out from the rest: 1. Get some new eyes: The thing about curb appeal is that you need to look at your house through a stranger's eyes, not through your own. You don't even notice the faded paint on the trim or the missing house numbers, but other people do. So if you can't be honest and objective about the overall condition of the exterior of your home, find someone who can. If you have a friend, relative, or neighbor who you trust to be honest with you (and that you have a good enough relationship with that it will survive their bluntness, then ask them). Ask your real estate agent. If necessary, hire a landscaper or a contractor to act as a consultant. The main thing is to get a comprehensive, written list put together of what needs to be done to the outside of your home to improve the first impression it makes. Concentrate on the front, but don't overlook the sides and back either. 2. Start with basic repairs: The very first thing on your curb appeal list should be basic repairs. Is there a broken window? A torn screen? A loose gutter or downspout? A sagging screen door? It doesn't matter what it is or how small it is, fix it. They may seem like little things, but making sure that everything is in proper working order can make a huge difference in how people perceive your house and the care you have taken with it as a homeowner. Make sure you have big, bright, easily visible house numbers. Oh yeah -- and don't forget to squirt a little oil on those squeaky door and gate hinges. 3. Next, do some cleaning: Break out the broom and clean the outside of your house better than it's ever been cleaned before. Rent a pressure washer, and clean the driveway, walkways and patio. Clean your decks and your siding (a scrub brush is a better choice in these areas than a pressure washer, to avoid damage to the wood). If your wood deck is badly weathered, consider a deck cleaner and brightener made specifically for that purpose -- available at paint stores. Wash all your windows, inside and out, including the window screens. 4. Declutter: Just as you would with the interior, you want to declutter the outside of your house as well. Pick up the kids' toys, and put away the garden tools and hoses (remember, you're going to have people visiting the house, so this is also a liability issue). Remove all that accumulated junk from the sides and back of the house, and haul it to the landfill. 5. Next, tackle the landscaping: As part of the decluttering and general cleaning, do the landscaping areas as well. Prune overgrown plants and trim back overhanging tree limbs. Pull out anything that's dead. Rake up leaves and needles, and pull weeds. If you have an underground sprinkler system, make sure everything is working properly. If you have a lawn, fertilize and water it regularly to green it up, and run an edger along sidewalks and driveway edges. In your planter areas, you can make a huge difference in how your house looks with the simple addition of some fresh bark and colorful flowers. And if you don't have any planter areas, create a few, or add some simple planter boxes to do the same thing. There's nothing like color to really catch the eye and give your home a bright, fresh appeal. 6. Consider a trip to the paint store: Few things help your home show better than a fresh coat of paint. If it's been awhile since the outside of your home's been painted, this might be a worthwhile investment, especially in a tough seller's market. If you're handy with a brush and an airless sprayer, you might just want to undertake the project yourself. A long weekend and a few hundred dollars in paint can make a world of difference in how well the home shows and how quickly it sells. Otherwise, talk with a licensed painting contractor for an estimate. Maybe painting the entire house isn't really necessary. Sometimes just a fresh coat of paint or maybe a new color on the trim, exterior doors, garage door or window shutters can make a big difference as well. A word of caution about paint colors: When painting the house for resale, select colors that complement the house and the neighborhood and that will appeal to the greatest number of buyers, whether they happen to be your favorites or not. You may really have been itching to paint the house purple with black trim, but save that for another day. |
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| Appraisal rules tough on additions By Dian Hymer Recently a homeowner in the hills above Oakland, Calif., applied for a refinance. An appraiser visited the property and measured both levels of the house. The appraiser called the homeowner a few days later to find out if the lower level had been added with a permit. The public record indicated the house had three bedrooms, two bathrooms, and 1,513-square feet. The actual house in its current configuration has four bedrooms, three baths and a recreation room, giving it considerably more square feet than the public record indicates. The owner didn't know if the lower level had been added legally, claiming the house was in its present configuration when he bought it about 30 years ago. Due to changes in appraisal guidelines for residential properties that took effect in 2009, appraisers usually don't give livable square footage credit for work that was done without building permits. Without the extra square footage, the appraised value will be less than it would have been if the work were done legally. This doesn't mean that the lender won't grant a loan. But, if your house appraises low and you were expecting a loan amount based on a higher figure, you'll be disappointed and perhaps unable to complete the refinance -- or, if you're a buyer, you may be unable to purchase. Let's say you wanted a loan for 70 percent of an $800,000 value, or $560,000. The appraisal comes in at $600,000. On a refinance, the lender probably won't lend more than 70 percent of $600,000, or $420,000, which is $140,000 less than what you requested. HOUSE HUNTING TIP: What can you do in a situation like this to increase the appraised value of your home? The first thing to do is go to the local planning department and request copies of all permits on the house going back to the original building permit. If you can find a permit for the additional work that was done, give a copy to the appraiser. The appraiser will have measured the unpermitted square footage. With confirmation that this space is legal, the appraiser will be able to include the additional square feet and increase the appraised value. Take a copy of the permit that confirms more rooms than is reflected in the public record to the county assessor's office and have them update their records. You may be reassessed based on the fact that your house has a legal addition, so your property taxes could increase. However, your house will appraise and sell for more if you can substantiate that the additional space was added with permits. If you discover that the work was done without permits, you can attempt to have the work legalized after the fact. This can be a complicated and expensive project, depending on when the work was done and how many square feet were added. If the addition is 10-20 percent of the size of the house, the permitting process will be less onerous than if the illegal space equaled 50 percent of the entire house. You will need to meet certain code requirements. For example, if a stairway leads to the unpermitted space, it must be 36 inches wide. Replacing an entire staircase can be prohibitively expensive. Walls may have to be opened to inspect the plumbing and electrical. If something doesn't meet current code requirements, it will probably have to be brought into compliance. You might have to add or change windows. Plus, if the building inspector discovers other items in the house that do not comply with current code requirements, you might have to correct these in order to receive final approval of the project. THE CLOSING: Sometimes contractors take out permits for work, but don't take the time to have the final inspection done. In this case, call the contractor and have him finish his job. 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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| Window trim: from boring to bold By Paul Bianchina If you look closely at homes with beautiful windows, you'll typically find one thing in common: wood trim. No matter what the style of the window is or what material it's made out of, a painted or stained wood surround enhances the beauty of the window far more than the inexpensive "drywall wrap" that's common on a lot of today's homes. Creating wooden surrounds for your windows is enjoyable, fairly inexpensive, and can be done by anyone with a few finish carpentry skills. And you can do one or two windows at a time, which is a lot less invasive to your home life than a lot of remodeling projects. First, a couple of definitions In the world of finish carpentry, there are a couple of terms that are helpful to know: Window surround: A window surround consists of the four pieces that wrap the inside of the window frame, between the face of the window and the face of the wall. Stool and apron: A window stool is the same as a window sill. It's the horizontal board at the bottom of the window surround. The trim board beneath the stool, which covers the joint between the bottom of the stool and the face of the wall, is the apron. Drywall wrap: A type of surround in which all four sides of the surround are done with drywall instead of wood. Three ways to trim the window There are basically three options for how you can trim out a window with wood. The simplest is to wrap the two sides and top of the window surround with drywall, and then install a stool and apron at the bottom. The drywall pieces are installed first and finished, prior to installation of the stool. If you already have drywall-wrapped windows, all you need to do is remove the bottom piece of drywall from the surround, to expose the rough framing underneath. The stool is cut from finish-grade lumber. You can use oak, maple, fir, or other clear grades of wood if the wood is to be stained. If you'll be painting the stool, consider poplar or medium-density fiberboard (MDF), both of which paint out very nicely. The stool is typically ripped to a width that's one inch wider than the distance from the face of the window to the face of the wall, and onr inch longer than the distance between the two side pieces of the surround. The stool is then simply notched on each end to fit into the opening in the window surround. It will overlap the wall face by an inch, and there will be two "ears" that extend past the edge of the surround by one-half inch on each side. The apron, which is a piece of trim of any desired size and style, is cut one-half inch shorter than the overall length of the stool, and is installed below the stool to finish things off. Method No. 2 is to make a wooden surround with no stool, which is done by building a box. You need four pieces of lumber ripped to the same width as the distance from the face of the window to the face of the wall, then cut and assembled into a simple box that's slightly smaller than the inside dimensions of the window frame opening. Slip the box into the opening, shim it until it's centered, then nail it in place. The installation is completed by installing four pieces of matching trim on face of the wall, sized so as to cover most of the edge of the wooden box and mitered at the four corners. The third method is a combination of the first two. In this case, you would construct a three-sided box -- two sides and a top -- then cut a stool as described above and use it as the fourth side (the bottom) of the wooden box. Install the box in the opening and shim it into place. Now install three pieces of trim on the face of the wall -- a top piece and two sides. The trim is mitered at the two top corners, and extends down on the two sides to rest on top of the stool. An apron, installed below the stool as described above, completes the installation. There are dozens upon dozens of variations on these three basic themes. Before you get started, take some time to peruse a few architectural and carpentry magazines and books and you're sure to find a look that's perfect for your home. |
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| Home prices put to ZIP code test By Dian Hymer The wealth created by the housing bubble has been wiped out, according to Lawrence Yun, chief economist for the NATIONAL ASSOCIATION OF REALTORS®, who spoke at the group's annual conference in November 2009. Does this mean that if you bought your home in 2005 in an area that experienced rapid appreciation from 2004-2007, you'll lose money if you sell today? NAR tracks home-sale price trends nationally and by regions. Relying on national, regional, or even statewide home-sale price data to determine home values in a given micro market could lead to misleading conclusions. Norm Miller, director of the Real Estate Academic Program at the University of San Diego, analyzes several factors to determine the health of housing markets. During a presentation at the UC Berkeley Haas Business School Real Estate and Economics Symposium, Miller advocated a ZIP code analysis to get an accurate picture of the local market. A ZIP code approach can reveal that home-sale price trends in a given ZIP code could be higher or lower than what the widely used S&P/Case-Shiller Home Price Index indicates for the entire city. For example, the Case-Shiller index for Los Angeles in January 2009 was quite a bit lower than it was in Pacific Palisades, a high-demand district in Los Angeles. In addition to other factors, Miller looks at foreclosure sales (REOs) in an area. He believes that foreclosure sales need to be tracked separately from regular sales. The price discounts on REOs in relation to regular sales can run from 25 to 50 percent or more. An abundance of REOs have a big affect on local sale prices. A low number of REOs will have very little, if any, price impact. Although Miller's approach to assessing current home values and where they might be headed is more informative than broader indices currently used, a ZIP code analysis may not be narrow enough to give an accurate picture of a niche market where you are considering buying or selling. It wouldn't work well for large cities like Oakland or San Francisco, where there is significant price variability between neighborhoods and within price ranges. There are micro markets within ZIP codes. HOUSE HUNTING TIP: To obtain an accurate micro-market assessment on which to base a decision about buying or selling at a point in time, you need to find out the following information about home-sale activity in the local neighborhood: • Look at the sales of listings that are similar to one you'd consider buying or selling that closed within the last three months. Did the listings sell close to the asking price or were they discounted? How long did they take to sell? How much inventory is there on the market now? Is the market dominated by REOs and short sales? Your real estate agent can help you with this analysis. • You also need data on pending sales. These are listings that are under contract but have not yet closed. Were there multiple offers? Were they priced higher or lower than the sold listings? If lower, this indicates a declining market. • How much standing inventory of unsold homes is there in the area? More standing inventory gives buyers an advantage because they have a lot to choose from. They can afford to be picky, and they will negotiate for the lowest price possible. Low-inventory, high-demand markets tend to favor sellers, and may have a positive impact on home prices. THE CLOSING: Supply and demand of homes for sale in the area, along with the state of the local economy, have a profound effect on local home prices. 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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| Sizing up purchase deposits By Dian Hymer In most states, it's customary, or required by law, for the buyers to include a good faith deposit when they make an offer to purchase a home. The deposit should not be given directly to the seller, but held by a trustworthy third party that maintains a trust account specifically for home purchase deposits, such as an escrow or title company, real estate firm, or real estate broker. The deposit can be in the form of a check made out to the third-party company or it can be wired into the appropriate account. The size of the deposit you make is usually determined by market conditions and local custom, except for specific types of sales, such as probate sales or sales of homes in a housing development where a minimum deposit is required. HOUSE HUNTING TIP: Your deposit will become part of your downpayment if the sale goes through. Depending on how your contract is written, your deposit should be refundable if you are unable to satisfy a contingency, after exercising due diligence to do so. Your contract should include contingencies for inspections, satisfactory condition of title to the property, your ability to line up financing, and the lender's approval of an appraisal of the property. For example, if your inspections reveal defects that can't be satisfactorily negotiated with the seller, your deposit should be returnable if your contract provides for this. However, the deposit won't be released by the holder to either the buyers or sellers without a release signed by both parties indicating how to disperse the funds. Be sure to check with a knowledgeable real estate attorney to determine who is entitled to the deposit if you back out for a reason that's not provided for in the contract. Real estate agents who also are not attorneys cannot advise you on this issue. If you end up in a dispute, the deposit holder won't release the money to either party until the dispute is resolved. How large a good faith, or earnest money, deposit you make will depend on several factors. In any case, your deposit should indicate your intent to abide by the terms of the contract and close the sale. There is usually no set amount required by law. In California, where home purchase contracts can include a liquidated damages clause, deposits are often 3 percent of the purchase price. This clause puts a limit on damages that could be awarded to the sellers if the buyers don't close the sale. If buyers and sellers agree to include this clause in the contract, state law limits the amount that can be awarded to the seller to 3 percent of the purchase price. In many areas of California, deposits tend to be 3 percent of the offer price, even if the contract doesn't include a liquidated damages clause. Like most elements of a purchase contract, the amount of the deposit is negotiable. So, if you offer a $10,000 deposit on a $500,000 house, the seller might counter your offer and ask for a deposit of $15,000, which is 3 percent of the purchase price. The deposit can be made in two steps. You could offer $5,000 as an initial deposit, and increase that amount to a total of $15,000 upon removal of contingencies. In a hot seller's market, you might want to offer the full amount up front, or make a larger deposit than you would if you weren't potentially competing, to show your sincerity to the seller. THE CLOSING: If you're buying a short-sale listing that might take two or three months for lender approval, you might want to keep the deposit to a lower amount so that you don't tie up more money than necessary for a long time period. 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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| Is security sign advertising? By Benny Kass DEAR BENNY: I am an 81-year-old widow who bought a townhouse four years ago. There were some odd things going on here so I installed a security system. I have been told that the security sign I have in front of the townhouse is considered advertising and I have to take it down. There are three other areas in town that have townhouses and none of them have a problem with this. What happens if I refuse to take the sign down? --Lillian DEAR LILLIAN: Different associations have different rules and regulations, and all homeowners are legally obligated to follow those rules. If your association does not permit signs to be posted outside your home and you refuse to remove your sign, the board of directors could fine you and/or ask a court to require you to honor and follow those rules. That's a general answer as to the things that association boards of directors can do if a unit owner fails to comply with the rules. However, in your case, you should meet personally and talk with the president of the association. Explain your situation and ask for a waiver of the rules. Point out that your sign really is not advertising. If the board refuses, I suggest that you contact an attorney to assist you. I am sure you can find a lawyer who will take your case on a no-fee basis called "pro bono." Also, AARP may be able to assist you. However, let me ask this question. While I understand that you want the outside world to know that you have a security system in your house, do you really need that outside sign? Isn't it sufficient that you have the actual system installed in your house? Perhaps you and the board can reach some kind of compromise -- such as having a sign in your window so that outsiders will be on notice of that system. DEAR BENNY: Could you please give me the IRS citation number of the repeat credit. I cannot find it on the IRS Web site. --Richard DEAR RICHARD: I received a number of questions about the "repeat credit," but did not know what they were asking about. I e-mailed one of my readers, who explained this was the new law that allows present homeowners -- under certain conditions -- to claim a tax credit previously available only to first-time homebuyers. You can get information on both credits on the IRS Web site at www.IRS.gov, or by typing in "first-time homebuyer credit" in the search box in the upper right corner of the home page. Last November, Congress enacted the Worker, Homeownership and Business Assistance Act of 2009. It extended the time that first-time homebuyers could get an existing tax credit of up to $8,000 beyond the previous Nov. 30, 2009, deadline. Now, in order to be eligible for the credit, you must have a binding sales contract signed by April 30, 2010, and must actually go to closing (also called "escrow") before July 1, 2010. There are a number of restrictions, including income limitations, and you should consult with your own tax advisors to make sure that you are eligible. In extending the first-time homebuyer tax credit, Congress also allowed some existing homeowners to claim a smaller credit, which some of you have labeled as a repeat credit. If you currently own a home that you have used as your principal residence for any consecutive five-year period during the eight-year period that ended on the date that the replacement home is purchased, you may be eligible for a $6,500 credit. Once again, your sales contract must be signed by April 30 and in settlement before July 1, 2010. DEAR BENNY: You recently wrote about how "limited common elements" can include a person's patio. I haven't heard the term "limited" before relative to common elements. In the case you cited, I understand you to mean that the condominium association has the right to have its architectural review committee set some standards for limited common elements, such as patios. I presume this also pertains to wooden decks and balconies that are accessible only from the inside of the unit. If so, does this mean that the association is liable for the repair of cracked decks or deteriorating external rear wooden decks/balconies as they would be if these were deemed to be common elements? --Lew DEAR LEW: Every condominium contains three basic elements: the common elements (such as the roof, elevator or main entrance); units (the place in which owners physically reside, usually described as wall-to-wall and ceiling-to-floor); and limited common elements. The latter is a common element but is not accessible to every unit owner. Typically, a limited common element (LCE) is a patio, a deck and even a mailbox. Some parking spots are also LCEs although they could also be a separate unit or merely a space in a general common element. Why are they called limited common elements? Because they are not within the physical unit itself. Most legal documents in a condominium association (usually the bylaws) give guidance as to who is responsible for the maintenance and repair of units and common elements. And from my experience, the association is usually responsible for the LCEs. This makes sense. The condo board (and indeed a majority of unit owners) wants some kind of uniformity in their community. They do not want unit owners placing gas grills, for example, on their balconies, or anything else that may become a health hazard. Recently, I represented a condominium association that had to take a unit owner to court because she had a hot tub on her balcony. But there is a more basic reason why the association must have the authority to control these LCEs. If, for example, a unit owner has a defective balcony and decided not to repair it, it could collapse and cause damage to someone walking down the street. So, yes, the association could be legally responsible for any damage or injury to property and person caused by a limited common element. However, that does not mean that the owner who has exclusive access to the limited common element is always off the hook for the costs involved in repairing those areas. Clearly, it would be unfair if the owners who do not have balconies have to pay for those repairs. Accordingly, some association documents -- while reserving the repair and maintenance responsibility to the association -- have the payment assigned to those who have such LCEs. Read your own legal documents and talk with the association's legal counsel. 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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| 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." |
| Bailing on underwater house By Benny Kass DEAR BENNY: My self-employed son and his new wife built a house several years ago at the top of the market. Last year, they decided to take advantage of slightly depressed real estate values in another state, and contracted to build a house there. The first house was put on the market at substantially less than they paid for it. They got no offers until someone asked to rent it with an option to buy. Under the supervision of a property management agency they signed a one-year lease with the renter, who recently defaulted in December. The house now is vacant, and despite their substantial downpayment, cannot be sold for anywhere near what they owe on the mortgage. After a year of paying two big mortgages, they are desperate and almost ready to sacrifice their credit to a foreclosure. What is the best way of getting rid of the first house under these circumstances? --Kris DEAR KRIS: Because this is really no longer their principal residence, they have more problems than if this were their main home. But here are some possible options. First, they should talk with the lender on the first home. Can they work out a loan modification so that the mortgage payments will be reduced -- at least temporarily? Will the lender accept a short sale, so that the house can be sold at a more realistic price? Will the lender accept a deed in lieu of foreclosure? This means that your son and his wife will deed the house back to the lender so that no foreclosure takes place. This can be a win-win for both sides, because the lender does not have to incur a lot of costs for the foreclosure and your son will get rid of the house. I assume that he is current on his mortgage payments for the first house. Finally, if all else fails, stop paying on the first home's mortgage and let it go to foreclosure. However, your son should discuss the situation with a local lawyer. Most states allow lenders to go after their borrowers for the deficiency, which is the difference between what the lender received at the foreclosure sale and the current outstanding mortgage balance. If state law permits, the lender could sue your son, get a deficiency judgment, and then go to the state where he now lives and try to collect on that judgment. DEAR BENNY: I have a rental property that I had purchased in 2005. I was going to hang onto it and sell it a few years later. Since that time the real estate market has not been good. My property is now worth less than what I owe on it. I have only a first mortgage on the property. In a previous article you stated that with having only a first mortgage the option of asking the lender to take back the deed and cancel the mortgage would be a lot easier. What sort of risk to one's credit rating would this have? I still have excellent credit but am unable to continue pulling out of savings to make the mortgage. Is there something that might be able to help me convince my lender to take back the deed? --Yvonne DEAR YVONNE: I have given up trying to understand what motivates banks. If you have good credit and get the lender to take back the deed (this is called a "deed in lieu of foreclosure"), it will still have an impact on your credit standing -- but not as bad if the property went to foreclosure. By taking back the deed, the lender is giving up a portion of the mortgage that you owe, and that information will no doubt be reported to the various credit-reporting companies. Try to talk with the highest-ranking person in your lender's office. Explain the situation. But keep in mind you are not the only one in trouble; the lender probably hears similar requests on a daily basis. The lender may ask you to try a short sale first, because legitimate lenders do not want to own property. If you give the deed back to the lender, the lender will have to pay the real estate tax and the insurance, and the lender clearly does not want to do that. You may also want to work out a loan modification. But any activity that you take, short of keeping current with your mortgage, will impact your credit scores. Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. |
| Home improvement you can trust By Paul Bianchina The Internet certainly has revolutionized the way we gather information. From remodeling our homes to protecting ourselves from fraud, there's an incredible wealth of product and technical information that's just a mouse-click away. As you've no doubt already learned in your wanderings about the Web, some of what's out there is extremely useful, and some of it's not. In fact, some of it borders on the downright dangerous. So when you're surfing, know your sources. As you find sites that you know have practical and reliable content, bookmark them for use in the future. Beware of sites that are obviously just passing along information from other sites, often word for word and without regard for copyrights. Here's a random sampling of interesting Web sites that are full of useable information you can rely on. Some of these are government sites, some are nonprofit organizations, and some are commercial sites. But even the commercial sites are ones that have reputable products: APA --The Engineered Wood Association (http://www.apawood.org): Formerly the American Plywood Association, this group now oversees just about anything having to do with engineered lumber and sheet goods. There's a wealth of information here about plywood, OSB, engineered beams, you name it -- and lots of free publications available for download or by mail. National Wood Flooring Association (http://www.woodfloors.org): This is a very nice site on wood flooring. It offers a lot of information about different types of wood floors, wood floor maintenance and repair, wood floor design, and even reclaiming and recycling wood flooring materials. It's designed to promote wood flooring, so it's slanted in that direction, but it's still a good source of information. Building Online (http://www.buildingonline.com): This is a big commercial site that's been around for quite some time. It's basically a search engine, which connects you to just about any type of home improvement material or information source that you're likely to need. It's a great place to find the names, addresses, phone numbers and Web sites of companies and organizations for a wide variety of different building materials. Federal Citizen Information Center (http://www.pueblo.gsa.gov): This is a very large site, full of an amazing array of information published by the federal government. At the left of the opening page, there's a menu of choices. Click on "Housing," then "Home Maintenance" to get to an area full of brochures and other information. The 36-page booklet called Energy Savers, about weatherization and other energy-saving tips, is one good example that's free for downloading. Quikrete (http://www.quikrete.com): Walk into any home improvement store or lumberyard and you're almost sure to see sacks of Quikrete cement, concrete, sand, asphalt and other products. Their Web site has a lot of good information about what the different products are used for, how to work with them, and how to calculate the quantities that you'll need. Wolman Products (http://www.wolman.com): There's always a lot of confusion about deck-cleaning products, and I always get a lot of questions about this subject. In my opinion, Wolman has some of the most reliable deck-cleaning products available. And their Web site has a wealth of information about selecting the best products for different decks and different applications. U.S. Green Building Council (http://www.usgbc.org): The Green Building Council is a nonprofit organization that has established the Leadership in Energy and Environmental Design (LEED) program to help train builders in green design and construction practices. They've also devolved a Green Building Rating System. If you're interested in green building, this is a good site to visit for more information. Purdy Paint Brushes (http://www.purdycorp.com): If you need advice on selecting or using paint brushes, in my opinion this is a site with some worthwhile information. These are some of the finest paint brushes out there, and this commercial site is a good place to learn about brushes and get some great painting tips as well. State Contractor's Boards: You'll need to search for this one on your own. In Google or whatever search engine you prefer, just type in "(your state name) contractors board" and it'll take you where you need to go. I can't emphasize strongly enough how important this is. If you're having any kind of work done on your home, you need to find out the contractor's laws for your state, then verify that the person working on your home is properly licensed, bonded and insured! |
| Find the right real estate stager By Dian Hymer Buyers in some areas complain about walking into an open house and finding dirty laundry in bedrooms. In places like the San Francisco Bay Area, so many listings are well presented for sale that sellers who don't stage their homes are at a disadvantage. Occasionally, a home shows beautifully as is and needs little work to get it ready to sell. A listing in the hills above Oakland, Calif., came on the market last year without the aid of a professional stager and sold for the asking price within a week. The house had just been renovated and the sellers had great taste. Their furnishings and paint colors were perfect for the house. Most sellers need to put more effort into preparing their homes for sale if they want to sell successfully. Some of this work can be done on their own, like decluttering, painting and sprucing up the yard, if they have the skills, time, and are so inclined. Many sellers will benefit from hiring a stager, which is a decorator who specializes in preparing homes for sale. Finding the right stager is important. You want to hire someone who will give your home a look that will sell it for the highest price possible. HOUSE HUNTING TIP: One way to get familiar with different stagers' work and style is to visit Sunday open houses. Usually stagers display their business cards at the property. If not, ask the agent holding the house open if it was staged. If so, ask for the stager's name. Most professional stagers have Web sites where you can find out more about them and preview samples of past staging jobs. Your real estate agent is a good resource. Some real estate agents have a favorite stager. If your agent has had success working with that stager, that could be an obvious choice. You're looking for results. A stager who has a good track record in your area is someone to seriously consider. If you live in an area where staging is not popular, ask your agent for the name of an interior decorator to consult with about how best to arrange your furniture and artwork. Make sure, before you pay for a consultation, that this person also can select colors for you if your home needs painting. Some sellers talk to several stagers before deciding on one. Each stager should meet with you at the property. Try to arrange for your agent to attend the meeting to give input on how the house should be staged to appeal to the most buyers. For example, should a bonus room be staged as a den or home office? Find out if the stager can use some of your personal possessions -- those that are appropriate for selling the house. The staging cost should be less if the stager doesn't have to bring in as much furniture and accessories. Ask if the stager will select paint colors. If not, there might be an additional cost for hiring a colorist. A stager should provide you with a written proposal, including the scope and price of the job, the term of the contract, and the cost to extend, if you need it. In this market, it could take months to sell your home. Staging contracts usually run for two to three months from the date the house is staged. Extensions are usually 10 percent to 25 percent of the original fee for each additional month. Deciding who should stage your home shouldn't be based on price alone. A cheap look is not going to generate an enthusiastic response. Go with the best stager you can afford. THE CLOSING: You want your home to look amazingly good so that it creates a buzz among buyers and their agents. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author. |
| Hot Links |
| California Association of Realtors http://www.car.org My Web Site http://www.ActorBillRealEstate.com Bill's Blog http://activerain.com/blogs/actorbill H.O.T. Homes Open Today http://www.homesopentoday.com/ |
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