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| Ralf Moll Real Estate - September 2010 |
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Rental Homes and Condominiums FOR RENT: 2-3 Bedroom units from $1200 to $2100 per month. Please visit http://www.ralfmoll.com http://www.ralfmoll.com/newrentalpage.htm |
Articles and Advice |
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| Pay attention to home inspection By Paul Bianchina For just about anyone, a home is the single-most expensive and single-most complex thing that you'll ever own. So when making that purchase, you certainly want to do everything possible to be an informed buyer and to protect yourself and your investment. One of the ways to do that is to have a home inspection prior to closing the deal on the purchase. A home inspection will give you a lot of information about the physical condition of the home you're considering buying, and should alert you to any potentially serious problems. But as a potential home buyer, it's important that you understand what a home inspection includes and doesn’t include. There are certain things you legitimately can expect your inspection to provide for you, and certain things that it won't. And you also need to understand that the more you participate in the inspection process, the more you'll get out of it in return. Finally, understand that just like there are good and bad contractors, there also are good and bad home inspectors. Expect to have to do a little homework to find one of the good ones. What is a home inspection? A home inspection is a visual inspection of the home you're thinking of purchasing, performed by an objective third-party inspector. The inspector will examine the physical structure of the home from top to bottom, as well as the home's operating systems. Typically, a home inspector will look at the following things: • Outside: The exterior home site; general condition of the foundation and basement walls; condition of the exterior walls, including the siding, exterior trim, windows, exterior doors and exterior paint; type and condition of the roofing; condition of gutters, downspouts, flashings, and vents. • Inside: The condition of the attic, roof support structure, attic insulation and attic moisture issues; condition of the basement and crawl space, including insulation and moisture issues; garage and carport; electrical system; visible plumbing system; heating, cooling and ventilation system; general interior condition of the home. A short time after the end of the inspection you'll receive a written report detailing the inspector's findings. Any defects the inspector identified will be noted. Inspectors never should attempt to sell you anything, such as their services to come in and fix anything that was identified in the report. To do so would be a clear conflict of interest. It's important to understand that inspectors do not do what is known as "destructive testing." In other words: they don't cut holes in walls or otherwise open up inaccessible areas to look inside. Everything is based on their visual inspection of whatever they can access. They're also not there to comment on anything that's readily apparent from a cosmetic standpoint, such as a sloppy paint job. What types of things does the inspection not cover? It's equally important to understand what a home inspection doesn't cover, because this is where you need to be sure that you continue with your due diligence when you're buying your home. For example, your home inspector will point out any obvious signs of visible mold or mildew in the home. However, he will not be performing any type of actual mold inspection. If you suspect a mold infestation in the home, you need to have testing done by a trained hygienist. Home inspectors will point out structural problems that have been caused by insect damage. But they're not there to perform a complete termite inspection. They also don't do inspections for the condition of the well, septic tank, or any type of soil contaminants. You also need to be very aware of the fact that a home inspection has nothing to do with code violations or zoning issues. You need to check those things out for yourself with the local building and planning offices. It's up to you to assure yourself that any prior work on the house was done with the necessary building permits. It's also up to you to check that there are not any issues when it comes to how the house is currently zoned, or how the current zoning might affect your use of the property in the future. What do you need to do? You have a couple of other responsibilities in this process as well. First of all, know who your inspector is, and what's required of him. Different states have different regulations pertaining to how home inspectors are regulated, so find out what's required. Interview the inspector before you hire him. Be sure he complies with all those requirements, including whatever license, insurance and bond is needed. Ask for and verify references. Ask for and read a sample report. Be sure it gives you the type of information you need, in a format you can understand. Find out if the inspector belongs to any professional trade organizations, and what their standards and codes of ethics are. The other important thing is that you need to attend the inspection. Follow the inspector around, even up into the attic and into the crawlspace if you're physically able to do so. See what he's looking at. Understand the potential problems. Ask questions and take notes. When you get your report, read it over from cover to cover at least twice, and be sure you understand it. You paid for it, and it's one of the most important documents you'll ever have. So if you don't understand any of it, be sure someone explains it to you. |
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| Pricing to sell in today's market By Dian Hymer Putting yourself in the right mindset to sell is essential. It's the most difficult aspect of selling for most sellers. Your home is worth what a buyer is willing to pay, which may not be what you think it is worth. Detaching yourself emotionally from your home is difficult. Clearing out years of clutter, depersonalizing your home by removing personal memorabilia, and staging your home for sale can help you step back and view the home as a commodity that needs to be sold rather than as your personal sanctuary. Putting your home on the market at a price that reflects what you want and not what the market will bear can cost you time and money as it sits on the market unsold. The home-sale market is a localized phenomenon. The only way to get a clear picture of what your home is likely to sell for is to find out which listings are selling in your neighborhood and for how much. The most recent sales -- those that closed within the last three months -- will be the most informative. Be sure to take a hard look at the list prices of homes that are new on the market. If the list prices are lower than they were two or three months ago, this indicates that prices are declining. This needs to be taken into account when you select a list price. HOUSE HUNTING TIP: Pay close attention to your competition. Don't fall into the trap of pricing your home higher than your neighbor's home because yours is better. If your neighbor's price is too high for the market, neither of your homes will sell. Ask your listing agent to call the listing agents of properties similar to yours to find out what kind of showing activity they are receiving. Have they had offers? If so, why weren't they accepted? Were the offers too high? If so, you should set your sights lower. Some listing agents recommend that you list considerably under market value in order to stimulate multiple offers. In some cases, this can be an effective strategy. For example, in the low-end foreclosure market, this was common practice at the end of 2009. Some listings priced way below market value received more than a dozen offers. However, it can be risky to price significantly lower than market value on a more expensive property for which the demand is lower. You could end up with more than one offer, but you could also receive under-market price offers. Your home needs to be perceived as a good value to a buyer to sell in this market. However, you could shortchange yourself by discounting the price too much. Your home is most marketable when it is new on the market. Buyers wait anxiously for the new crop of listings. Listings that don't sell relatively quickly often languish on the market. Price reductions often follow as the sellers try to find market value. A listing that has been on the market for months is likely to receive a low offer -- if a buyer makes any offer. A listing that receives a lot of showing activity when it first hits the market but gets no offers is probably overpriced for the market. In this case, it's best to lower the price to market value as soon as possible while the listing is still fresh in agents' and buyers' minds, even if this is within two to four weeks of the listing date. THE CLOSING: Listings in neighborhoods where sales activity is slim require a longer marketing period. Even so, pricing right for the market is imperative. 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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| Protect real estate from Medicaid By Benny Kass DEAR BENNY: Seven years ago, when my mother was 80, my husband and I purchased cooperative apartment shares in a senior complex for her to live in. Since at least one of the tenants had to be over 55, we put her name on the shares, as well as my name. The actual paperwork reads: " 'My Mother's Name' or 'My Name' as joint tenants with right of survivorship and not as tenants in common." If my mother needs to move to assisted living or a nursing home, will Medicaid try to get possession of this apartment? I've called the co-op's attorney, senior law offices here in Reno, Nev., and I've called private attorneys. No one can give me an answer. One office suggested I call the Medicaid office. As much as I would like to, I think that might give Medicaid an opportunity to take what isn't hers. We used equity in our home to purchase this apartment. My mom lives on Social Security and could never afford this apartment. One lawyer suggested the co-op "reconvey" the share back to my name, but their bylaws require that whoever is on the deed live there. Any ideas? Are we safe in keeping this, selling it and keeping the monies, or will Medicaid take it? --Penny DEAR PENNY: This is a complicated question and I am surprised that the senior law offices were unable to assist. There are a number of "elder lawyers" throughout the country, and you can locate them on the Web. I searched "elder lawyers" and found a number of Web sites that should be of assistance to you. Generally, however, Medicaid (which is administered by the state, with each state having its own rules) does not "get possession" of property. But if your mother applies for Medicaid, I assume she will need to disclose her interest in the co-op as an asset. It is possible that the state will take into account the fact that she is not an "equitable" owner of the property (as she did not contribute to the purchase price of the property) and simply disregard the asset. But even if she is considered to be an owner for Medicaid purposes, the state may impose only a lien on the property rather than require it be sold. In fact, if the state considers the co-op interest an asset of your mother, it wouldn't require her to sell it, but could deny her benefits until her assets, including her interest in the house, were spent down to whatever the threshold is in Nevada. Many states allow a number of exceptions. For example, if a disabled family member (or a spouse, which I assume there is none) is living in the property, the Medicaid applicant would qualify for benefits and a lien would be imposed on the applicant's share of the property in the amount of any benefits paid -- but the benefits would need to be reimbursed when the property is sold or the disabled person or spouse dies. This is a highly specialized area of law, and not all attorneys understand the rules or the law. DEAR BENNY: I have a question about escrows for taxes and insurance. Let's say I am buying a home and last year's tax bill was $1,200 (or $100 per month). Can the lender set up escrow collecting $150 per month for taxes? --Nate DEAR NATE: My mathematical skills are limited, but the answer to your question is no. According to the federal Real Estate Settlement Procedures Act (commonly known as RESPA), a lender who collects money in escrow for real estate taxes and insurance can have only a two months' cushion on an annual basis. So, if the bank is collecting $150 per month, annually that comes to $1,800. A two-month cushion allows you to collect only $1,400, or $116.66 per month. But depending on when settlement takes place, the lender does have the right to collect sufficient funds (plus two months extra) to make sure that it can pay the taxes and insurance when they become due. Let's take this example: You settle (go to escrow) on May 15. The tax bill in your jurisdiction must be paid by Sept. 30, 2010, but is applied from January 2010 through December 2010. Because mortgage interest is calculated in arrears, your first payment will due in July. (Note: The lender will charge you interest at closing from May 15 to the end of that month.) By the time the real estate tax bill has to be paid, you will have made three payments in escrow (July, August and September). But the lender needs a full 12-month payment. Accordingly, the lender has the right to charge you -- at closing -- nine months' escrow to collect all the money needed, plus two months' cushion; in other words, the lender can charge you at closing for 11 months' escrow. Here's a consumer protection suggestion: Because too many lenders often do not make the tax or insurance payments on a timely basis -- or in some cases do not make the payments at all -- homeowners should send their lender a demand letter, once a year right after the taxes or insurance payments are due, requesting proof that those payments have, in fact, been made. For those jurisdictions where this information can be found online, you should learn how to access this from your local government's Web site. 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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| Is “do it yourself” in your DNA? By Paul Bianchina In many ways, this is a tough time to be a homeowner. Finances might be tight, but that doesn't stop the roof from wearing out, or the plumbing from starting to drip. Or perhaps you're thinking of selling your home, and you need to add a deck or replace some windows or siding in order to be competitive in a tough real estate market. But you can't really afford to hire a pro. That may have left you giving some serious thought to undertaking some do-it-yourself projects that in the past you might not have considering tackling. There are some pros and cons to that. Doing things yourself saves money and adds value to your home. It can also bring a lot of personal pleasure, and a definite sense of pride. But there are risks. A poor job can actually detract from the value of your home. In some cases, you can even end up paying more for wasted materials and correcting mistakes than you would have paid to have a contractor do it right in the first place. So before you break out your tools and head to the home center for a stack of lumber and paint, take a moment for some honest assessment. Do you know how to do the work? This is the obvious first thing to ask yourself. Do you know what steps are involved in the project? All of the steps? There are lots of great columns (you're here, right?), books, videos, TV shows and other sources of information that will help tell you how to get from point A to point Z in a project. Take the time to check out a few of those sources. Understand what's involved. Then ask yourself if you know how to do those things. If you don't, can you learn them? Do you have the right skills and abilities? OK, you figured out the steps involved. Now, do you have the skills and the physical abilities to accomplish those steps? Remember, they're two different things. You might easily read about how to re-roof a house, and fully understand all of the steps involved in doing it. But if you're not able to handle the rigors of working for hours at a time on a steep roof, then understanding the theory of how to do it won't be enough. Can you commit the necessary time? This is a tough one for a lot of homeowners. For one thing, it's really hard to understand just how long some of these projects are going to take -- especially if you've never done them before. For another, the time commitment to the project means time that's going to be taken away from something else. It may be that re-siding the house takes the entire summer, simply because you can do it only on the weekends. Will that work for you? Will that work for your family? If the purpose of doing the re-siding work is to sell the house, will you end up missing the prime selling season? Time creates other risks, as well. Take re-roofing, for example. If you can commit only small chucks of time to the project, you may be leaving your home vulnerable to sudden rain storms if the roof isn't adequately protected. Or your home may not be secure if you're taking windows or doors out, but temporarily replacing them with plywood or, worse yet, sheets of plastic. Have you thought about the physical side? Most building projects, even the simple ones, require some amount of physical labor. Are you up for that? Climbing, crawling, lifting, carrying and all the other things that go along with getting the work done? Then there'll be those times when, despite your own willingness to do the work, another set of hands is going to be necessary. Do you have a helper you can call on? What about getting the materials? Can you pick them up at the home center or the lumber yard by yourself? Can you get them delivered? Once they get to the house, can you get them where they need to go: onto the roof, into the house, or into the basement, attic or crawl space? And don't forget that once things get under way, there's the obvious need for tools and equipment, which you'll need to buy, rent or borrow. You might want to go back to the first question, and look at all of the steps involved in the project. That might help you better understand the physical side of things, as well as those times when a helper might be needed as well. Do you want to do it? Be honest here. Your real estate agent may have said that your house will show better with a fresh coat of paint. You can't really afford to hire a painter, so you decide to do it yourself. Unfortunately, you hate painting more than root canals, and the only thing you want to do is hurry up and get it over with. Do you really think that the appearance of the finished product is going to help you sell your house? None of this is meant to dissuade you from tackling a do-it-yourself project. Just the opposite. Taking responsibility for their own homes is something I encourage people to do every day. But so is honest assessment. So just take a moment before you start, and make sure your eyes are open before you get started. You'll end up with a better finished project as a result. |
| Real estate contingencies make comeback By Dian Hymer During the recession of the early 1980s, when mortgage interest rates hovered near 18 percent, few home buyers could qualify for financing, particularly if they already owned a home that needed to be sold before buying a replacement home. Offers made contingent on the sale of the buyers' current home were popular. Contingent-sale offers are increasing in the current housing market. Most buyers who want or need to make a move to a home that better suits their current lifestyle can't qualify to buy before selling their existing home due to stringent mortgage-qualifying criteria. Sellers don't like offers that are contingent on another property selling because it increases uncertainty. If the buyers don't price their house right for the market and it doesn't sell, the sellers are back to square one searching for another buyer. Most buyers aren't keen on selling their current home before they know where they will be living next. This can limit buyers' prospects because many sellers won't accept contingent-sale offers. The best houses at the best prices usually sell quickly, sometimes with multiple offers. Sellers usually reject contingent-sale offers if there's another qualified buyer who doesn't have to sell a home. As always with homebuying and selling, compromises must be made. In areas where home sales are slow and there are many homes on the market, a contingent-sale offer may be better than no offer. A drawback is that once the sellers accept a contingent-sale offer, this fact must be disclosed to other interested buyers. This can slow the showing activity. Aggressive marketing, like continuing to hold Sunday open houses, can counteract this to some extent. Sellers who accept contingent-sale offers can continue to entertain offers from other buyers for backup position, subject to the collapse of the primary offer. But when there is plenty of inventory for buyers to choose from, there's not much incentive for a buyer to make an offer on a listing that already has an accepted offer -- even though it is contingent on the sale of another property. HOUSE HUNTING TIP: Sellers who accept contingent-sale offers can maximize their chance of selling by including a release or escape clause in the contract. This clause allows the sellers to notify the contingent-sale buyers that they have accepted another offer in backup position and that they are invoking the release clause. The release clause has a time frame -- often 72 hours, but it's negotiable -- within which the primary buyers must remove the contingent-sale contingency and provide evidence that they can close the sale of the replacement home without having their home sold. If they are unable or unwilling to do so, the first contract is canceled and the backup buyers move into primary position. Recently, buyers who were in contract to buy a home contingent on the sale of their home were delivered a 72-hour notification. The buyers who were kicked out of contract had their home on the market but hadn't found a buyer in time. It's tempting for buyers who lose a home they want to another more qualified buyer to pull their home off the market and wait for a better time to sell. However, it's near impossible to buy contingent on the sale of another home in a seller's market when buyer demand is high. THE CLOSING: It's inconvenient for most buyers to move to an interim rental if they sell their home before they find a suitable replacement home. But, with cash in hand, they have the luxury of waiting for the right house. They can make a stronger offer and probably receive a price concession compared to the premium usually paid to entice sellers into accepting a contingent-sale offer. 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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