 Dennis King
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TODAY'S HOTTEST REAL ESTATE BLOG & NEWS ARTICLES!
09/03/10
Stand Out In A Buyers' Market
by PJ Wade from "Realty Times"
My recent tour of the shores of southern British Columbia's Okanagan Lake revealed a wide selection of waterfront and community-adjacent rural properties sporting "For Sale" signs. How do sellers fare when there are two, three, or more listing signs visible on their street, along their stretch of shoreline, or in their condominium complex?
Sellers who have kept up their property, and continually modernized their house or condominium are well prepared for competition. Understanding current market conditions and presenting a property to showcase its unique real estate value are the skills that real estate professionals excel at. The right team, with the right attitude and marketing strategies, will captivate buyers who are actively searching, and stimulate interest in the indecisive.
During the boom, the limited number of available listings in this popular winery-dotted sun spot were hot items—a common story across Canada. Now, the OkanaganValley is a buyer's delight. More listings to chose from means more buyers can locate that special property which reflects their unique needs. Important financial and lifestyle decisions can be made at a more realistic pace, and buyers have time to learn about their new community before they jump in. In some neighbourhoods, and for some property types, prices have reversed their upward trend, bringing out-of-reach real estate within reach. Great for buyers, but unsettling for sellers who fondly recall the last boom.
Setting a market-accurate listing price may not be enough to ensure a sale when there's lots of choice. Every aspect of property value must be presented using every available communication technique:
Drive-by shopping remains a powerful selling strategy. This makes the curb in front of a property the true real estate marketplace.
If there is a real estate "For Sale" sign on the property, make sure phone numbers and other contact information are easily read on a drive-by. A clean, vertical sign is "the silent salesman", so make sure it does its job.
Real estate marketing strategies employed by listing brokers and salespeople do not merely involve sticking a sign on the lawn and an ad in the local paper, then hold an open house or two. Internet marketing extends communication reach and presents the true value of a house, cottage, or condominium in full colour, depth, and detail. Agent-to-agent marketing is invaluable when buyers are searching out that special property. Listing salespeople know the value of following-up with the real estate professionals who show the listed home. Contacting those with similar listings and, therefore, prospective buyers with relevant interest, can be particularly productive.
Clean sells, inside and out. Be extreme. Hose the dust, spider webs, and bird droppings off road-side bushes and fencing. Prune unruly trees to reveal the house. Refresh potted plants with bright, full-bloom versions for "stop and look" appeal. Polish brass door hardware. Power wash decks, driveways, siding…anything that does not look brand new.
Maintenance matters. Paint what needs to be painted. Fix what is not 100% perfect. Spruce up the driveway with fresh asphalt coating or extra gravel. Manicure the lawn. Weed and compost flower beds after edging them.
Cut the clutter. Put out garbage cans just before collection and remove them immediately. Keep them sparkly clean, too. Remove all toys, bikes, broken patio furniture, and cars. Park down the street and keep the view clear for potential buyers.
Make it easy for buyers to learn what's inside. Ask your listing salesperson to post Feature Sheets in an outdoor water-proof display holder. This will encourage buyers to stop for a closer look and to collect full details on the property. This accessible profile, coupled with agent contact information, may stimulate a cell call for a viewing. Post up-coming open house dates and times for convenience, and to emphasize that the home is actively marketed.
How is cell phone and internet access to listing information made easy for drive-by prospective buyers? Don't rely on your listing salesperson knowing every tech option in continually-changing mobile computing. What can you discover?
Ignoring other listings is not a strategy. Ask your listing salesperson about the value in a joint open house or advertising ventures with the other listings. This can be effective when the location is a special one. If your property is priced for value (that's not automatically having the lowest price) and shows well, your home may benefit from deliberate comparison. Buyers compare your home to others and will probably want to see the neighbouring listings anyway. A higher advertising profile for your location may draw buyers into this "hot" area. When buyers call for information on any listing in the area, there is always potential for them to be directed to your listing.
Tightened mortgage lending practices may limit buying in some regions, but experienced real estate and mortgage brokers know how to present the best financial options for all concerned. Sellers who work with these professionals to ensure no-hitch financing in an attractive package can stand out in a crowd of listings. Sellers who offer back-up financing like a low-interest or no-interest second mortgage may discover their net return is very attractive. Since properly-designed mortgages can be sold, this strategy does not necessarily tie a seller down financially.
Offering a higher selling commission may be a useful strategy to discuss with your listing salesperson.
Discuss procedure with your listing salesperson in case a buyer knocks directly on your front door asking for a viewing. Be prepared to react in a professional manner that will encourage the buyer. There are special skills involved in showing a property and generating an offer to purchase. If you lack these skills, personally showing prospects your home may be counterproductive.
Sellers can find that "living in a listing" is a stressful experience. Experience has proven that you'll be the loser if you spend more time whining about the inconvenience, than keeping your real estate in "buyer ready" mode.
Published: August 24, 2010 "Realty Times"
Social Benefits of Housing
Social Benefits of Housing by Carla Hill "Realty Times"
Recent research from the National Association of Realtors (NAR) outlines the importance of homeownership's relationship with the economy, but of the social benefits it provides.
NAR reports, "The economic benefits of the housing market and homeownership are immense and well documented. The housing sector directly accounted for approximately 14 percent of total economic activity in 2009."
What sorts of social benefits are provided through homeownership?
According to the study entitled, "Effects of Homeownership on Children: The Role of Neighborhood Characteristics and Family Income", teens from households of homeownership have a higher rate of staying in school than teens from rental households. In addition, daughters of homeowners also experience a lower rate of teen pregnancy.
In terms of education, in the study, “Measuring the Benefits of Homeowning: Effects on Children,” there have been significant findings that homeownership has a strong positive effect on educational achievement.
The NAR report goes even further to show that "the average child of homeowners is significantly more likely to achieve a higher level of education and, thereby, a higher level of earnings."
Homeowners deal daily with issues pertaining to home maintenance and financial responsibility, something NAR research shows teaches children "life management skills."
Studies have also found that homeownership increases the amount of civic participation in a community. This is due in part to homeowners feeling that they have a higher, more permanent stake in their community and its issues.
For example, a study by Glaeser and DiPasquale found that 77 percent of homeowners said they had at some point voted in local elections, compared with 52 percent of renters.
In addition to these great social benefits, higher levels of homeownership have shown to reduce crime rates in communities. "Homeowners have a lot more to lose financially than do renters. Property crimes directly result in financial losses to the victim. Furthermore, violent non-property crimes can impact the property values of the whole neighborhood. Therefore, homeowners have more incentive to deter crime by forming and implementing voluntary crime prevention programs." (NAR)
For more information about these studies, please visit Realtor.org.
'Day-at-the-Beach' Becomes Tougher Sell for Gulf Coast Vacation Rental Property Owners
'Day-at-the-Beach' Becomes Tougher Sell for Gulf Coast Vacation Rental Property Owners
by Broderick Perkins "Realty Tmes"
The Gulf Coast's economically pivotal vacation rental playground faces a value crunch that could cost individual properties as much as $80,000 in lost value, according to the most exhaustive study to date of the Gulf oil disaster's impact on residential real estate values, reported by the HomeAway Gulf Coast Response Center
Core Logic, in a report that denotes value as real property value combined with the value associated with the amenities of beach front access, says the cost of the oil disaster to home values along the Gulf's coastal counties is expected to range from $648 million in one year, to as much as $3 billion over the span of a half decade.
The study adds beach front proximity to the value equation because buyers who acquire coastal properties pay premiums for the amenities that come with a property that provides easy access to the proverbial "day-at-the-beach."
Among the study's 600,000 properties identified as being within 1,000 meters (about a half mile) of the Gulf coast line, are an estimated 150,000 vacation rental properties representing a uniquely pivotal sector of the area's economy, according to HomeAway.com.
HomeAway.com, the nation's largest vacation rental portal of a half million privately owned listings for travelers and property owners alike recently created the HomeAway Gulf Coast Response Center to address the concerns of vacation rental owners often overlooked by mainstream media.
Largely under reported is the fact that the Gulf Coast includes a large swath of Florida panhandle vacation rental properties -- not resorts, hotels and motels -- that provide the bulk of the area's travel accommodations with direct, easy access to beaches.
Florida, among the most over speculated housing boom markets, has had one of the nation's worst housing busts and, among all states during the first half of 2010, had the third highest foreclosure rate, with some panhandle counties suffering the worst foreclosure rates in the state, according to RealtyTrac.com.
"While it is by no means a certainty that the major coastal communities along both coasts of Florida will be impacted at all by the oil spill, the lost amenity value in these markets could be particularly high," said Mark Fleming, chief economist with Core Logic.
The report examined the impact of the oil disaster on the more than 600,000 properties identified as being within 1,000 meters of the coastline in 15 counties, representing major beach travel communities stretching from the Gulf coast of Alabama to the Atlantic peninsula coast of Florida.
The report found:
• The highest risk coastal communities along the Mississippi, Alabama, and Florida panhandle include more than 71,000 residential homes at risk of losing an estimated average loss in beach amenities valued between $40,000 and $56,000. The total estimated loss of beach amenities is valued at $3 billion.
• Of the immediately impacted communities, the largest overall loss in amenity value would be in Pensacola ($1.6 billion), followed by Gulfport ($1.2 billion).
• In terms of average loss in amenity value per home, Gulfport ($56,000) is the largest, followed by Mobile ($45,000) and Pensacola ($40,000).
• If the Gulf currents take the oil to the communities along the Florida gulf coast the loss in amenity value will rise substantially. The four coastal communities along the coast (Panama City, Tampa Bay, Cape Coral, Naples) could experience a total loss in amenity value of $11 billion impacting 238,000 homes.
• Even though the chances are low, Core Logic estimated the loss in amenity value for communities along the Atlantic coast of Florida as well. This includes Miami, Key West, Palm Bay, Daytona Beach, and Jacksonville. More than 295,000 properties within 1,000 meters of the beach could be affected with a total loss in amenity value of $13.5 billion.
"Our hope is that the oil spill is contained and the loss in amenity value is further moderated by a speedy cleanup and a return of beach amenities to the affected communities' homeowners," said Fleming.
Silver Lining In Low Appraisal?
Silver Lining In Low Appraisal?
Today's Real Estate News Provided by Inman News
A real estate wake-up call for sellers
Barry Stone
DEAR BARRY: Our home was just appraised, and the results were disappointing. The assessed value was $100,000 lower than our previous appraisal one year ago. This totally shocked us, given the recent improvements in the economy and the housing market. What are our options for handling this lower-than-expected appraisal? --Aaron
DEAR AARON: This column typically addresses property defect and disclosure issues, rather than property values. But the conditions that affect appraisal values are apparent to nearly everyone who participates in real estate transactions on a daily basis, including agents, home inspectors, pest control operators and others. So here is one home inspector's opinion.
Home sales have noticeably increased in the past year. But this is largely due to lower prices, not to an invigorated economy. The overinflated prices of previous years have fallen to levels that people can now afford, and interest rates, temporarily suppressed by the government, add to this affordability.
For many sellers, it is hard to accept that prices are no longer what they were and are unlikely to recover in the foreseeable future.
Some economists are predicting new waves of foreclosures in the coming year, leading to further price reductions. Interest rates are expected to rise because current low rates discourage foreign countries from financing America's rising debts. And higher taxes, set to occur on Jan. 1, could leave less money available for mortgage lending.
The rearview mirror is not where you should look for direction in today's real estate market. The prices of the past are just that: prices of the past. Your current appraisal value may be disappointing compared with last year's, but it may be better than next year's appraisal.
Fortunately, there is one silver lining in this cloud: Although you must sell your property for less, you will also pay less for the next one that you buy.
Whatever fortunes or misfortunes the future may hold, that is the only direction we should be facing.
DEAR BARRY: We built an addition onto our master bedroom about four years ago. Since then, a crack has appeared in the ceiling where the new drywall meets the old. The work was done by a licensed contractor, but we're wondering if he did a very good job. We've tried calling him and have left messages, but he never calls us back. Do we have any recourse? --Jill
DEAR JILL: The crack may or may not indicate a significant problem. It could be due to faulty construction or simply to shrinkage of the newer lumber. However, the remodeler's refusal to return your calls throws a bad light on what might otherwise be a simple problem. If the builder will not respond, you should file a complaint with the state agency that licenses contractors.
You can also hire a home inspector to evaluate the entire addition. If corrective work is needed, and the remodeler won't address the problems, you can take him to small claims court. But be sure to get some legal advice before pursuing that course of action.
To write to Barry Stone, please visit him on the Web at www.housedetective.com.
Put Air Conditioner To The Test
Home inspector omits major detail from report
Barry Stone
Inman News
DEAR BARRY: We bought our home in the winter time, so our home inspector did not test the air conditioner. He said the outside temperature was too cold to run the system. But that left us with an undisclosed problem. The summer arrived with 100-degree temperatures, and we found that our air conditioner did not work.
The contractor we called said the system had not been fully connected when it was installed, but this was not reported to us during the home inspection. Is our home inspector liable for failing to report this problem? --Kathy
DEAR KATHY: Your home inspector could be liable, depending on what he did or did not say in his report. At the same time, there remains the issue of whether or not to test an A/C system in cold weather. So let's take a look.
Many home inspectors refuse to test air conditioners when temperatures are below 60 degrees. This is because A/C systems can be damaged if they are operated during cold weather.
However, damage is unlikely to occur if the system is briefly operated for purposes of testing and inspecting. Prolonged use is what causes damage. Therefore, failure to test an A/C system during cold weather is not fully justified.
However, if a home inspector chooses to skip the test, the report should recommend testing by a licensed HVAC contractor prior to close of escrow, rather than allowing the homebuyers to purchase the property without knowing the condition of the A/C system. If your home inspector declined to test the unit but made no recommendation for further evaluation, then he was professionally negligent.
There is, however, a second issue in your situation. If the A/C system was not fully connected, the lack of connections may have been visible at the time of the inspection. If so, your home inspector would be liable for failing to disclose a visible defect that was within the scope of the inspection.
But whether he is legally liable depends on the wording of the home inspection contract that you signed. You should notify the inspector of this situation to see what he is willing to do.
DEAR BARRY: We bought ceramic floor tiles for our bathroom and hired a tile setter to install them. But the workmanship was terrible. So now we're going to tear it all out and start over. But we want to make sure we get a good tile contractor this time. How can we find someone who is competent to do this work? --Laurel
DEAR LAUREL: Finding a qualified contractor can sometimes be a shot in the dark, but there is a good way to find competent flooring installers. Stores that sell flooring materials seldom employ their own workers. Instead, they contract with various carpet layers, vinyl installers and tile setters. And these store owners usually know which contractors are better than the others.
The next time you buy floor tiles, ask the vendor which tile installer is the best of the bunch. That person is the one you should request to retile your bathroom
Smart Strategies For The 'Small Investor'
Book Review: 'How to Invest $50-$5000'
Tara-Nicholle Nelson Inman News
Title: "How to Invest $50-$5000: The Small Investor's Step-by-Step Plan for Low-Risk Investing in Today's Economy"
Author: Nancy Dunnan
Publisher: HarperCollins, 2010; 272 pages; $14.99
We Americans eagerly await any investment tip uttered by Warren Buffett, and voraciously consume information about the strategies used by hedge fund titans and investment bank moguls. But the reality is that the vast majority of those of us who have funds of our own to invest are working with sums closer to $50 than $50 million.
Those oodles of zeroes are tossed around so carelessly in the financial media that many who come across an extra hundred bucks think they're better off using it to de-stress with some retail therapy than to bother trying to "invest" such a small sum.
But according to financial adviser Nancy Dunnan, the author of "How to Invest $50-$5000: The Small Investor's Step-by-Step Plan for Low-Risk Investing in Today's Economy," that just ain't so.
For 2010, Dunnan has published her 10th edition of this uber-usable book at a time when small sums are all most people have, creating both hope for the future and an immediate set of action steps for small investors at all levels to get some mileage out of whatever cash they do happen to have at hand.
In fact, Dunnan's introductory message pervades the book: No amount of money is too little to invest.
Dunnan's mastery of the behavioral and financial elements of personal finance is evidant throughout the book. She insists from the beginning that readers save something -- anything -- from their very next paycheck, if only to get into the habit of saving. She also provides a set of the "10 Dumbest Financial Mistakes People Make," so readers can spot their own "issues" and begin building momentum to correcting them, stat.
The "Mistakes" section and the evergreen yearly financial calendar in the first chapter are, by themselves, worth the cost of the book. Their easy-to-follow, uncomplicated format provide bite-sized, non-scary, crystal-clear action steps of the precise sort that empower even the worst of financial procrastinators to do something different than they've been doing for years.
Move your emergency fund from a bank savings account to a money market account or an online bank one week. Consolidate those 10 different accounts you have all over town into three the next week. Got a windfall you're scared to invest? Break it down and make three smaller investments -- Dunnan tells you where -- over several weeks.
At the $50 level, Dunnan's advice focuses mostly around becoming conscious of bank fees, interest rates and yields, and being more strategic about which "institutional cookie jar" (bank) you select to stash your cash. She also provides primers on credit unions and savings bonds for those trying to do something smart with 50 bucks.
For those at the next level, who have around $500 to invest, Dunnan still focuses on highly liquid, but interest-bearing, accounts, like interest-bearing checking and money market accounts, certificates of deposit (CDs) and mini-investor plans (she gives links!), treasuries and investment clubs.
At the $1,000 level, Dunnan encourages readers to dive into tax-advantaged retirement plans, like IRAs and 401(k)s, the different flavors of which she details in one of the most clear explanations I've ever read (and she gives even more links!).
For those with $2,000 to $5,000 to invest, Dunnan goes all out, providing specific recommendations about classes of stocks and funds that make sense for these largest of the small investors, as well as offering a roadmap to the research resources we need to consult before making such an investment.
Her appendices are mini-treasure chests filled with unique advice on a generous handful of important subjects, like where to get cash in a crunch, how to come up with college funds, and scams to avoid, what to do if you get fired or laid off, and Wall Street-speak translated into plain English.
Selling When Owner Moves To Care Facility
Today's Real Estate News Provided by Inman News
Will Dad qualify for $500,000 tax exemption?
Benny Kass Attorney Washington D.C.
DEAR BENNY: We recently placed my father, who will be 96 in a few weeks, into an assisted living facility nearby. It's a terrible time to sell real estate right now. But if we have to sell the house, I wondered -- since he is living in the care facility, and not in his home -- how would the $500,000 exclusion work for him?
No one is living in his home and it is still in his name, and bills are sent to me but are in his name. My brother stays there when he is visiting the area.
As I understand the $500,000 tax exclusion, he has to have lived there for two of the last five years -- meaning for him he'd have until he's 101 to do this. He's very healthy -- just has dementia -- so he might very well surprise us by living another five years.
Dad doesn't have a huge income but the value of his home (even in this down market) will result in a considerable profit, which I would love to be able to preserve for him. I have his power of attorney and my brother and I are pretty much in agreement on how to handle things and we could use your advice. --Virginia
DEAR VIRGINIA: You are correct that to exclude the gain from the sale of a principal residence there are two tests: (1) ownership and (2) use. You have to have owned and used the house for two out of the last five years. But that does not mean that he has to start living there now.
The five years relates to the date of the sale. In other words, if your Dad lived in the house for many years, and is just now moving to the assisted living facility, if you sell the house now, he would be entitled to the exclusion of gain.
Let's take this example: He moved out in April 2010, but lived in the house for at least two years. If my math is correct, he will be able to claim this tax benefit until March 2013.
But, there's one more wrinkle: Only married couples are eligible to exclude up to $500,000 if they file joint tax returns. If you Dad is now on his own or files a separate tax return, he would be limited to exclude only $250,000 of the profit.
If you believe that there will be a lot of profit -- perhaps over the threshold -- you should talk with an accountant who can try to assist you in determining your gain and even trying legally to reduce it.
DEAR BENNY: I live in a small condominium complex with 52 units. In the late 1970s I was the condominium's first homeowner president and found out the hard way that condominium living isn't the "carefree life" it is touted to be.
There are quite a few of us who were original owners who still live here but many are getting older and feel they have "been there, done that" so it gets harder and harder to find good leadership with a dwindling pool of candidates. If many of the units are second homes or investment property, then the pool gets even smaller.
Condominiums cannot be successful unless owners realize they have an obligation to contribute. The old saying, "If you are not a part of the solution, then you are part of the problem," fits this situation. --Judith
DEAR JUDITH: Service on a board of directors (or on a condominium committee) is a thankless job. The hours are long, and there is no pay.
I have heard board presidents tell me that they have been called by phone night and day. One president was pushed into the association's swimming pool; another board member had molasses poured into his car's gas tank.
But despite those problems, all of these board members said they were serving to protect their property and financial interests in the association.
And for those naysayers -- those who constantly complain about what is happening (or not happening) in their association -- I tell them that they have but three alternatives: (1) get on the board, (2) put up with the situation, or (3) move out.
DEAR BENNY: I purchased a house in 2005 to be used as rental property. This property is in a community association. In 2007, the association amended its covenants to place restrictions on the leasing of homes within the community. One restriction limited the maximum number of homes in the community that could be leased at any time to 10 percent.
There is a grandfather provision that reads: "Homeowners of record with existing leases on the effective date of this amendment are grandfathered and shall not be restricted in renting their homes by the limit on the maximum number of homes that may be leased until the current tenant vacates the home. Any grandfathered homeowner may lease his home even though the maximum number allowed has been reached."
Last month my tenant received a military transfer out of the area and has vacated the property. The association is stating that since the tenant left, the grandfather status was lost and that the number of rentals in the subcommunity of the rental house exceeds the 10 percent. (The association) also informed me that the only hardship provision that has been accepted by the association is for property owners who are in the military and have been transferred from the area.
My questions are:
(1) Does the written grandfather provision (noted above) appear confusing and contradicting? My understanding was that I would continue to fall under the grandfather provision as long as I owned the property.
(2) Is it the norm for the grandfather provision in leasing restrictions to be temporary (current tenant)?
(3) Can associations apply their own interpretation when there may be ambiguity?
(4) Does the association have a responsibility to keep landlords informed of the status of the rentals in their respective communities so the landlords are not shocked that they can no longer rent the property after their tenant vacates?
(5) What is the recourse when the landlord is coerced into selling his property and he experiences a significant loss from a quick sale and a depressed real estate market? --R.C.
DEAR R.C.: The issue of community associations imposing rental restrictions is something that every association in this country is facing -- especially since the secondary mortgage markets (Fannie Mae, Freddie Mac, VA and FHA) have gotten more strict on enforcing these leasing requirements.
In my opinion, 10 percent is way too low a threshold; even FHA requires only 50 percent. Especially in today's economy where money remains tight and sales are slow, it makes no sense to force a homeowner to sell when the tenant moves out. Boards should have a little heart -- extend the time or grant a temporary hardship.
Answering your questions: (1) Yes, it does appear ambiguous, especially the last sentence, which seems to contradict the first. And in law, any ambiguity will be held against the drafter. (2) there really is no "norm" -- in my experience, different associations enact different kinds of requirements; (3) see my answer to question No. 1 -- a court of law (should you decide to litigate) will make the decision; (4) I don't believe associations have an affirmative obligation to advise owners of the ongoing rental percentage, but it certainly makes sense to do so.
And (5) there is no recourse for the landlord other than to take the matter to court. However, in my opinion, there is significant impact on the association. Property values are lowered, and often the landlord cannot make the monthly association payments until the property is sold, so the association loses out.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.
If You Want to Sell Your Home, Don't Make These Mistakes!
by Phoebe Chongchua
I usually write about the things you should do when you want to sell or buy a home. Sometimes there are suggestions mixed in about what not to do and that's the foundation of this week's column. It's pretty easy to get caught up in looking forward to where you're going to relocate next when your home sells. However, let's not put the cart before the horse—Most of the time sellers—need or want to sell their current home in order to make that transition into the new one.
With that in mind, let's take a look at some of the mistakes sellers make when they put their home on the market.
Not Using Experts. This tip really applies not only to selling a home but also to financial investing, building a business, or anything else that requires expertise. Of course, you can sell your own home and some people do; but many times the headaches that go along with it far outweigh the benefits. Frequently, I hear stories from homeowners who attempt to do this, but months later that those same sellers are trying to locate a qualified real estate expert. Their self efforts effectively slowed their sales process and lost time on the market.
As a business owner, I subscribe to the understanding that I need to always be doing the things that are in my highest and best interest. That means that if I am attempting to handle something in a field where I don't have expertise, it will take me longer to do what someone else with years of experience can do better and faster. When I bring in those experts and allow them to help me, this leaves me with more time to focus on the important things that I need to do. It's the basic foundation of good business and it works when selling a home as well. So, at least consult with a real estate expert when you're considering selling your home.
Getting Emotionally Attached. Sounds like I'm talking about a relationship? Well, it kind of is. You've had history with your home—the memories cause you to have an emotional attachment with it. But now, you have to detach and recognize that your emotional attachment will likely not transfer to the buyer—at least not right away.
Buyers will come into your home looking to find out what's wrong hoping to thereby negotiate the price down. They'll be skeptical—checking all around the house to make sure that they're not going to buy the home and end up having to deal with burdens of many flaws later. They won't have the memories of the kids taking their first steps in the living room or the big celebration you had for grandma. Buyers will possibly think about the parties and how their lives can fit into this house if you've removed the items that make it look and feel too much like your home.
When you get emotionally unattached you're allowing yourself to see the home you're listing for sale the way a potential buyer might.
Holding Your Own Open House. This one really goes hand-in-hand with the first "don't do" tip. Some sellers like to be around when their home is on the market. However, I suspect you have better things to do than sit at home while potential buyers explore your house.
Making fish and other smelly foods. Okay, so I'm not saying that you can't cook what you want in your home. The issue is actually not just about food but also things like pet odors and incense or anything else that might have an offensive odor to a potential buyer. I've written about people who use fragrances to create a particular smell when they're showing their home (there are companies that specialize in this). But one reader wrote to tell me that he didn't think that was a good idea…he preferred to not be able to smell anything (or as close to no odor as possible). That can be hard to achieve.
Generally, a pleasant odor is appreciated but there are different types of people and "pleasant" is relative to the individual. So, basically some of the mistakes that you can make are to fry up some fish, let the pets do the wrong thing in the house and then not deodorize, and leave the pets loose to "welcome" the guests in their own ways. For certain, most people won't appreciate those smells.
As for using other fragrances, my personal opinion is that if the smell is subtle and not overwhelming, it probably won't cause any issues with buyers unless they happen to have a particular allergy. However, if there's a repugnant smell, it will get a huge reaction and buyers will flee the home like scurrying ants seeking food and water on a hot summer day.
Watch out for these mistakes and you'll be ahead of the sellers who are wasting time (and possibly losing buyers) by not seeking expert help, not detaching from the home, showing their own home, and forgetting to deodorize.
Persistence Pays Off In Hunt For Vacation Home
Today's Real Estate News Provided by Inman News
Permit problems teach valuable lesson by Tom Kelly
For some unknown reason, I used to take some time leading up to Father's Day to visit and explore some possible places where kids would enjoy spending vacation time. I did this even before we had kids.
Perhaps the reason was that June was finally here and warmer days were right around the corner. More likely, it was the pursuit of a summer experience that my dad gave to me and my siblings -- wonderful, lazy days for a week or two every year at a waterfront cabin.
I thought about those explorations the other day when my sister and her husband were in town. She mentioned that I often write about second homes, but that there was no way she could ever afford one. She had seen some of the prices in her favorite getaway area and, despite the economy, still would not be able to swing it.
"If you did the research, bought it right and rented it out when you were not using it, you might be surprised at what's possible," I said. "Besides, some sellers have to sell and are willing to carry the financing."
I still believe most consumers underestimate the number of days they could rent out a property they enjoy. If you like it, chances are other people will, too. While the Internet has made the research easier to conduct, there's still no substitute for personal visits and legwork.
For example, more than 30 years ago my wife and I were fascinated by the switchback trails and warm tidal waters of a small beach community. I began visiting various properties in the area during the morning hours before my switch-shift at a newspaper.
I contacted owners of the seemingly cheapest cabins and vacant lots to see if they would consider selling. I tracked down the beach plats at the county courthouse, copied the lot numbers and found the listed owners through tax records. We then wrote letters and got several "maybe" responses.
One local man asked that we contact his attorney about a vacant lot on the east side of a small beach community. It turned out the man had been involved in the original platting of the community and at one time had owned quite a bit of property in the region. He said he thought his beachfront lots had been sold long ago.
His attorney researched the man's holdings and concluded that the man did, indeed, own the vacant lot and would part with it for an agreed-upon amount. We told the attorney we would buy the 50-by-250-foot property contingent upon the approval of all services.
It wasn't waterfront, but it was dollar figure we could afford on a parcel across the one street in the community. There were no problems with power or water.
The only thing that stood between us and a buildable dream lot was an approved septic-system design and percolation test. The lot had the required square footage, but water from the side of the hill periodically made the ground soggy.
While doing property research at the courthouse, I met a registered sewage disposal designer who said the drain-field design, percolation testing and required county paperwork would cost $195. I considered doing the job myself (a designer or engineer was not required), but felt our chances for approval would be better if a professional did the work.
In the end, a health inspector decided the dry area of the lot was too small to adequately accommodate the septic system and she denied us a sewage disposal permit -- an opinion upheld by the district supervisor.
We were stunned. Without a septic permit, we could not build our cabin. Alternative systems were not allowed by the community association. Adding to the sting was the fact that most of the cabins were on lots smaller than the minimum size required for septic approval. They were built when the laws were less stringent.
Should we try to buy the adjacent lot? Maybe with an additional lot we could pass the septic inspection. But the county said the adjacent lot had problems, too.
We decided to walk away from the beach lot. The experience was not worthless. We had found a lot, its owner, history, taxes, neighbors, market value and requirements for building. It did not work out, but at least we knew why it didn't.
A year later, we found a small cabin on a mountain lake by the same method. We continue to share it with another family from the newspaper. The place has appreciated significantly and the family memories are priceless. Scores of people have asked to rent it out.
Before she left, my sister wondered if there would be any merit in visiting a bank-owned view property with beach access once listed for $399,000 and now on the market for $159,000.
"Why not see what's possible?" I replied.
Tom Kelly's book "Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border" was written with Mitch Creekmore, senior vice president of Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com.
Mortgage Lenders Can't Always Obtain Deficiency Judgments
by Bob Hunt
One of the major concerns facing the millions of homeowners who are currently delinquent on their mortgage and "upside down" in value is that they fear not only losing their homes but also being subsequently pursued for a deficiency judgment.
Different states have different laws regarding foreclosure and deficiencies. Anyone who has the kind of concern noted above should verify those laws in their own particular state.
In California, the threat of a deficiency judgment -- which, technically, may be real – is frequently, for practical purposes, not a serious one. In some situations there is no threat at all. The discussion that follows here pertains to California law.
In the context of this discussion, a deficiency judgment is a judgment that may be entered by a court. Generally, it is the difference between the foreclosure sale price (the successful bid amount) and the amount of debt owed. In order to obtain a deficiency judgment, a lender must apply to the court for the judgment within three months of a judicial foreclosure sale.
In California, a major exception to the deficiency judgment rules is that no deficiency judgment is allowed when the loan is a purchase money loan for owner-occupied residential property from one to four units. Simply put, if the loan was made for the purchase of your home, no deficiency judgment is allowed.
Another major exception to the deficiency judgment rules is that no deficiency judgment can be obtained if the foreclosure is non-judicial. To understand this, we must note that there are two kinds of foreclosure available in California. One – the overwhelmingly most common – is a non-judicial foreclosure, also known as a trustee sale. A non-judicial foreclosure occurs when, pursuant to a deed of trust, the lender notifies the trustee that the borrower is delinquent. The trustee files a public notice of default. Then, in approximately three months, if the delinquency has not been cured, the trustee publishes a notice of sale. Approximately three weeks after that, if there is still no cure of the default, a trustee sale occurs. (At the discretion of the lender, this sale can be postponed.) This foreclosure sale is the "auction at the courthouse steps." There is no court action.
In a non-judicial foreclosure, when a trustee sale occurs, there is no deficiency judgment available. If the property sold for less than the loan amount, that is the lender’s loss. There is no further recovery. (Two minor exceptions to this are: 1. if the loan had been obtained by fraud or 2. if the property had been intentionally damaged by the borrower.)
The other kind of foreclosure in California is a judicial foreclosure. This involves filing a lawsuit, to which the borrower may respond. Rather than taking the typical four to five months that a non-judicial foreclosure requires, this may take a year or more. Moreover, being a lawsuit, it can be costly. For reasons of time and money, then, lenders hardly ever file judicial foreclosures. It might make sense to do so in the context of a large commercial loan where a borrower might have significant assets worth pursuing. But it is hard to imagine many circumstances where it would be worthwhile to pursue a judicial foreclosure against a homeowner.
If a homeowner’s loan is not a "purchase money" loan – perhaps it is a subsequent "cash-out" refinance loan – then the borrower does have personal liability for the loan. It would be possible for the lender to seek a deficiency judgment. But to do so, the lender would first have to conduct a judicial foreclosure and, as noted, that is very unlikely.
Finally, we note a slightly different but increasingly common situation where a lender may pursue a borrower personally for liability on a loan secured by real estate. This is the case of a "wiped out" junior lien. Many homeowners have second mortgage loans, some even thirds. If these were loans incurred in order to purchase owner-occupied property, then they are subject to the same rules discussed above. No deficiency judgment is available. But if the junior lien is not purchase money, and if foreclosure by the senior lien (the first mortgage) leaves the junior unpaid, then they may pursue the borrower directly just like any other debt.
Deficiency judgments are certainly something for financially distressed homeowners to be concerned about. But they are not as widely available as is sometimes thought.
Summer Home Maintenance
by Carla L. Davis
Summer is a season full of many activities. Pool-side barbecues, family vacations, and children's backyard campouts are just a few. But there's another activity that sometimes gets overlooked, and that is summer home maintenance.
This season presents some prime opportunities to make sure your home is in good working order. Let's examine a few areas you should add to your activity list.
1. Decks: Even the most well-constructed deck will need to be looked over for loose nails and screws, as well as warping or rotting wood. Replace any pieces that pose a safety risk. For easy cleaning, consider using a power washer. This will get rid of the dirt and grime that naturally collects throughout the year on decks.
2. Roof. Roofs require semi-annual inspections. Wind storms, hail, and regular old wear and tear mean you need to visually inspect your roof each year. Clean debris from your roof and look for missing and loose singles. Trim back branches that overhang onto the roof. And be sure your gutter is still free of debris.
3. Water Heaters. Your tank should be drained once a year. This will help with sediment build-up that is inevitable with water heater use. By draining the water heater you can add years to its lifespan.
4. Change air filters. Filters do their job well, and as such, they need changed often. Filters are part of what keeps your home protected from pollutants and allergens. And since they are inexpensive and easy to change, there is not reason not to add this task to your summer activity list.
5. Recreation. Pools are a popular destination during the summer months. Take this time to be sure that tiles and grout are in good repair, or that linings are free from holes in the case of above ground pools. Check your pool's chemistry often. That means twice a week during the summer. And don't forget to clean the pool skimmers often to make sure you get the best circulation, a must for any healthy pool.
Have fun this summer, and remember to give your home a little TLC.
Repair Rules Complicate Financing For 'AS IS' Deals
Q: I am trying to buy a home with a 5 percent downpayment, and I've been told that the only loan I can use is an FHA loan. I made an offer on a house I really like, but it's a very old house. My offer was to take it "as is"; I thought I would just get a pest inspection and a home inspection to make sure I knew what I was taking on, but the seller was clear up front that he wouldn't be doing any work to the place, so I got the place at a very good discount.
Anyhow, somehow the appraiser saw the pest inspection report and now the bank is saying it won't do my loan unless all the repairs the inspector recommended are done before closing! There's no way the seller or I can afford it, and the seller had other offers from two other buyers who say they'll take it "as is." Do you know of any solutions to this problem?
A: It's one of the strangest but very common things, this real estate version of the "Don't ask, don't tell" policy. If the loan underwriter doesn't know and isn't specifically told that the buyer has obtained a pest inspection, it doesn't require seeing it -- it's simply not a requirement for a loan, even an FHA loan.
(The one exception is in the event the appraiser sees some condition on the property he or she feels might pose a health or safety risk -- the appraiser has the right to recommend that the underwriter require that an inspector or contractor verify the safety of that item in writing, or repair it.)
However, if the underwriter is informed in any way that there is a pest report on the property, he can and almost always will ask to see it. And once he asks to see it, he can and almost always will require the recommended repairs be completed -- before funding the loan.
This is a major glitch on "as is" transactions, where the buyer negotiated a lower price for the property specifically because of the repairs that needed to be done, and planned to do the repairs herself, over time, or in the course of an overall overhaul and remodel of the property.
In these cases, the seller often can't or won't pay to do the repairs -- or even allow the repairs to be done -- before closing. And the buyer often doesn't have the cash to get the repairs done, or was planning to use the cash to do larger, more urgent projects after closing to make the home livable.
There are a number of ways underwriters learn of pest reports. Sometimes it is specifically mentioned in the contract. (This, by the way, is not necessary -- buyer's brokers can preserve their clients' rights to obtain any and all inspections they want to without specifically stating which inspections the buyer plans to obtain.)
Other times, the listing agent has left a disclosure packet, including reports and repair bids, on the kitchen counter or uploaded them into the multiple listing service (MLS) listing, and the appraiser sees them, then alerts the underwriter.
I've even seen underwriters notice a line item on the proposed closing statement that mentions that the buyer was planning to pay an inspector out of escrow funds at closing, and demand to see the inspection report generated before green-lighting the release of mortgage funds.
In any of these events, the underwriter will almost always require to see the report. If the report has active infestations or even dry rot, or wood damage -- no matter how minor or unlikely the problem is to get worse -- the underwriter will require that it be cleared before closing.
Many agents whose clients are buying properties "as is," but obtaining inspections for their information, now simply don't mention any specific inspections in the documents to allow their clients the right to do the work after closing, on their own timetable, or in the course of other changes they have planned to the property.
In terms of workarounds, some underwriters will waive the repairs as long as they see that the buyer has signed an agreement to take the property "as is," and the appraiser gives the opinion that there are no health and safety dangers on the property, and that the repairs recommended do not cause the value of the property to fall below the purchase price.
However, underwriters have a vast amount of discretion, and many will simply not budge on requiring repairs once they see the reports.
In these cases, buyer and seller might want to discuss splitting the repair costs, or otherwise renegotiating the terms of the sale to allow the repairs to be completed (e.g., increasing the price to cover the repair costs sellers incur to meet the lender's requirements).
Some buyers will find a less expensive contractor to actually complete the repairs, then just have the pest company reinspect and certify that the repairs have been done satisfactorily.
I've also seen mortgage professionals switch the entire transaction to a new lender, presenting them with a totally new contract that doesn't mention the pest report.
This strategy requires major cooperation from the seller and an extension of time to close the deal. Often, sellers prefer to move on to their backup offers in these situations, but it never hurts to ask.
Q: I am trying to buy a home with a 5 percent downpayment, and I've been told that the only loan I can use is an FHA loan. I made an offer on a house I really like, but it's a very old house. My offer was to take it "as is"; I thought I would just get a pest inspection and a home inspection to make sure I knew what I was taking on, but the seller was clear up front that he wouldn't be doing any work to the place, so I got the place at a very good discount.
Anyhow, somehow the appraiser saw the pest inspection report and now the bank is saying it won't do my loan unless all the repairs the inspector recommended are done before closing! There's no way the seller or I can afford it, and the seller had other offers from two other buyers who say they'll take it "as is." Do you know of any solutions to this problem?
A: It's one of the strangest but very common things, this real estate version of the "Don't ask, don't tell" policy. If the loan underwriter doesn't know and isn't specifically told that the buyer has obtained a pest inspection, it doesn't require seeing it -- it's simply not a requirement for a loan, even an FHA loan.
(The one exception is in the event the appraiser sees some condition on the property he or she feels might pose a health or safety risk -- the appraiser has the right to recommend that the underwriter require that an inspector or contractor verify the safety of that item in writing, or repair it.)
However, if the underwriter is informed in any way that there is a pest report on the property, he can and almost always will ask to see it. And once he asks to see it, he can and almost always will require the recommended repairs be completed -- before funding the loan.
This is a major glitch on "as is" transactions, where the buyer negotiated a lower price for the property specifically because of the repairs that needed to be done, and planned to do the repairs herself, over time, or in the course of an overall overhaul and remodel of the property.
In these cases, the seller often can't or won't pay to do the repairs -- or even allow the repairs to be done -- before closing. And the buyer often doesn't have the cash to get the repairs done, or was planning to use the cash to do larger, more urgent projects after closing to make the home livable.
There are a number of ways underwriters learn of pest reports. Sometimes it is specifically mentioned in the contract. (This, by the way, is not necessary -- buyer's brokers can preserve their clients' rights to obtain any and all inspections they want to without specifically stating which inspections the buyer plans to obtain.)
Other times, the listing agent has left a disclosure packet, including reports and repair bids, on the kitchen counter or uploaded them into the multiple listing service (MLS) listing, and the appraiser sees them, then alerts the underwriter.
I've even seen underwriters notice a line item on the proposed closing statement that mentions that the buyer was planning to pay an inspector out of escrow funds at closing, and demand to see the inspection report generated before green-lighting the release of mortgage funds.
In any of these events, the underwriter will almost always require to see the report. If the report has active infestations or even dry rot, or wood damage -- no matter how minor or unlikely the problem is to get worse -- the underwriter will require that it be cleared before closing.
Many agents whose clients are buying properties "as is," but obtaining inspections for their information, now simply don't mention any specific inspections in the documents to allow their clients the right to do the work after closing, on their own timetable, or in the course of other changes they have planned to the property.
In terms of workarounds, some underwriters will waive the repairs as long as they see that the buyer has signed an agreement to take the property "as is," and the appraiser gives the opinion that there are no health and safety dangers on the property, and that the repairs recommended do not cause the value of the property to fall below the purchase price.
However, underwriters have a vast amount of discretion, and many will simply not budge on requiring repairs once they see the reports.
In these cases, buyer and seller might want to discuss splitting the repair costs, or otherwise renegotiating the terms of the sale to allow the repairs to be completed (e.g., increasing the price to cover the repair costs sellers incur to meet the lender's requirements).
Some buyers will find a less expensive contractor to actually complete the repairs, then just have the pest company reinspect and certify that the repairs have been done satisfactorily.
I've also seen mortgage professionals switch the entire transaction to a new lender, presenting them with a totally new contract that doesn't mention the pest report.
This strategy requires major cooperation from the seller and an extension of time to close the deal. Often, sellers prefer to move on to their backup offers in these situations, but it never hurts to ask.
5 Key Changes In Boomers' Post-Work Plans
Survey Reveals New Expectations For Homes, Finances
Mary Umberger Inman News
It's not your father's retirement scenario -- that's for sure.
And for many aging baby boomers, "retirement" won't even amount to a real cessation of work, because many of the generation of 76 million babies born between 1945 and 1964 are now saying they plan to keep on working, whether from enjoyment or because they must.
Del Webb, a builder that specializes in housing developments for residents 55 and over, has conducted 10 extensive opinion surveys on the boomers since 1996, and says the famous population cohort has changed significantly over the years. The 2010 Del Webb Baby Boomer Survey found them considerably less interested these days in heading for the traditional Arizona/Florida locales -- if they'll move at all. And their reasoning for pulling up stakes has changed, too.
Five things to know about boomers' retirement plans:
1. The last day on the job is going to hit later than it used to. The younger boomers, who are turning 50 soon, plan to retire a median of four years later than 50-year-olds who responded to the survey in 1996 -- at age 67 versus 63.
Their reasons for the change are mixed, according to Webb spokesman Valerie Dolenga, who says the survey found plenty of people who like to work and want to continue, whether in the same kinds of jobs, as consultants, or some other field, part time or full time. Then there are those who just have to work.
"I was looking at the comments of those who answered the survey," she said. "I was really surprised to see that it's pure enjoyment for some of these folks.
"Then there are those who say, 'Yeah, I need to work because my 401(k) has been hit so hard,' or they can't sell their homes," she said. "Clearly, those factors are working in tandem."
And then there's this sobering admission: Boomers who are turning 50 this year are three times as likely to think they'll never be financially prepared for retirement compared to older boomers -- 41 percent today vs. 15 percent who said that in the 1996 survey.
2. The still-at-work decision will affect whether they'll move, she said.
Among the older baby boomers (who started turning 50 in 1995), one-third plan to move in retirement; more than 50 percent plan to move to a different state, 25 percent to a different city within the same state, and fewer than 20 percent within the same town.
Younger boomers now are more interested in moving than their similarly aged predecessors were in the 1996 survey. About 42 percent of those turning 50 this year say they want to move in retirement, compared with 36 percent of 50-year-olds in the earlier survey.
3. But the ones who are planning to move some distance are changing the rules, the survey found.
"Florida has slid off the map," Dolenga said. In the survey, the top two destination preferences were North and South Carolina.
The boomers still are lured by the promise of warmer weather, but the Carolinas, with occasional glimpses of the climate Northerners have left behind, offer a compromise, she said. The "halfback" phenomenon -- retirees who have wearied of Florida for whatever reason and moved back up the Atlantic coast to the Carolinas -- is real, she said.
A major influence: cost of living, according to the survey.
4. What they want once they get there has changed significantly, also, Dolenga said.
Boomers aren't seeking some armchair idyll -- they're drawn to urban amenities such as shopping, restaurants and cultural amenities. And access to health care ranks very high for them now.
Another attitude adjustment: The almost folkloric belief within the housing industry that baby boomers will retire to some spot that's close to their relatives has gotten the heave-ho, according to the survey. Being close to grandchildren ranked second to last among their decisions about where to live.
5. The houses they'll live in are changing, too, Dolenga said.
Reflecting what they've seen in the economy in the past couple of years, boomer consumers are more accepting of less square footage and are more interested in spaces that can handle multiple uses.
And builders who cater to them have changed tactics somewhat, with less of an "everything is included" approach in order to appeal to financially chastened boomers who are interested in a simpler, less luxurious house to start with and may add some of the fancier features as they go along, she said.
But Dolenga is starting to suspect that despite their loudly expressed financial worries, home-shopping baby boomers just recently have begun to display a little more willingness to crack open their wallets.
"I think we're seeing some frugality fatigue, people weary of trying to save every single penny," she said. Her company, which tracks the number of visitors to its developments, says traffic is up.
"We're starting to see people out there again," she said. "They're out there. They're shopping."
Mary Umberger is a freelance writer in Chicago.
Top 10 Places for New Grads to Live and Work
Apartments.com and CareerRookie.com, CareerBuilder’s college job search site, have identified the 10 best cities for recent college graduates to both find a job and an affordable apartment.
The list was compiled by identifying the top U.S. cities with the highest concentration of young adults, the largest inventory of jobs requiring less than one year of experience, and the most apartments affordable on a median new graduate’s salary.
Here’s the list of selected cities and the cost of renting a one-bedroom apartment.
1. Atlanta, $723
2. Phoenix, $669
3. Denver, $779
4. Dallas, $740
5. Boston, $1,275
6. Philadelphia, $938
7. New York, $1,366
8. Cincinnati, $613
9. Baltimore, $1,041
10. Los Angeles, $1,319
Source: CareerRookie.com and Apartments.com (05/05/2010)
Dotting i and crossing t in 'tax credit'
Today's Real Estate News Provided by Inman News
Home Sale Hindsight
Tara-Nicholle Nelson Inman News
Q: How does one get information on what forms to fill out when buying a new home? It's my understanding that a form needs to be completed within seven days after the close of a property. I was eligible last year and did not know I needed a form to complete and submit for a certificate.
So I have two questions:
1. Am I solely responsible to know the process, or does my agent have a responsibility to guide me through this?
2. Is there any way I can get this credit based on my purchase last year? I closed on March 15, 200 | |
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