|
|
|
|
|
|
|
| News & Information; ToTheMax |
|
Articles and Advice |
|
 |
|
| The Housing Stimulus Bill (as of 7/30/08) By National Association of REALTORS® H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions: GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008). FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008). Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan). FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008. Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008. VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008. Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009. GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail. Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages. National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing. CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes. LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient. Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator. For more information, visit http://www.realtor.org/governmentaffairs. |
|
| Detox your indoor air By Elyse Umlauf-Garneau Everyone seems to love that new-house smell and pine-scented air. Unfortunately, such aromas frequently are the stench of toxins being emitted by construction materials, cabinets, paint and adhesives. Formaldehyde, mold, dust mites and a multitude of other nasty bits may make up the chemical soup that you’re breathing. Air quality is important because more than 80 percent of most people’s time is spent indoors and exposure to bad air can cause symptoms as minor as headaches, watery eyes and sluggishness to more serious ailments like asthma and even cancer. Sources of poor indoor air quality (IAQ) include: -Volatile Organic Compounds (VOCs), involve a host of scary-sounding chemicals like benzene, toluene and formaldehyde. VOC sources include paint and paint strippers, aerosol sprays, disinfectants, dry-cleaned clothes and air fresheners. Matt Golden, president of Sustainable Spaces Inc. www.sustainablespaces.com, recommends being wary of every new thing (especially if they have a smell) you bring into the house. Chemicals in such items—be they small items like shower curtain liners to larger purchases like mattresses—can off-gas into the environment. -Biological pollutants can include bacteria, mold, dust mites and pet dander. Minimize dust and know that dust mites lurk in couches, bedding and mattresses. Washing bedding in hot water is important, and be sure that household appliances and systems, such as stoves, furnaces and air conditioners, are clean and operating properly. Mold often can be controlled by using exhaust fans in bathrooms and kitchens to move moisture outside, and by venting clothes dryers to the outdoors. Also remove moldy items (shower curtains, for instance) and fix leaky plumbing, and inspect for and clean mold from under carpets and on walls, ceilings and floors. Covering mold with paint, varnish or sealers could allow mold to return. “Products don’t solve problems,” Golden warns. He prefers a holistic approach to solving air quality problems—one that identifies and addresses their root causes. Sometimes IAQ problems stem from poor insulation or moisture in the crawl space and others, like mold formation and dry air, result from improperly sized HVAC systems. “Many heating and air conditioning systems are too big and they’re pushing air through leaky ducts and registers that are too small,” observes Golden. He often finds solutions by properly ventilating homes and delivering the correct amount of humidity in the air. Some solutions: When you’re building a new house or renovating, pay attention to air quality. Choose formaldehyde-free products and use low VOC paints, caulks and adhesives. Work with architects and contractors who understand and can address IAQ issues and who know how to balance energy efficiency with proper ventilation. Often correcting IAQ problems is simple. Golden points out that bag-less vacuum cleaners may suck microscopic contaminants and blow them right back into the air. Just switching to a vacuum with a HEPA filter could eliminate many irritants. And though cutting off the heat in an unused room may save energy, you could inadvertently be creating a mold problem. Needless to say, smoking cigarettes indoors is taboo. Swap chemically-based household cleaners for non-toxic ones made from natural materials. They’re readily available at stores and online. Find them at http://www.greenseal.org/findaproduct/index.cfm. Better yet, save money and make your own with easy-to-find products like vinegar and baking soda. Find some recipes at http://greenlivingideas.com/housecleaning/natural-cleaning-recipes.html#Surface. Additional resources: -Learn about improving IAQ during wildfires at www.allergyconsumerreview.com/improve-indoor-air-quality.html. -The sites, www.healthyhouseinstitute.com and www.healthhouse.org/ provide guidance on all aspects of creating a healthy home. -Find healthy household furnishings and building supplies at www.greenfusiondesigncenter.com/index.htm. -The California Air Resources Board www.arb.ca.gov/research/indoor/indoor.htm features IAQ guidelines and fact sheets. |
|
| What to do if your home won't sell By Dian Hymer Homes take longer to sell today than they did in 2005. This is due to a slow home-sale market that has resulted in a build-up of the inventory of unsold listings. Although there are exceptions, this situation is expected to continue until late 2008 or 2009 -- at least. What options do sellers have whose homes aren't selling quickly enough? Many of the homes that aren't selling are priced too high for the current market. The median sale price of homes sold nationally in February 2008 was down 8.2 percent from a year ago, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). This percentage was even higher in cities like Miami and Las Vegas that were speculative hotbeds in 2004 and 2005, and now have high foreclosure rates. Some areas are doing better than others. For example, the median sale price of homes sold in the San Francisco Bay Area in February 2007 dropped only 5 percent compared with a year ago. There are few areas in the country where prices have actually increased during the past year. Even so, sellers often have a difficult time coming to grips with the fact that the value of their property has declined. It has often been said that sellers are the last to know when it comes to the value of their homes. Buyers, on the other hand, are often ahead of the game. They know the market better than most sellers. They are aware of the risks involved in today's market, and they gauge the price they'll pay accordingly. HOUSE HUNTING TIP: Sellers whose homes aren't selling should analyze the price they are asking with the help of their real estate agent. It's useful to look at similar homes in your area that have sold recently. Why did these homes sell when yours didn't? If price is the key determinant, adjust your price accordingly, if you can. Sellers who are unable to accept a reasonable price for their home should take it off the market and wait for a better time to sell. Letting your home sit on the market overpriced won't accomplish your goals. And, it could hinder your sales effort at a later date when you get serious about selling. You don't want to be known as an unrealistic seller. Some listings need more than a price adjustment to sell in this market. If modifications can be made to the property to make it more salable, consider removing the listing from the market temporarily until changes can be made. Then, adjust the price some to give the listing an entirely new look when it is re-marketed. Finding a tenant rather than a buyer might seem like a good option for some sellers. Before taking this approach, talk with a tax advisor. The tax laws affecting single-family residences differ from those relating to income-producing properties. One tax benefit of owning your home is that you are entitled to $250,000 of tax-free gain ($500,000 for a married couple filing jointly) when you sell. But, restrictions apply. For instance, you need to have owned and occupied your home for two of the last five years. If you were to move out of the area, with no plans of returning, this could pose problems when you decide to sell. It can be difficult to sell a tenant-occupied property, particularly if the tenants are content to stay where they are. Also, your home might not show well with a tenant living in it. Ideally, plan on selling after the tenant has vacated. THE CLOSING: This way you can have the property repaired, painted, cleaned and staged for sale before it goes on the market. |
|
| Shopping for wallpaper made easy By Paul Bianchina There are two things you can pretty much be assured of when it comes to wallpaper: The right paper can make a dramatic decorating difference in a room, and actually finding the right paper can be an overwhelmingly daunting task. Go into any wallpaper store, paint store, home center or other retailer and you'll be confronted with dozens if not hundreds of wallpaper sample books. Considering that each book may contain upwards of a hundred or more different papers, you can see how quickly the number of choices you have can run well into the thousands. To avoid randomly flipping through books until your eyes glaze over, you need to have a plan in mind before you ever head to the store. Start by looking through magazines or browsing decorator sites on the Internet. Don't look for the perfect paper -- instead, concentrate on what you like, and, equally important, what you don't like about the rooms you're seeing. You may notice that you are being continually drawn to vertical patterns, while anything floral is a complete turnoff for you. Bold colors may be your thing, while subtle patterns may be something you simply don't like. Tuning into to what your eyes and your mind are telling you can be a big help. Next, gather together some samples of what the wallpaper will need to coordinate with. Get a flooring sample and samples of the paint colors being used on the ceiling, trim and adjacent walls, and a drapery fabric sample. All of these items will greatly affect your wallpaper choices, and will help you narrow things down. Because wallpaper can be quite expensive, it's important to have a fairly accurate idea of how much you need before you go shopping, so you can see if it will fit into your budget. For that, you'll need to measure your room. Measure the length and height of each wall, and round up to the next half-foot or foot (round 10 feet 4 inches up to 10-6, or 12 feet 8 inches up to 13 feet.) Make a sketch of the room as you go, noting the size and location of doors, windows and any other large areas that will not be papered, such as a fireplace or built-in bookcase. Armed with some magazine pictures, your armload of samples and the dimensioned sketch you made of the room, it's finally time to head to the wallpaper store. But before you go, call ahead and see if the store has a designer or wallpaper consultant that's available to help, and see if you need to make an appointment for a specific time to come in. A good consultant knows the books, the companies, and the available patterns and colors, and can do a lot to narrow your search. It doesn't necessarily mean they will take you immediately to the perfect book, but it certainly can make the difference between looking through eight or 10 books or having to plod through 60 or 70. During your initial perusal of the books, all you're really trying to do is get a feel for what's available, and what appeals to you in the way of colors and patterns. Mark the pages that have papers you like, and then set those books aside for a second look. When you feel like you have a good variety to choose from, work your way back through the books you've set aside and narrow it down to no more than half a dozen -- any more than that will probably be overwhelming when you get them home. Next, discuss your possible choices with the consultants. They can look at your sketch and determine how many square feet of paper you'll need, and can then work with the specific papers you're considering to determine exactly how many rolls will be required -- different types of papers and different pattern matches can affect the overall roll count, even though the square footage of the room remains the same. Now you need to consider your budget. The consultant can take the number of rolls of a specific paper, and tell you the overall price, including shipping. Some papers are very reasonably priced, while others can be dauntingly expensive, so you want to take this into consideration before falling in love with a paper that's out of your price range. When you have narrowed the choices down, the final step is to take the books home and view them in the rooms where the paper will be installed. Keep the books around for a couple of days, and look at the papers under different natural and artificial lighting conditions at different times of the day. When you finally have your choice, double check your measurements before placing the order. If you're uncomfortable with measuring accurately, ask the consultant to make a site visit and do the measurements for you. Finally, to ensure an accurate color and pattern match between rolls, each roll needs to have the same dye lot number. To do that, be sure that you order all of the rolls that you need for the entire project at the same time, and check and compare the numbers on the rolls before you unwrap them. |
| Selling subdivided land? Keep eye on taxes By Benny Kass DEAR BENNY: I purchased 30 acres for $600,000 in 2004. This part of the county is zoned to a minimum parcel size of 10 acres. We recently built a home on one part of the property and reside there. At some future point 10 to 15 years from now, we may decide to sell off one or two 10-acre lots. If I subdivided the property and sold off a 10-acre lot, what would be the tax consequences? Assume a sales price of $500,000 for a 10-acre lot. –Bill DEAR BILL: This is a complex tax and accounting question and you really have to consult with a tax attorney and an accountant. But let me give you a brief, oversimplified answer. When you own real estate -- whether it is residential or investment property -- and you hold it for at least one year, unless you qualify for the up-to-$500,000 (or $250,000) exclusion of gain, you will have to pay capital gains tax to the IRS and whatever appropriate state tax may be imposed. However, when you start to sell real estate, depending on the facts of your particular situation, the IRS may consider you to be a "dealer," in which case you will have to pay the tax as if it were a short-term capital gain -- in other words at the same tax rate that you pay on your ordinary income. The difference can be very significant. For example, the current capital gains tax rate is 15 percent. But if you are considered a "dealer" you may have to pay the tax as high as 35 percent. If you were to subdivide and sell off 10 units in one year, you are automatically considered a "dealer" and will have to pay the full tax. However, because you are going to sell only one lot, a strong argument can be made that you will have to pay only the then-current capital gains tax. This issue has been widely litigated over the years, and the courts have looked at a number of issues that they will consider in making the determination of "dealer" versus "investor." Some of these factors include: • Is the taxpayer in the business of selling real estate? • Was the property listed with real estate agents? • How long was the property held by the taxpayer before it was sold? • What was the taxpayer's initial objective when the land was purchased: to sell or hold? • What did the taxpayer do to improve the property? For example, were improvements (such as infrastructure) made to the land? • Your tax advisor will analyze all of the factors and assist you in deciding what your tax implications will be. DEAR BENNY: If a house sells for $100,000 with a 6 percent commission, is it illegal to record the purchase price of the house for $94,000 and pay the commission separately? –Kai DEAR KAI: If you have a sales contract for $100,000, that's the sales price. If you try to lower the price, you are defrauding both the buyer's lender as well as the state or county real estate tax offices. Typically, any recordation or transfer tax that is paid to the government is based on the sales price, and in your example, these taxes would not reflect the true purchase and sales price. You are also misrepresenting the price to the IRS when you file your income tax return. No, I don't like this arrangement and cannot recommend it. DEAR BENNY: I have the opportunity to buy a fixer-upper for a seasonal rental near a ski resort in Vermont. The price is well below market value. The house has a new roof, but needs an updated bathroom, new carpet and paint, along with some other minor cosmetic fixes. I may choose to live there in the next few years. I have enough cash on hand to pay for the purchase and repairs. Would you still recommend financing? –Catherine DEAR CATHERINE: This is always a difficult question to answer, and much depends on your own personal financial situation. You state that you have the money to buy the house and pay for the necessary repairs. But what about your other assets? The last thing you want to be -- as you grow older -- is to be "house rich and cash poor." I am a strong believer the homeowners should have a mortgage on their properties. They get tax benefits from the mortgage interest that they pay, and can use that cash for other investments. No, in most situations, it does not make sense to get a mortgage at 6 percent and put your money in a bank account that only pays you 3 percent. But if you have the opportunity to invest your money elsewhere, why put all of your cash into that resort property? You indicate that the property is below market value. Hopefully, in the foreseeable future, the real estate market will bounce back. Assuming that this investment will increase in value by just 3 to 5 percent a year, you will have dead equity in your house -- doing nothing for you. And keep in mind that under current tax law, you can deduct interest only on what is known as the "acquisition indebtedness" plus $100,000. If you pay all cash, your acquisition indebtedness is zero. So in the future, if you ever decide you want to refinance and pull out some of that equity, your tax deductions will be limited to the interest on only $100,000. This is yet another factor to consider as you ponder the question of whether to pay all cash. DEAR BENNY: The question I have concerns the deed to our home. I married a man 24 years my senior who has three grown children, and his first wife died two years before we started seeing each other. He has changed the will to read that I receive the house and all contents, but his deceased wife's name is still on the deed. Should we change the deed to both our names? –Stephanie DEAR STEPHANIE: As laws vary from state to state, I only can provide you with general advice. First, you have to determine how title was held between your husband and his first wife. if, for example, it was not in tenants by the entirety (or joint tenants with rights of survivorship), then it is possible that the three children of the first wife have an interest in the house. And probate of the first wife's estate may be necessary. You must consult with an attorney in your state to clarify this issue. If, however, your husband is now the sole owner of the property and if he wants you to have the house on his death, then yes, your name should be added to the title in such a manner that you will automatically own the house on his death. |
| Some remodels endure endless inspections By Paul Bianchina If you're thinking of doing some improvements on your home, especially extensive ones, chances are you'll need a building permit. So you head down to your local building department, fill out an application and provide whatever information they require, and a short time later you have your permit. Once you have your permit, it's important to understand how the inspection process works, and what you need to do to be ready for it. Knowing when different inspections are required and what the inspectors are going to be looking for will help everything go much more smoothly. When you receive your permits, you will also be given information about how to call for the inspections. Some cities utilize an automated call-in system, some do it online, some have live technicians that take the requests, and some offer all three. However it's done, be aware that most jurisdictions require that you request an inspection with at least one day's notice, sometimes more. DIFFERENT PROJECTS, DIFFERENT INSPECTIONS As you will see from your permit card when you pick it up, there are a wide variety of different inspections, many of which may not be required for your particular project. Many building departments will tell you specifically which inspections you'll need to request, but if they don't, be sure that you ask when you pick up the permits. Here are some of the more common inspections, as well as when they occur and what the inspector will be looking for. Footing Inspection: This is typically the first of the inspections, and occurs after the grading has been done and the forms have been laid for the foundation, or at least for the footings. The inspector is looking to see that the footings are the proper size and depth, that any reinforcing steel is in place, and that the location of the foundation does not violate any setbacks. Underfloor Inspection: This occurs after the foundation has been poured and the floor framing is in place, but before the subfloor is installed. This gives the inspector the opportunity to look at the floor framing, as well as any plumbing or mechanical systems that might be in place under the floor. The inspector will be looking at the size and spacing of the framing; that proper materials have been used wherever the wood meets either the concrete or the soil; and that plumbing and mechanical systems are properly sized, installed and supported. Rough Inspections: These inspections occur after the rough framing has been completed and all the rough wiring, plumbing and mechanical components have been installed, but before any finished wall and ceiling covering is installed. These are typically the most extensive and complicated of all the inspections, since there is a lot to review and it will all be covered and inaccessible in the future. The rough framing inspection includes an inspection of all the structural components. The inspectors will be checking that the proper size and type of lumber was used, and that the spacing is correct; that hangers and steel connections are the correct type and are installed with the proper type and quantity of fasteners; that flashings and other weatherproofing measures are in place; and that the roof, windows, exterior doors and other components are in place to make the building weather-tight. Rough electrical inspections include checking the size and installation of all the wires; the service panel; grounding; installation and location of boxes; installation of can lights; and whether the wires are properly routed and protected. Rough plumbing inspections look at the size and type of pipe that was used; proper slope for drain pipes; vent pipe sizes and locations; size and location of water lines; and that everything is secure and well supported. Rough mechanical inspections include the size, location, and installation of all ducts and vents; installation of furnaces and ventilation fans; and the proper ducting of fans to the outside of the building. Insulation Inspection: This inspection occurs after the wall insulation has been installed and checks to see that it is complete and of the proper R-value. Drywall Inspection: Some cities include a drywall inspection, which occurs after the drywall has been installed but before it is taped. The inspectors are checking to see that the proper number and type of fasteners have been used to secure the drywall to walls and ceilings. Final Inspections: When everything is done, the inspectors will make their final inspections of all systems to ensure that everything has been completed correctly. They will test different systems, check for compliance with manufacturer's specifications, and ensure that everything is operating properly and the house is safe for occupancy. Remember that this is just a brief overview of the inspection process, and that the actual number, timing and details of the inspections can vary widely. Be sure to talk with your building department to get the specific details of the inspections for your particular project, and to get any of your questions answered before you begin. |
| Can landscaping expense be added to cost basis of home? By Benny Kass DEAR BENNY: Over the past 20 years I have spent a considerable amount on landscaping my property, such as trees for screening. Can these expenses be added to the cost basis when I sell? –Ted DEAR TED: Oversimplified, any improvement to your property -- including the land -- that has a useful life for more than a year is generally considered an "improvement," which can increase your tax basis. However, if you installed trees 10 years ago and then recently replaced them with new trees, you cannot include the cost for both sets of trees. A good source of information can be found in IRS Publication 523 [1], entitled "Selling Your Home," which is available from the IRS online. This publication provides a number of examples of what can and cannot be included as "improvements." DEAR BENNY: My husband and I own two investment properties in rural Virginia. We are renting one and are in the process of renovating the other. We plan to purchase another property when we are done with this one. When (if at all) do we need to form an LLC? Is it after we own a certain number of properties? Although we have been using a computer program to do our taxes, we feel it is time to hire an accountant to do them in order to take advantage of tax savings and possible deductions. What type of accountant should we be looking for? –Cindy DEAR CINDY: These are good questions. As for the accountant, you need someone who has knowledge and experience with real estate investments. Talk with friends and get some names of potential accountants. Talk with them, and specifically ask if they handle real estate investment issues. And don't forget to ask about their fees. I believe that everyone who owns real estate investments should seriously consider putting each one in a separate limited liability company, or LLC. As the name implies, your liability is limited. That means, for example, if you are sued because of a problem with one of your investment properties, so long as you make sure to carefully follow the rules for operating a LLC, your other assets should be protected. What are these rules? You should consult your attorney or even that CPA you will hire. Oversimplified: (1) don't commingle funds; (2) keep accurate books and records for each LLC; and (3) whenever you sign any legal documents relating to one of your LLCs, add the word "member" or "managing member" after your signature. In an LLC, you and your other investors are members, and if there are a number of members, one of you will be the manager. I recognize that in some parts of the country, it is expensive to create a legal LLC. For example, I have been advised that in California, it costs upwards of $800 for each such company. One reader asked "instead of paying $800 for each LLC, wouldn't I be better off just getting umbrella liability insurance coverage?" My response: Perhaps. But if there is a court-ordered judgment against you that is over the limit of your insurance coverage -- or if for some reason the carrier did not insure the kind of lawsuit (such as lead paint) -- then all of your assets may be at risk. So, talk to your new accountant, but consider creating that LLC before you buy so that the new property will be held in the name of that company. |
| Hot Links |
| Search For Bank Owned Homes http://www.pmz.com/mypmz/search/searchFormREO.asp?LID=01717430 |
|
| Your Newsletter is Powered by: |
 |
|
 |
