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| August 2010 Edition |
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Model Perfect Home in Orange 3 bed/2 bath home is situated on a premimum cul-de-sac with a large lot. http://socallistings.marketlinx.com/SearchDetail/Scripts/PrtBuyFul/PrtBuyFulNoAddress.asp?emailGUID=e12ebed5-c21d-41e9-9fa9-2aba316bf137&AgentId=SHALLDEA |
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Mobile Home in Corona Children and pets will love the yard, since it is bigger than most mobile home spaces. http://socallistings.marketlinx.com/SearchDetail/Scripts/PrtBuyFul/PrtBuyFulNoAddress.asp?emailGUID=d7aac0ea-7a12-4516-a080-bcea9cad0e40&AgentId=SHALLDEA |
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Cute Condo in Orange This condo is in a lovely quiet neighborhood which is walking distance to Old Towne Orange http://socallistings.marketlinx.com/SearchDetail/Scripts/PrtBuyFul/PrtBuyFulNoAddress.asp?emailGUID=fcf6db92-8ce2-4be3-ad69-20894cfc720e&AgentId=SHALLDEA |
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Newer 3 Bedroom Mobile Home All it needs is you! Lovely, turnkey mobile home built in 2004. http://socallistings.marketlinx.com/SearchDetail/Scripts/PrtBuyFul/PrtBuyFulNoAddress.asp?emailGUID=ef6a8b94-b2f5-4060-bead-86c55df406d5&AgentId=SHALLDEA |
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Local Business Spotlight I enjoy promoting my clients’ businesses. This month, I am presenting Higher Level Training Corp. http://www.higherleveltrainingcorp.com/ |
Articles and Advice |
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| Adding family to real estate title has its drawbacks Urgent sale hits roadblock when co-owner objects By Robert J. Bruss DEAR BOB: A few years ago I added my daughter's name to the title to my home. At the time, I was very ill and she took good care of me. However, I recovered. She moved away from the area and is no longer close to me. I want to sell my home so I can afford to move into a lifecare retirement home, but she refuses to agree to the sale unless she gets half of the sales proceeds when my house sells. How can I take her off my title? --Ramon V. DEAR RAMON: Sorry, there is no easy way to take your daughter's name off the title to your home. As regular readers of this column know, it is usually a big mistake to add a prospective heir's name to your home title before death. Such an act can be a disservice to both the homeowner and the heir, as you discovered. Now you have an ungrateful daughter who demands half of your home sales proceeds. Unless you can prove fraud, duress, or mistake in a court, there is no way to undo what you did by adding her to your title. For more details, please consult a local real estate attorney. MORTGAGE LENDER MUST APPROVE PARTIAL PROPERTY SALE DEAR BOB: My brother bought a home in February 2006. He has about a 1/4-acre of land, which a neighbor offered to buy for $15,000. Can he sell this portion of land without notifying the mortgage lender? Does he have to record the transaction at a title company? --Rod C. DEAR ROD: If the house and vacant 1/4-acre are on one parcel lot, it will be necessary to subdivide the property so the 1/4-acre can be deeded to the neighbor. A local real estate attorney can advise what is necessary in the locality to accomplish this. Presuming the entire property is the security for your brother's mortgage, the lender's consent to the subdivision and selling off the 1/4-acre will be necessary. To obtain the lender's consent, the lender might require a partial pay-down on the mortgage balance. Or the lender can refuse to consent at all. Your brother's buyer will insist the deed for his 1/4-acre purchase be recorded in the public records. The buyer should also insist on receiving an owner's title insurance policy to be certain he owns marketable title. SHOULD BOTH SPOUSES NAMES BE ON THE HOME TITLE? DEAR BOB: My husband is a "macho man" who insisted on taking title to our home in his name alone. That was 18 years ago, shortly after our marriage. We are just as much in love today as the day we married. However, he refuses to add my name to the title to our home. A lawyer friend says I should insist my name be added to the title to avoid probate if my husband dies first (he had a heart attack two years ago). What would my husband have to sign to add my name to the title to our home? --Evelyn C. DEAR EVELYN: Your husband can sign a quitclaim deed from himself to himself and you. The deed should include the method of holding title, such as joint tenancy with right of survivorship. Your lawyer friend can prepare the deed, which must be witnessed in front of a notary public so it can be recorded. When title is held in joint tenancy, after a joint tenant dies, all that is required in most states is for the survivor to record a certified copy of the death certificate and an affidavit of survivorship. SELLING A CONDO WITH A TENANT'S LEASE WON'T BE EASY DEAR BOB: Should I sell my condo? Years ago, I purchased it for $282,003. Today, it's worth $400,000. I lived in it for two-and-a-half years. Now I rent it to a tenant, but with a $700-per-month negative cash flow. Does it make sense to keep this condo if I'm losing money? The rental agreement expires in November 2006. --Maria G. DEAR MARIA: Selling any house or condo for top dollar with tenants living in it can be extremely difficult. However, because your renter is your logical buyer, you should first ask your tenant if he or she wants to buy it. Also, then you wouldn't have to pay any sales commission. Unless your condo is appreciating in market value at least $700 per month to compensate for your negative cash flow, selling the condo makes good business sense. But don't expect to get top dollar with that existing lease. Unfortunately, your lease expires in November, one of the most difficult months to sell residences. December is even worse. Today is a great time to be selling. However, anyone who buys your rental condo must honor the terms of the lease until it expires so your sale might be very difficult. SELL INHERITED PROPERTY IF YOU CAN'T AFFORD TO KEEP IT DEAR BOB: I am inheriting a house from my landlord. My property taxes and insurance will be exorbitant. I am disabled and on Section 8 subsidized rental. I will be kicked off Section 8 and also be paying more than I did as a tenant to meet expenses. My disability income is minimal. Are there any tax breaks for disabled or Section 8 homeowners? --Helen M. DEAR HELEN: You must have had a very nice landlord who left you that house. However, if you are unable to afford to keep it, perhaps you should sell the house and live off your inheritance in a less expensive residence. Because you will receive a new "stepped-up basis" to market value on the landlord's date of death, you will owe little or no capital gains tax. Homeowners are not eligible for Section 8 federally subsidized housing vouchers. Depending on your disability status, check with the local property tax collector to see if you might qualify for any property tax reduction benefits. CAN BUYER GET A REVERSE MORTGAGE TO BUY A HOME? DEAR BOB: I thought I understood senior citizen reverse mortgages. But you had a recent item from a guy who wanted to buy a home with a reverse mortgage without first living in it. Is that possible? What do you mean by a "substantial down payment?" --Dan W. DEAR DAN: You are referring to a senior citizen reverse mortgage for home purchase, offered by Fannie Mae. The residence to be purchased must be intended as your principal residence, not as a secondary or vacation home. This special reverse mortgage program is ideal for seniors who want to "downsize" by selling their large home and using the cash proceeds to buy a smaller home and not have any mortgage payments. Exact numbers will vary depending on the purchase price of the home, and the buyer's ages, but a very general rule is a cash-down payment of 50 percent or more will be needed. However, that's a very good deal for senior citizen buyers who then won't have any monthly mortgage payments. You can find Fannie Mae reverse mortgage originators at www.reversemortgage.org. |
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| Best deck material: Douglas fir or redwood? Both require long curing process, but one costs much less By Bill & Kevin Burnett Q: I'm building a small deck in the backyard and for cosmetic reasons am painting it rather than finishing the wood. So, being cost-conscious, I am wondering whether using a Douglas fir 2-by-6 versus a con-heart redwood makes sense. The lumber cost is less than half. A friend said that the redwood really ought to cure 90 days and then be washed with oxalic acid to leach out the tannins so the paint doesn't peel and crack. Whichever wood I choose, I was figuring I could buy it, prime it and screw it down prior to applying the top coat. I didn't factor in any period for curing, and 90 days is a long time (just because I was in the mood to see my creation finished). But it sounds important to let it cure for some time before doing any of that. A: Cool your jets. Your friend's right about allowing redwood to cure prior to painting. The same thing applies to fir if you go that route. Moisture levels in lumber must stabilize prior to painting for the paint to successfully adhere to the wood. Construction-grade lumber has a relatively high moisture level. The wood must acclimatize before you seal the surface with paint. Excess moisture must evaporate to give the paint its best chance to stay on the wood. Buy the boards, and stack them with sticks between each board to allow air to circulate. We can't overemphasize the importance of this step, as it allows air to get to all sides of each board. Let the boards cure for two to three months to allow the moisture content to stabilize. If you can stack the boards out of the weather (under a patio or in the garage), that would be best. If that's not possible, and they get rained on, the curing time will be extended. When the curing is complete, plan on priming all six sides of each board. Pay special attention to the ends because the end grain is the most susceptible to moisture penetration and the resultant paint peeling. If you don't precut the decking, you'll have to prime them once you've screwed them to the joists. Speaking of joists, we strongly recommend using pressure-treated material for the framing to inhibit the possibility of rot. Consider applying two coats of primer to the decking for extra protection. It's more work, but it will make the job last longer. This is especially important if you choose to go with fir, as it doesn't take paint quite as well as redwood. As to the choice between Douglas fir and con-heart redwood, we'd save a buck and go with fir. The extra work involved is offset by the cost savings. We know this is heresy to lumber dealers, but if you select vertical grain fir, cure it properly and prime and paint it thoroughly, it will perform. An added bonus is that fir is harder than redwood and will resist heavy foot traffic and dings a bit better. Lowe's and Home Depot will allow you to go through the "stacks" to select boards without charging a premium. Lumberyards allow it also but generally charge a premium for the "select" grade. Look for vertical grain as opposed to the flat grain. It holds paint better. Use good quality primer and deck paint and you'll get many years of use from your new deck. An alternative we'd consider for a painted deck is a composite product we saw a couple of years ago at the Pacific Coast Builder's Conference. Generally, we're not big fans of composite decking, but a product called CorrectDeck CX caught our eye. It's a manufactured plastic/wood product and has a paint-like surface that is impervious to staining. Check it out at www.correctdeck.com/products/decking/cx/default.htm. |
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| Green building's surprising energy savings New-home design that can also help environment, improve health By Katherine Salant "Use common sense to make sense." It sounds like Ben Franklin, but the speaker in this case is David Johnston, a green-building consultant in Boulder, Colo. His Ben Franklin-sounding aphorism, he said in a recent interview, has proved to be a useful, shorthand way of explaining sustainable green-building principles and practices. Although these have been embraced by more and more home builders, there is still much confusion among the general public as to what exactly makes a house green. One way to keep things straight, Johnston said, is simply to remember to "use common sense to make sense." For example, Johnston is regularly asked if a green house is one that is petroleum-product-free. His common sense answer: "If you eliminate everything that contains petroleum, you can't enjoy the accoutrements of a 21st century lifestyle." All the heating and cooling equipment and standard appliances contain plastic, he pointed out, adding that "even something as basic as a toilet has plastic parts." The make-sense part of green building, Johnston went on to say, has to make sense both environmentally and economically. For example, building materials that have recycled content are generally considered to be a plus because recycling can significantly reduce both the volume of the waste stream and pressure on overflowing landfills. But, speaking like the hard-headed home builder that he once was, Johnston said you shouldn't select a product solely on this basis. A product with recycled content may be much more costly than the conventional product it is intended to replace, and it may not perform any better. Materials have to make sense from a health perspective as well, Johnston said. Many building materials are made with unstable, volatile organic compounds, called VOCs. They can off gas into the air for weeks and sometimes years after they are installed in your house. Of the hundreds of VOCs that have been identified, the one that concerns most people is formaldehyde, a potent eye and nose irritant that can cause respiratory problems. It has been classified by the World Health Organization as a confirmed human carcinogen. You can easily avoid it by using one of the many building products now available with low or no VOC content, Johnston said. Though the non-VOC products often cost more, this is one instance where a higher cost is worth it, he added. Segueing from materials to other aspects of green-home builders Johnston talked about household energy use. His common sense rule: Use as little as possible. His common sense reason: to save money and the planet. If you use less energy, you'll save money on your utility bills. You'll save even more as the price of natural gas, fuel oil and electricity inevitably goes up. If you use less energy you'll help save the planet because you will be reducing the greenhouse gas emissions associated with your house. Unbeknownst to most homeowners, buildings are the largest source of the greenhouse gas emissions that are causing global warming. In the United States, half of building-related emissions are from houses. Johnston feels that energy issues are so important, he urges homeowners to put them front and center in the design of any new house -- "from the first sketch of a floor plan to the final dotting your I's and crossing your T's." But, Johnston hastened to say, energy savings should not come at the cost of having a great-looking house with lots of windows and great views. The trick is to get all this and save energy. Johnston's common sense strategy for supplying household energy needs: Use what's free before using what you have to pay for. That is, tap as much free solar energy as you can for your heating and lighting needs before turning to conventional solutions. To do this, you really do have to think about energy from the start because the feasibility of passive solar solutions depends on how you place your house on your building site, the first step in any building project. To capture the sun's rays for heating your house during the winter, your living areas must be oriented to the south. You can keep the same spaces cool in the summer by adding overhangs. With some additional refinements to the overhangs, the sun can also supply your lighting needs during the day. To maximize the benefit of passive solar heating and cooling, you need to carefully tailor your building envelope to reduce heat loss or heat gain through the walls and roof. This generally requires adding insulation to the walls, attic and basement in amounts far above code requirements and upgrading windows to get ones with a low-emission coating that helps to keep the heat inside during winter and outside in summer. Unless you live in Hawaii or Santa Barbara, Calif., where passive solar strategies can supply all your heating and cooling needs, you'll still need a furnace for those cold days when the sun's heat is not enough to keep you comfortable. But with your upgraded building envelope, you can use a smaller furnace and air conditioning condenser, and that is a cost savings, Johnston said. You'll also need electric lights for nighttime use and cloudy days. Surprisingly, lighting accounts for about 12 percent of household energy use in the average household. Solar daylighting shaves part of this, but you can shave it further with compact fluorescent bulbs, commonly called CFLs, Johnston said. They use about 75 percent less energy to produce the same amount of light as an incandescent bulb, and they last six to eight times as long. CFLs can be screwed into almost any conventional light socket and their color correction has vastly improved in recent years. The other part of the home energy puzzle that green building can affect is the sizeable energy draw for hot water. The luxury of having 40 to 50 gallons available 24/7 consumes another 12 percent of household energy use. But, Johnston said, it's another instance where you can tap free solar energy by installing a solar collector on your roof. For those cloudy days, though, you'll need a backup hot-water heater. The other 35 percent of the energy that the average household consumes is out of a builder's hands, because it is the "plug loads" that homeowners bring into the house when they move in -- appliances, computers, home-entertainment equipment, and all the other doodads that most households accumulate. The most effective way to reduce this load is to purchase Energy Star products, now available in more than 40 categories. How does Johnston's "common sense to make sense" work in real time on a real house? To find out I contacted McStain Neighborhoods, a small production-home-building firm in Boulder that has built sustainable, green houses for more than 40 years. The firm builds about 350 houses a year in the Denver and Boulder markets. Like all home builders, McStain evaluates everything from a cost-benefit perspective. But, unlike almost all the others in the United States, McStain has a research and development department that carries out in-depth reviews of about 50 new products and building techniques a year. Periodically, the firm builds a test house that incorporates the most promising of these innovations. The test houses are eventually sold, but the firm continues to monitor them for several years afterwards, said McStain marketing head Barr Hall. Jeff Medanich, who heads up McStain's research efforts, said that much of his work is a balancing act, spending more here but saving more there so that in sum, the cost of an innovation is relatively small. Medanich offered as an example McStain's current exterior wall construction. Instead of the dimensional wood studs that are used by most home builders (a single piece of wood sawn from a tree log), McStain uses finger jointed studs, which are made up of several smaller pieces of recycled scrap lumber that are glued together. These cost more but their superior quality means that fewer are tossed as unusable -- only about 4 percent compared with 20 percent of the dimensional studs. The cost difference is a wash, but the finger-jointed studs have the added benefit of lowering costs down the line. Because they are straighter, the walls are plumb, and this makes the work of subsequent trades go more smoothly and faster. |
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| Don't rush decision to use builder's lender Financing issues with new homes By Jack Guttentag Finding the right home mortgage loan provider is complicated enough, but when you buy a house from a builder who has an in-house lender, the complications multiply. The builder wants you to use his lender, and will offer significant inducements to do so. This puts many buyers in a quandary as they realize that the inducements must be weighed against the likelihood that the builder's lender will overcharge them. Offering inducements is legal if it is done properly. A builder cannot post a sale price of $290,000 and raise the price to $300,000 if a buyer insists on using his/her own lender. But a builder can post a price of $300,000 and reduce it to $290,000 for borrowers who use the in-house lender -- as if there was a difference! In developing a strategy for dealing with a builder pushing an in-house loan provider, it is useful to know where the builder is coming from. He expects to make money on the lending operation, but the main reason for having a preferred lender is to provide assurance that home sales won't fall through because of lack of financing. The builder wants to avoid investing significant marketing dollars in finding a buyer who then leaves him at the altar because his loan doesn't come through. This won't happen with his in-house lender because of some prior arrangement with the builder. While the arrangement can take many forms, the thrust of it is that in the event that a loan to a buyer can be closed only at a loss, the loan will nonetheless be made, since the profit margin on the house will more than cover it. For example, if the buyer turns out to have previously undisclosed credit problems that make him unacceptable except at subprime loan terms, the in-house lender will make the loan and sell it at a loss. To make up for these losses, other buyers are overcharged. Since the builder cannot require buyers to use the in-house lender, he encourages them to do so by offering concessions that he hopes buyers will value by more than the overcharge. For example, if the loan overcharge is $2,500, the builder might offer kitchen cabinets with a retail price of $3,000, but which cost the builder only $1,500. It is a mistake for a buyer to commit to a builder with an in-house lender without knowing the financial part of the purchase. The true price of the house when using the builder's lender is P + O - C, where P is the posted house price, O is the overcharge on the loan, and C is the value to the buyer of the builder's concessions. This is the price that should be used in comparing houses offered by different builders. The extent of the overcharge on the loan should be measured in present-value dollars by shopping one or more online lenders on the same day. I will have a detailed explanation of exactly how to do this in the version of this article I place on my Web site. The value of concessions is the value to the buyer, which could be less, perhaps considerably less, than the value suggested by the builder. If the builder's concession is to absorb some or all of the settlement costs, the buyer should check the alleged cost savings against those shown by online lenders such as Amerisave, E-Loan or IndyMac. In comparing true prices of different builders, buyers should give the builders ample opportunity to sweeten their concessions in order to make the deal. Especially in the kinds of soft markets that were common in late 2006, aggressive bargaining can yield a large payoff. Some buyers may find themselves in a situation where a particular house is the best deal, despite the fact that the builder concessions have less value to them than the loan overcharges. In such cases, in negotiating with builders, buyers can offer to allow themselves to be approved by in-house lenders, while reserving the right to use their own lenders. This removes builder uncertainty that deals might fall through due to a failure to fund, and should make them more amenable to the use of outside lenders. |
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| No-cost mortgage may be unwise in today's market Points and fees add to overall loan payment By Dian Hymer No-cost mortgages are popular with home buyers who are trying to scrape together enough cash to buy a home. Now that the cost of mortgage money is rising, it makes sense to re-evaluate this financing strategy. To say that a mortgage has no costs is a bit of a misnomer. The borrower pays few if any upfront fees to originate a no-cost mortgage. But the upfront fees, like points, are added to the cost of the mortgage. The cost is reflected in a higher interest rate. "Points" is a term lenders use for the mortgage origination fee. One point is equal to 1 percent of the mortgage amount. So, if you pay one point to originate a mortgage for $500,000, you will pay $5,000 cash to the lender at closing. There is an inverse relationship between points and the mortgage interest rate. The more points you pay, the lower the interest rate. One point is roughly equal to a quarter percent on the interest rate. If you were to pay one point, you'd buy the interest rate down 0.25 percent in relationship to a borrower who chooses to pay no points. For a no-point loan, your interest rate will be approximately 0.25 percent higher. A no-cost mortgage was an attractive option when interest rates on fixed-rate financing were under 6 percent. Now that rates are moving higher, paying points may make more sense, particularly if you're buying for the long-term. For example, let's say you're trading up to a home that you plan to own 20 years or so until your children are in college. You're financing the purchase with a $500,000 mortgage. For one point, the interest rate will be 6 .25 percent with a monthly payment of $3,078.60. The zero-point option will cost 6 .5 percent with a monthly payment of $3,160.35--a difference of $81.75 per month, or $918 per year. If you opt to pay one point, you will need to keep paying on the mortgage for approximately five years and two months to break even when compared to the cost of the no-point mortgage. HOUSE HUNTING TIP: To arrive at the break-even point when comparing a no-point loan to one with points, divide the points, or $5,000 in this example, by the annual difference in monthly payment, or $918. The result is the length of time in years that you need to keep the loan to make it worthwhile to pay points. In the above example, there is an advantage to paying points for a lower interest rate if you keep the loan for over five years. The longer you keep the loan, the bigger the savings. In today's market, buying for the long term is a good strategy. Paying upfront points also can be advantageous to home buyers who will benefit from a tax deduction. Points paid on a purchase mortgage are tax-deductible in the year of purchase by homeowners who itemize deductions on their federal tax return. Talk to your tax advisor for advice on whether you'll benefit tax-wise by paying points. Keep in mind that paying points can be an unnecessary expense for buyers who purchase for the short term. You would also come out ahead with a no-point loan if interest rates were to decline over the next few years. In this case, you could refinance into a lower interest rate mortgage. THE CLOSING: If you're short of cash and there are a lot of homes for sale that aren't moving quickly, you might ask the seller to pay points for you. This strategy will have less chance of success in a market where listings are selling quickly. Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books. |
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| Search The MLS From Your Computer Like A Realtor Customize search criteria, view properties even after sale, save favorites By Dean Hall, Realtor e-PRO, QSC, Relocation Expert No consumer search site has the customization and power as Dean’s direct MLS access. This unparalleled service allows you to search the MLS from your own computer, categorize properties in your personal online Portfolio, and customize your search criteria. Have you ever been frustrated with consumer real estate search sites? Is the data often out-of-date or flat out wrong? Do you see a property one day and have trouble finding it the next? My custom search tools are your solution. By saving properties to your personal Portfolio, you will be able to track properties even after they sell. HOW MUCH IS IT? I pick up the costs of this service, and provide it to you free of charge. All I ask is that you give me an opportunity to earn your business when you are ready to buy or sell real estate. I believe that as the buyer/investor, you should be able to make informed decisions. For this reason, I will even include property addresses on the listings so that you can drive around neighborhoods to narrow down what you like the best. When you are ready, simply call me, and I’ll arrange a comprehensive tour of your favorite properties so that you can see inside. If you have a home to sell, my service is the perfect tool for you to track exactly how much homes in your neighborhood are listing and selling for. SIGN ME UP! To sign up, please copy the following information to an e-mail, and send the answers to Search@TopOCRealty.com. Please rest assured that your information will be kept in the strictness confidence and only be available to me. FULL NAME: MAILING ADDRESS: PHONE NUMBERS: E-MAIL ADDRESS(ES): DESIRED PRICE RANGE: TARGET MOVE DATE (if any): TYPE OF HOMES TO INCLUDE IN SEARCH (condo, detached home, mobile home): PREFERRED PROPERTY SEARCH CITIES (you can change this later): MINIMUM NUMBER OF BEDROOMS (you can change this later): MINIMUM NUMBER OF BATHROOMS (you can change this later): GARAGE SPACES NEEDED (if any): Once I receive your information, I will set your initial search criteria. You will then start receiving property information immediately. You can modify your search criteria at any time. Enjoy! |
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