University Title Company - (979) 260-9818

HOME

COMPANY INFO

TITLE INSURANCE

SERVICES

CLOSING PROCESS

BUYER’S TIPS

SELLER’S TIPS

LINKS

NEWS & RATES

CLOSING TRACKER

SITE MAP

Inman News

Latest trends in kitchen cabinets

Link - Fri, 16 May 08 00:00:00 -0700 - Email The Author

Description:When remodeling, choose sizes and styles with resale value in mind Paul Bianchina <a href='http://www.inman.com' target='_blank'>Inman News</a> If you're contemplating remodeling your kitchen, one of the most important aspects to take into consideration is the cabinets. Certain trends are popular right now while certain others have lost a little of their appeal, which can certainly add or subtract from your resale value as well. Keep in mind that your cabinets, in addition to being a visual focal point for the kitchen, are also a sizable monetary investment. As such, it's best to stick with styles that have a broader, more timeless appeal and then accessorize around them, rather than opting for the latest wild trend and then facing the expense of changing them a couple of years later. Which Woods: For natural wood cabinets, there are lots of choices in the type of wood you use. Oak remains a popular choice, with some people opting for an upgraded look by specifying more expensive quarter-sawn white oak, traditionally used in Mission-style furniture, instead of the more common plain-sawn red oak. Cherry remains a popular wood for kitchen cabinets, with a deep, rich color. Maple is also still popular, as is alder. At the higher end, in addition to the quarter-sawn white oak there are woods such as knotty chestnut and red birch. Again for those looking for something more unusual, there is the option of running the grain of the wood horizontally instead of the more traditional vertical orientation. With any of these woods, popular finishes include natural (no stain added before the final clear coat is applied), and light to medium stains. For the most part, dark stains are not really popular. A Color Instead: Thinking of painted cabinets instead of natural wood? White is still hanging around to some degree, although it's definitely diminished in popularity. In its place are softer earth tones, as well as pale green and pale yellow. If you're looking to make a statement, at the other end of the color spectrum some people are opting for deep blues and reds, and even black. Keep it Organized: One definite trend in kitchens is that people want the room to be very functional in addition to decorative. Kitchen users want things at their fingertips, and that has led to popularity of some of the many organizational accessories and systems currently available -- many of which can easily be added to stock, modular cabinets. Larger storage areas are popular, and some designers are choosing to combine food and dishes in the same cabinet -- grab some chips and bowl to put them in at the same time. More Visible Kitchens: With the popular trend of opening the kitchen up to the rest of the house, cabinets are more on display then ever before. This has had the effect of several design changes in the kitchen. Lighting is more unified with the surrounding rooms, and light fixtures are tending toward the decorative in addition to their functionality. Kitchen flooring is also a major consideration, as it tends to intersect the flooring in other rooms over a much broader area. As part of that increased visibility, more kitchens are incorporating display cabinets. These are typically upper cabinets with clear or patterned glass doors, often with built-in lighting, that make it easy to display anything from Grandma's china to your salt and pepper shaker collection. Stand Up Tall: With the open kitchen trend, there still needs to be some definition of the space between the kitchen and the adjoining rooms. Toward that end, you will find cabinet runs that are being anchored by taller-than-normal lower cabinets at one end -- typically 42 inches instead of 36 -- which helps keep the kitchen from looking like it ends in the middle of nowhere. Taller cabinets also offer more storage opportunities and can accommodate elevated dishwashers as well. Furniture Influences: There is also a definite furniture influence in kitchen cabinets these days. This includes lower cabinets that are mounted on feet (or with toe kick areas that imitate the look of feet), as well as the use of decorative moldings on the cabinets in areas besides just the traditional crown molding. Easy Personality: If you want a distinctive look in your kitchen without resorting to blue or black cabinets, you can easily dress up any kitchen to reflect your individuality simply through the knobs you choose. Options abound, from tiny silverware to brightly colored balls to elegant stainless steel shapes. And you can always change the knobs later for a quick makeover that won't break the bank. Remodeling and repair questions? E-mail Paul at <a href="mailto:paul2887@ykwc.net" title="mailto:paul2887@ykwc.net">paul2887@ykwc.net</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Inman News</div></div></div>

Denied short sale, struggling homeowners look for way out

Link - Fri, 16 May 08 00:00:00 -0700 - Email The Author

Description:Will filing for bankruptcy get lenders off their back? Ilyce Glink Co-written by Samuel J. Tamkin <a href='http://www.inman.com' target='_blank'>Inman News</a> Q: We have lived in New Jersey for five years, and have been waiting for an opportunity to go back to Florida. My husband recently got offered a job in Florida that will pay $30,000 less than what he makes now. He will start his new job in mid May and I will follow in when our kids get out of school. We signed a rental for a home in Florida but we can't purchase a home at this time. The house we currently live in (in New Jersey) is about 2 years old. Houses like ours in our development are now selling for $60,000 less than what we paid. We could do a short sale with our lender, but our credit score is close to 800 and we hope not to ruin that. Another option we explored was filing for bankruptcy. We met with a bankruptcy attorney and now I feel like that may be our only option. We have two loans on our home and our first lender would accept the short sale but the second would not. We thought about renting out our home but our mortgage is $3,000 a month and we can expect to receive a monthly rental payment of only about $1,800. We can't afford three payments per month (our two loans on our house and the rent for the home in Florida). We have been advised to stop paying the mortgage payment. We do not want to do that but we really want to move to Florida. On the other hand, we want to make the best financial decisions and rebuild our credit as soon as we can. A: You have an interesting situation. Unlike many people with mortgage troubles due to job losses, health problems or other financial difficulties, your situation appears to be self-created. You know your home value has gone down, and you know you will make less money if you move to Florida now, and you know you can't afford to keep your current home and rent a home in Florida. And yet, you've gone ahead, accepted the job in Florida, and signed a lease for a home there. What are you thinking? Your life in New Jersey must be pretty horrific if you're willing to file for bankruptcy just to get back to Florida. You have excellent credit -- now. Unfortunately, going through a short sale or filing for bankruptcy will severely hurt your credit, and you can expect your credit score to drop several hundred points. A short sale is where you sell your home for less than the amount you owe on it to your lenders. Both of your mortgage lenders would have to agree to take less than the full amount that is owed in exchange for allowing the sale to go forward. When a home has two lenders, the second lender is in a position to lose all of the value of its loan. In some cases, the second lender may not even respond to the request for a short sale with the hope that it may get something later rather than agree to get nothing now. If either lender fails to agree to the terms of the short sale, your sale with a prospective buyer will fall through. Make sure you are in good contact with each lender if you decide to go down this route. If you have a good line of communication open with each lender and each lender works with you in the short sale, you have a better chance of selling the property to a buyer that comes along. You mentioned filing for bankruptcy as another option. Bankruptcy will certainly hurt your credit history -- if you even qualify. Your excellent credit will be shot for years to come and you would have to take steps over the next several years to restore your credit. With a lower score, you may find that you will have to pay more for car and renters insurance and it may be much more difficult to obtain credit-card offers with low interest rates. Just because you file for bankruptcy may not mean that you're out of the woods with your lenders. If you have other assets, you may find that your current lenders want a piece of those assets. If you have savings that are not in retirement accounts, you may lose those savings. If you sat down with a bankruptcy attorney, you should have gone through what you own, what you have in savings and what you owe to come up with a picture of where you would end up after the bankruptcy. You do have another option: Sell your home and fund the shortage from savings. For example, if you sell the home for $60,000 less than you owe to the bank, but you can scrape together $60,000 from your savings, retirement accounts (you may have to pay taxes and a penalty on that cash), family or friends, you can close on the property and move on. For many people, coming up with that kind of money to sell a home is prohibitive, but for others it gives them the option to move on without affecting their credit. It may be too late, given the other commitments you've made, sooner rather than later -- but if you could hold off moving back to Florida for another few years, you might find that the real estate market is much better. You might find that you're able to sell your home for what you owe, and then move south without taking a hit on your credit score. If you feel as though you can't live without whatever is waiting for you in Florida, then move and suffer the financial consequences. But from what you've described, it sounds like you're sticking a dagger through your wallet. To get even more valuable advice from Ilyce, visit her <a href="http://www.inman.com/glink/" target="blank">Personal Finance and Real Estate Center</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Ilyce R. Glink and Samuel J. Tamkin</div></div></div>

Be careful what you say about landlord online

Link - Thu, 15 May 08 00:00:00 -0700 - Email The Author

Description:Rent it Right Janet Portman <a href='http://www.inman.com' target='_blank'>Inman News</a> Q: I own a large apartment complex. I'm worried about the effect of an online message board on my business. Hosted by a large Internet service provider, the message board solicits input from tenants about housing issues, and there's currently a string of messages concerning my complex, complaining about the rent, security-deposit return practices, and general management. Two posters have written rambling, flaming rants about our employees and business practices. This is very damaging stuff if it's read by prospective tenants. Is there any way I can get the service provider to give me the identities of these message writers? --Jerry Y. A: Regular folks with access to the Internet can become the equivalent of a town crier or a pamphleteer, and they can do so anonymously. The First Amendment's protection of free speech extends to them as it did to their paper-bound forebears, and that includes an author's decision to remain anonymous. However, that protection isn't without limitation -- the law has long recognized that when speech becomes defamatory, obscene, or likely to incite a breach of the peace, the author's right to continue to sound off will be cut off. Because the Internet affords such easy and unregulated posting, it opens the door to abuses like these. Your complaint seems to be that these messages defame management and possibly interfere with your ability to do business. One response might be to simply join the group -- post your own messages, calmly and professionally countering the allegations and inviting posters to engage in a dialogue. A newcomer to the board will see that you are a rational businessperson who's taking the matter seriously. The difference in tone alone might lead readers to heavily discount the negative postings. If you're bent on learning the identities of your detractors, you're facing an uphill battle. Most Web sites' "terms of use" agreements include a statement that the provider will disclose posters' identities when legally required. This won't happen until a judge has ordered the site to divulge the information. A judge means a lawsuit -- you'll have to sue these unknown posters, then serve the service provider with a subpoena to cough up the names. The provider will notify the poster that unless the poster objects, the provider will comply; the poster will object (anonymously, of course), and the judge will balance the alleged damage to you versus the harm caused by interfering with the poster's First Amendment rights. First, however, most courts will require you to show them sufficient evidence that defamation and harm to your business have actually occurred. Getting past this hurdle may prove difficult for you. Defamation is the publishing of false statements of fact that result in injury to another. Defamation does not include opinions, and if the postings on the message board are, as you describe, illogical rants, they may not qualify as false statements of fact. Though crude, childish and offensive, they are protected speech as long as they don't include false statements of fact or allude to undisclosed, false facts that would confirm the poster's opinion. Q: When roof repairs were scheduled for our apartment complex, we received a notice telling us that that our vehicles had to be moved from the parking lot by 8 a.m. The notice said to use "street parking," but did not mention anything about parking restrictions for the street on which the complex is located. Many tenants, including myself, parked overnight on this street. We got parking citations, because this street prohibits parking from midnight to 5 a.m. The landlady says she will talk with the city to see if the fines can be waived. If the city won't do it, is the landlady responsible for paying our fines? --Catherine A. A: You may have a hard time coming up with a legal reason compelling your landlady to pay your parking tickets. Although she advised you to use street parking, she did not warrant that it would be OK to park on the street you used. You're responsible for checking the "No Parking" signs along the curb, and choosing a street that permits overnight stays. The outcome might be different had she urged you to "park right outside, opposite the building" or something similar, because in that case you could argue that she had represented that the street was available, despite what the parking signs might say (it would still be a stretch to say that you could reasonably believe she could trump the city's parking rules). But, she didn't say that. Like you, she probably didn't even think of parking restrictions when she advised you to move your cars from the apartment lot. All is not necessarily lost, however. Your landlady now has a building full of annoyed tenants, which is a situation no careful owner wants to continue for very long. If she is unable to get the city to rescind the tickets (a long shot, to be sure), she may still be willing to subsidize your fines a bit. If she's wise, she'll chalk up the expense to marketing, figuring that appeasing her tenants (who should be the source of future good tenants) is well worth the expense. Needless to say, your chances of prevailing here will depend on whether you are good, stable tenants whom the owner wants to retain. Q: We own and manage a rent-controlled apartment building. Our ordinance requires tenants to live in the unit more than six months in every year in order to keep the unit under rent control. One of our tenants has been given a new job assignment that takes him to another city for long periods of time. He's asked us to accept more rent in exchange for overlooking the fact that for the next few years he will no longer be here the required six months. Is this a good idea? --Jane P. A: You must really want to keep this tenant, otherwise there would be no reason for you to pass up an opportunity to de-regulate his apartment and rent it out to someone new at higher, market rates. It's usually a fine idea to work with good tenants to find ways to accommodate their reasonable requests and keep them on the property. For example, though no law requires you to allow the tenant to paint the living room beige, the two of you can agree that the tenant may do so and you'll pay for the paint and the hourly labor. If you don't pay as promised, your tenant could even take you to small claims court, where a judge would enforce the agreement. Your tenant's proposal, however, is significantly different than the scenario described above because you and your tenant would be circumventing a rent-control rule. The cops won't come to arrest you for this maneuver, but a judge will probably not enforce your agreement if you end up arguing about it in court. Rent-control rules, like usury laws and child labor laws, generally cannot be waived, even when both sides know exactly what they're doing. You can probably see where this is going -- because your "agreement" is not enforceable, you could disregard it at any time, knowing that the tenant's last recourse (taking you to court) will end with a judge voiding the agreement. Suppose, in a year or so, you decide that the officially allowed rent, plus the under-the-table bonus, isn't enough in light of the increased market value of the apartment, and your tenant refuses to pay more? Willing to take your chances with a new resident, you initiate eviction proceedings based on the six months' rule. Your tenant's defense -- the agreement -- will do him no good when a judge invalidates it, and he'll be out. You get to choose a new tenant at high, market rates -- nice. Of course, such shenanigans don't go down well with judges, who don't like seeing landlords manipulate tenants and rent-control ordinances. You'd probably be ordered to return all the extra rent you collected. And depending on how offended the judge is, you might find yourself with a vacant but still regulated apartment, leaving you with the risk of finding a new tenant but without the consolation of being able to charge market rates. Whether this arrangement is a "good idea" depends, first, on how likely it is that you will be satisfied with it for several years. Second, if relations sour, think about how willing you are to be drawn into court, where you will "win" and get your apartment back, but possibly pay dearly for your out-of-bounds play. Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at <a href="mailto:janet@inman.com">janet@inman.com</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Janet Portman</div></div></div>

Neighbor sabotage kills home sale

Link - Thu, 15 May 08 00:00:00 -0700 - Email The Author

Description:Harrassment toward Realtor, buyers forces critical action Benny Kass <a href='http://www.inman.com' target='_blank'>Inman News</a> Q: We listed our home for sale about a month ago, and our real estate agent has been conducting open houses. On more than one occasion, our next-door neighbor has made derogatory or rude remarks to the Realtor, potential buyers and other agents visiting on open house days. One particular couple was very interested and even came back to see the house a second time -- only to have our neighbor "snap" at the wife. The couple's interest completely vanished following that incident. My wife and I have spoken with the neighbor, asking her if there was a problem. The neighbor told us that our visitor had parked in her driveway and that she had merely asked the car be moved. The neighbor also admitted that she had been in a bad mood that day and that she may not have been very nice to the potential buyer. Since then, our agent has told us that the neighbor has also snapped at visiting brokers and made derogatory comments directly to the Realtor about the price of my home. Is there anything we can do to make the neighbor stop deterring potential buyers with her negative behavior and comments? A: I am surprised that you are still calling her your "neighbor." There are several things that you can do, starting slow and then, if need be, escalating your approach. First, you and your wife should sit down and talk to your neighbor. If she is married or has a companion, insist that all owners of that house join you. Explain that you are concerned about the behavior, and that it may already have cost you a potential buyer. Find out if there is a problem. Your agent suggested that she may be concerned about the price you are looking for. Discuss this openly with her. I doubt that she is concerned that you have overpriced the house. However, she may be troubled that if you sell the house too low, that will impact on the value of her house. It may be a good idea to get some market comparables from your agent in advance of your meeting. It may also be that you are, in fact, trying to sell the house too low and it would be worth your while to get a second opinion from another agent. Do not threaten your neighbors in any way. Listen and be polite, but make it clear that you plan to sell and would appreciate no further interference from them. If your neighbor really does have legitimate concerns, try to address them as soon as possible. Perhaps they would like you to move the times when you are holding your house open. Perhaps too many other visitors have been parking in their driveway. These issues can be resolved easily with the cooperation of your agent. See if this laid-back approach works. You should also consider showing up at the next open house to see if there are any more incidents. You obviously don't want to interfere with your agent's activities when visitors show up to view your house, but you certainly can be around, making your presence known to your neighbors. If this does not work, then I suggest you consider retaining an attorney who can write a strong letter to your neighbors, advising them that they are interfering with your right to peacefully sell your house and that they should "cease and desist." Often, a letter on a lawyer's letterhead will do the trick. But if all else fails, you may have no alternative but to take them to court. The cause of action would be private nuisance -- by their conduct, they are creating a nuisance that is causing you economic hardship. The judge will be asked to issue a restraining order against your neighbor, especially during the times that you are holding those open houses. No one likes to be sued, and the mere filing of a lawsuit may resolve the problem. If you have to file suit, you will need proof of the disturbances your neighbors are creating. Your agent will most likely be the principal witness on your behalf, so you will have to make sure that she has documented the times when there were problems. The ideal proof, of course, would be to get testimony from the couple who backed away from the house as a result of the neighbor's conduct, but I doubt they will want to cooperate. I assume there has been no violence involved. If so, then you have every right to ask your local police to investigate and possibly even monitor the house during subsequent open houses. One additional suggestion: While you may consider this to be a complete capitulation to your neighbor (and it certainly will not be as effective as an open house), you might want to consider having prospective buyers come to your house "by appointment only." Many homeowners do not like the concept of an "open house," with people opening closets and desk drawers, so it is one way to try to market your home. There is no legal or moral obligation to be friendly with your neighbors. Some people want their privacy and consider their home to be their castle. But there is an obligation to be civil, and that's the message you should be sending to your next-door neighbor. 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 <a href="mailto:benny@inman.com">benny@inman.com</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Benny L. Kass</div></div></div>

Moving to a new city? Web's got you covered

Link - Thu, 15 May 08 00:00:00 -0700 - Email The Author

Description:From Google to Megan's Law, sites help make choosing destination easier Helene Lesel <a href='http://www.inman.com' target='_blank'>Inman News</a> Q: I'm relocating to another city and don't know which area to consider. How can I tell if a neighborhood is convenient, safe and close to what I want to do? A: Thanks to the wonders of the Internet, checking out a new area is easier than ever before. Assuming you've figured out your budget, try pinpointing possible neighborhoods that fit into your needs by asking friends, colleagues or co-workers. Also make a list of your location must-haves, such as convenient commuter routes or favorite type of off-time activities. Looking for a place to start inputting your choices? An amazing tool for researching a world of destinations is through the Web site <a href="http://www.earth.google.com/" target="_blank">earth.google.com</a>. Once downloaded from the Internet and onto your computer system, for no charge you have a satellite view of the world down to the finest detail. Starting with a view of a twirling globe, with a click and roll of your mouse you can hone in anywhere on earth you desire -- from as general as the clouds above a region to a specific street address with amazing clarity. Views can be as close as 300 feet from above, and with a scroll of the mouse can be brought into sharper focus. Reversing the mouse will pull back the view and show the neighborhood and surrounding area in astounding detail. Using a specific street address is best, so when looking for a place gather a few choices to input. Rolling the mouse will shift the view anywhere you want to go -- from driving down the nearest street to taking the expressway to another city. Do you want to know how to get from one location to another -- or the distance between them? You can input a city and state, region or specific address. If you know your job or school address, you can actually see the route to anywhere you choose. In larger cities, some areas can be viewed in 3-D and street-level view, right up to the front door by sliding the bars located on the upper right portion of the screen. How are you planning to get to work or school? What time will you most likely be on the road? How long does rush hour stretch? Maps that pinpoint and provide directions between locations can be found through several map sites including <a href="http://maps.google.com/" target="_blank">maps.google.com</a>, <a href="http://mapquest.com/" target="_blank">mapquest.com</a> and <a href="http://maps.yahoo.com/" target="_blank">maps.yahoo.com</a>. In addition to providing invaluable directions and maps, they include real-time traffic activity that monitors traffic speed and incidents causing slowdowns. Try checking the exact route and time you'll be traveling, and then decide if the distance and cost of gas works for you. Map sites also offer links to area restaurants, businesses, places of worship and more. Want to look into public transportation? There are many routes to take -- bus, train or subway -- but in some areas choices are few and far between. Most public transportation options can be found online. Search "Public Transportation" and the city name for an area guide. For example, "Public Transportation City of New York" yields <a href="http://www.mta.info/nyct" target="_blank">http://www.mta.info/nyct</a>, which transports you to the home site for the New York State Metropolitan Transit Authority and links to specific city information. Likewise, searching "Public Transportation Seattle" suggests <a href="http://transit.metrokc.gov/" target="_blank">http://transit.metrokc.gov</a> as a route to more information. When looking for community details, don't overlook the U.S. Census Bureau at <a href="http://www.census.gov/" target="_blank">census.gov</a>. The "American Fact finder" option offers a vast array of information ranging from housing type and density to economic and household details. The search can be based on any address, ZIP code, city, county or state you can name. What about personal safety in a particular area? In the state of California, registered sex offenders can be tracked through <a href="http://www.meganslaw.ca.gov/" target="_blank">meganslaw.ca.gov</a>. For details regarding other state registry sites, access <a href="http://www.klaaskids.org/" target="_blank">klaaskids.org</a> for links. Information about burglary, car theft and other crimes in an area are usually available through the local police or sheriff's office. Search "Crime Statistics" and the name of the city or town to look into details. Most provide a map that can be generated by inputting address or area. Sites provide specific details on type of crime, timeline and location. What about the quality of local schools? Most states now have standardized test scores available for their district. Local schools often have individual Web sites that show photographs of the grounds and give in depth detail about available programs, staff and amenities. Enjoy shopping at local farmer's markets? Stroll through <a href="http://www.ams.usda.gov/farmersmarkets/map.htm" target="_blank">ams.usda.gov/farmersmarkets/map.htm</a> for directions. Like to garden? Some areas have communal growing space. Dig through <a href="http://www.localharvest.org/" target="_blank">localharvest.org</a> for details and how to obtain organic foods through various sources. Keep in mind that while using the Internet is no substitute for visiting the real thing, it does help kick off an informed search for a place to call home.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Helene Lesel</div></div></div>

Buying house before marriage can be risky

Link - Thu, 15 May 08 00:00:00 -0700 - Email The Author

Description:Instead of prenup, consider partnership agreement Ilyce Glink <a href='http://www.inman.com' target='_blank'>Inman News</a> Q: I live in California and plan on getting married. However, my boyfriend wants me to sign a prenuptial agreement. At the present time we're also looking into buying a home. His credit is awful while mine is very high. We have both signed the loan papers for a preapproved bank loan but now I'm having doubts about going through with the purchase. He obviously makes more money than I do and if he decides to leave me I don't want to be stuck with a high mortgage I can't afford. Is it better to take my name off the loan and still be on the title? Or should I just remove myself entirely? A: In general, prenuptial agreements come into play when one person has a lot more assets (money, stocks, real estate, jewelry, etc.) than the person he or she is marrying. You have to decide first if you want to sign an agreement that will decide now how to divide all of the assets you accumulate together after your marriage. I'm not opposed to prenuptial agreements, and in fact I think they can be very helpful, particularly in the case of a second marriage where each person has his or her own children. I do think you should consult with an attorney who can advise you on whether the agreement protects you as well as your fiancé. Whether or not you eventually marry, you should be cautious about buying property as an unmarried partner (which is what you are now) unless you have created a legal partnership that governs the financial aspects of the purchase. This partnership agreement will describe what each of you is bringing to the table, and lay out the financial workings of the relationship, including what expenses each of you are responsible for, and what share of the equity each of you will be entitled to in case the partnership doesn't work out. A real estate or family planning attorney can draft a partnership agreement for you, and I strongly recommend you execute this sort of agreement before you go ahead with the purchase. If you and your fiancé do ultimately decide to get married, your partnership agreement can contain a clause that specifies what will happen to the property and your financial relationship. Because you live in California, you may have some extra protections if you and your boyfriend live together for a certain number of years. Your first move is to sit down with an attorney who can go through the prenup, and help make sure that you're protected down the line. Q: My husband signed a quitclaim deed four years ago while living in another state. Now, we're finally getting divorced. I have been paying the mortgage, which has been refinanced twice in my name only. Is the house a marital asset? Please help me. I am so afraid I'm going to lose my home. I live in Massachusetts. A: If you purchase a piece of real estate while you're married, that property is typically considered part of the marital estate. An exception would be if you purchase property using funds that are excluded from the marital estate, such as an inheritance that you have kept separate from your other assets. In your case, your husband signed over a quitclaim deed, which should have turned over to you any financial interest he had in the property. While this property might have originally been part of the marital estate, you've got a good claim that it no longer is. That doesn't mean your ex might not try to get a piece of it. You should immediately consult with a divorce attorney who can advise you of your rights, and how to protect your home. Q: A property that was rented to a school has been sold and the school is moving to a new location. There is playground equipment that was purchased by the school that is cemented into the ground. Can the school dig that up and take it with them or did it become a fixture and therefore goes with the property? A: It depends on what the contract says about this sort of equipment. In a typical residential purchase contract, fixtures (items that are permanently attached to the property, like light fixtures and bookshelves) are typically left with the property. If you want to take a fixture with you when you move, then you would typically exclude those items from the contract. When it comes to commercial property, fixtures sometimes belong to the tenants of the property and they are able to do with them what they want. The disposition of fixtures would depend on what the contract between the landlord and tenant says. For example, if a restaurant leases out a space and then goes out of business, and the restaurant equipment, bar and light fixtures were all purchased by the restaurant owners, they may be entitled to remove these items even if they were attached to the rental space. In your situation, if the school and the former owner of the property agreed that the school could take the playground equipment with them, then they'd be entitled to dig it up and move it. If the contract was silent on the specifics of which fixtures could be removed, then the school might not have been able to take the equipment. In that case, and for more precise answers to your question, you should talk to a real estate attorney. If local residents are unhappy that a really nice playground has been removed, then you should talk to your local municipality about creating a new playground that features similar equipment. Many communities have raised private funds to create these kinds of child-friendly playgrounds, which help stabilize areas and provide a safe and fun environment for their children. To get even more valuable advice from Ilyce, visit her <a href="http://www.inman.com/glink/" target="blank">Personal Finance and Real Estate Center</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Ilyce R. Glink</div></div></div>

Home buyer sues when appraiser misses leaky roof

Link - Wed, 14 May 08 00:00:00 -0700 - Email The Author

Description:Why suit was thrown out despite court's ruling Tom Kelly <a href='http://www.inman.com' target='_blank'>Inman News</a> It's been more than 13 years, but "the leaky roof" case in Washington state is still at the top of the list when it comes to defining and understanding the basic responsibilities of appraisers and inspectors. It's also become the prime ammunition used by defense attorneys in seeking restitution for their clients. A recent example surfaced a few months ago when a Seattle-area woman made an offer on an older one-story, weekend home in the Cascade Mountains. It was more updated than the typical cabin -- insulated floors, energy-saving windows and a new septic system. She did not have the home inspected by an accredited home inspector. However, when she discovered the roof leaked, she began to mount a case against the appraiser. Should real estate appraisers really be held accountable if their report does not disclose a leaky roof? An important case on the issue -- Schaaf v. Highfield -- centers on the sale of a home in Bremerton, Wash., that had a leaky roof. John Schaaf, the buyer, alleged that Paul Olson, an appraiser hired by the United States Department of Veterans Affairs, conducted a negligent appraisal of the home that did not reveal the leaky roof to Schaaf. The trial court held that a VA appraiser owes no duty to a prospective purchaser like Schaaf. The appeals court, however, held that a real estate appraiser owes a "duty of care" to third parties like Schaaf. Olson, though, was not held liable in this case because Schaaf did not rely on Olson's appraisal when he bought the house. In addition, Schaaf said that he already knew that the home needed a new roof before he bought it. According to court papers, Schaaf stated that he "offered the lower price because the house was 16 years old and thought the house would need a new roof." Just what does this mean to appraisers? Are they expected to be experts in the field of home repairs? Would not a leaky roof be more in line with the responsibilities of a home inspector? "I believe we are expected to be accountable in areas of valuation," said Bill King, an independent appraiser. "But what levels of expertise are we expected to have in other areas?" A typical appraisal on a single-family home costs about $400-$750, more for huge homes with specific amenities like timber, a swimming pool, view or waterfront. An appraisal is an estimate, or opinion, of value the market would bring if the property were offered for sale. The appraisal usually includes comparable sales from other homes in the immediate area. Appraisals are often confused with a comparative market analysis, or CMA. Real estate agents use CMAs to help home sellers determine a realistic asking price. Experienced agents often come very close to an appraisal price with their CMAs, but an appraiser's report is much more detailed -- and is the only valuation report a bank will consider when deciding whether or not to lend the money. Times have not been easy for appraisers. Fluctuating interest rates and flat appreciation have meant fewer jobs for "outside fee" appraisers not linked to a lender's in-house staff. And, with more disgruntled homeowners blaming appraisers for lower valuations, some conventional appraisers have looked elsewhere for income. Attorneys who have studied and cited the Schaaf case state that while the court ruled that duty was owed to the third party, the appraiser was let off the hook because Schaaf did not see the report until more than a year later. It also brings up the issue of detrimental reliance -- you can't rely on something to your detriment when you already know about it. One of the main issues in Schaaf v. Highfield was the possible exception of liability for an appraiser hired by the VA. Should there be a loophole when the government was involved? And, was duty owed only to the VA or to the veteran/buyer? According to the court, "when a prospective house purchaser applies to the Veterans Administration for a loan guaranty and the Veterans Administration hires an appraiser to appraise the house solely because of the prospective house purchaser's application, the appraiser owes a duty of care to the prospective house purchaser. Federal statutes and regulations do not preempt the appraiser's common-law duties owed to the purchaser." But will any appraiser ever be an expert in leaky roofs? To get even more valuable advice from Tom, visit his <a href="http://www.inman.com/kelly/" target=blank>Second Home Center</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor" target-blank>letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Tom Kelly</div></div></div>

Seniors, leave apartment painting for the pros

Link - Wed, 14 May 08 00:00:00 -0700 - Email The Author

Description:Tips on packing belongings, hiring painters, choosing paint Bill and Kevin Burnett <a href='http://www.inman.com' target='_blank'>Inman News</a> Q: What is the cheapest, quickest way to paint a full studio apartment? I am a senior with limited physical and financial resources. My problem is common to many urbanites: In San Francisco, landlords are not obliged to repaint apartments, no matter how long the tenant has lived there. So they don't. Many of us have grown out of our places, but because of rent control and high rents elsewhere, moving is not a viable option. Here are some of the things I need to know: 1. Do I ask painters to include in their estimate the packing and unpacking of the hundreds of books, art materials, office items, etc. -- or do I hire a crew to do that? If so, how do I find one? 2. I will need dozens of boxes. Can these be rented? Is there a recycled boxes source? I may be able to store everything in the house hallway. If not, what are those large soft-walled storage crates that I see outside people's homes? Is that service available without relocation? Is it expensive? 3. The painting must happen over the weekend, as that is when I have somewhere local to stay. Do painting contractors charge more to work over a weekend? 4. Is there a quick-drying paint that doesn't smell? A: The quickest, cheapest way to paint a small apartment is to do it all yourself. By acting as your own packer and painter you can control the time it takes to pack, prep and paint. The cost will be a few gallons of paint, some rudimentary tools (a paintbrush and a roller) and perhaps some packing boxes if you can't find enough of them at the local grocery store. But because you are a senior with financial and physical limitations, we'll try to give you some suggestions that can keep the costs down and make the job go smoothly. We'll assume that you are hiring painters to do the painting. The actual paint job should take just one day. The challenge for you will be in dealing with your books, art and other stuff. We'll try to answer your specific questions in the order in which you've posed them. 1. Don't ask the painters to pack and unpack boxes. Painters paint. That's all. To save money boxing up your belongings is something you should do yourself. If you find you can store the boxes in the hallway, we suggest you enlist some strong young backs to hoist the boxes. Your church or the local senior center may be able to suggest a source of this labor. If you insist on hiring the packing out, we suggest you contact a local moving company to perform the service. They can provide the boxes and, if you wish, store your property during the painting and return it when the job is done. 2. Boxes are available at moving companies -- even self-serve outfits like Ryder and U-Haul have boxes to buy. For some freebies, try a grocery store or a liquor store. We're not familiar with the soft-sided storage of which you speak. For portable storage containers try PODS (Portable on Demand Storage, www.pods.com). If you decide to use a portable storage container, check out the local regulations if you plan to leave it on the street. 3. Painting contractors will work weekends. As for price, get three estimates from licensed painting contractors. Make sure to let each know from the beginning the scope of the work and that you want it done on a weekend. 4. Most water-based paints are quick-drying. While there will be some odor, the smell will dissipate over time and once fully cured there will be no odor at all. Low-VOC and no-VOC (volatile organic compound) paints generally are low-odor products. For a discussion of low- and no-VOC paints and a list of manufacturers go to <a href="http://www.eartheasy.com/live_nontoxic_paints.htm" target="_blank">www.eartheasy.com/live_nontoxic_paints.htm</a>. We hear your lament about having to repaint a place you're living in. The easiest interior paint job is one where there is nothing in the house. You might take solace that in our experience moving is much worse than painting.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Bill and Kevin Burnett</div></div></div>

Homeowners react to falling real estate values

Link - Wed, 14 May 08 00:00:00 -0700 - Email The Author

Description:Many struggling after losing access to HELOCs Ilyce Glink <a href='http://www.inman.com' target='_blank'>Inman News</a> I'll admit to it: When home prices were soaring in my neighborhood, it made me feel really smart. Like so many millions of other homeowners, we concluded that we chose the right house in the right neighborhood at the right time. And as the years went by, and all of us on the block could count our home appreciation month by month, all this paper equity made us feel financially secure, as in "Now we know how we're going to pay our college tuition bills down the road." But as they say, easy come, easy go. Home prices in our neck of the woods have been falling just as they've been falling around the country. The Case-Shiller Home Price Index released in April showed home prices in the top 10 metropolitan areas declined more than 13 percent since last year. Home prices declined in the top 20 markets, but if you were a single-family homeowner living in Las Vegas, Phoenix or Miami, you really got swatted: Single-family home prices in those cities declined by one-fifth. Worse, many economists don't believe we've seen a bottom on housing prices. Some estimate home prices could drop a total of 25 percent from their recent highs. We've lived in our house for nearly 15 years, so if the price comes down even 20 to 25 percent, there's still an excellent chunk of appreciation to fund the college dreams of our pre-teens. And, we've been working hard to pay down our mortgage balance, adding to our equity. I still feel like we made a good choice. But if you bought your home in the last two to three years, all of your financial hopes and dreams, not to mention a good dose of self-esteem, may have evaporated overnight. And, if you bought your house hoping to make a fast $50,000, you may find now that your home is worth $50,000 to $100,000 less than you paid for it. It may even be worth less than your mortgage balance. This is fine as long as you don't have to sell and you can afford your mortgage payment and plan to live in your home for some time to come. If that news wasn't bad enough, I've been hearing from readers around the country who are in shock that their home equity lines of credit have been shut off. Apparently many readers missed the fine print on their loan documents that said the lender has the right to shut down the line of credit if their homes fell in value. (And for those of you who are able to sell short -- that is sell your home for less than what you owe the lender -- and you don't have the lender forgive whatever part of the mortgage balance you can't pay, you may find that the lender may come after you for its loss or the private mortgage insurer that paid the lender its loss may come knocking at your new rental-house door to recoup that money.) This is what a stuck housing market looks like. Nobody feels that smart anymore. The question is: What's going to get help? At its most recent Open Market Committee meeting, the Federal Reserve Bank lowered the short-term interest rates that banks charge each other for overnight loans another 25 basis points, to 2 percent. The collective groan you heard was from anyone living on a fixed income, who knows that the paltry sum they're earning on their savings accounts and CDs isn't enough to keep up with inflation, let alone the fast-rising cost of basic necessities. But longer-term mortgage interest rates haven't quite fallen along with CD rates. And while you can get a 30-year loan for around 6 percent if you have excellent credit, which is a terrific mortgage interest rate if you look at it from a historical perspective, it isn't low enough to compensate for the other mitigating factors. The dramatic drop in home equity has spooked home sellers. Foreclosure rates have skyrocketed, hitting new records. Banks are still taking weeks and weeks and weeks to parse offers from prospective buyers. Buyers are getting fed up and are moving on to make other low-ball offers. Interest-rate locks are expiring, but if you have a jumbo loan (over $417,000), in some cases you're looking at a rate above 7 percent, even if you have good credit (and more like 9 percent if you have mediocre credit). Fighting through all this to get a deal done is like wading through Jell-O. Just ask any real estate agent who hasn't torn his or her hair out yet. If the real estate news wasn't bad enough, consumers have been spooked by rising prices on the basic necessities of life. The cost of gas is roughly the same as the cost of a gallon of milk. (If you want to buy a gallon of organic milk, it'll cost nearly double.) Stories in the media about how consumers are selling family heirlooms on craigslist and eBay to put peanut butter and jelly on the table are laid out next to stories about how low consumer confidence has fallen. Yuck. The good news is that eventually, we'll move through the recession. We'll get through the presidential election (traditionally a drag on any real estate market), and people will start buying homes again. Starting up a real estate market is a lot harder than getting the stock market rolling. But once it gets rolling, everyone is going to feel a whole lot better. One final thought: If your lender has shut off your home equity line of credit (HELOC), you can request (and pay for) an appraisal to prove to the bank you have enough equity to support the HELOC. Or, if values in your area haven't gone down or you still have equity in your home, you can find another lender and get a different HELOC. To get even more valuable advice from Ilyce, visit her <a href="http://www.inman.com/glink/" target="blank">Personal Finance and Real Estate Center</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Ilyce R. Glink</div></div></div>

Best way to divvy up house after failed relationship

Link - Tue, 13 May 08 00:00:00 -0700 - Email The Author

Description:Before quitclaiming share, make sure compensation is fair Ilyce Glink <a href='http://www.inman.com' target='_blank'>Inman News</a> Q: My domestic partner of 11 1/2 years and I have split up. We purchased a house in 1999. While I am on the deed, I am not on the mortgage but have been contributing towards the monthly payments the entire time we've owned the property. She wants me to sign a quitclaim so that she can refinance the mortgage in order to get a more affordable payment for herself. Am I entitled to anything? Will she have to buy my half of the ownership? Thank you for your assistance. A: I'm assuming that you and your domestic partner didn't take the basic, but savvy, step of preparing a business partnership agreement that outlined your financial responsibilities and ownership interests in your real estate property. While I'm sure you thought your relationship would last forever (who doesn't think that?), the reality is about 50 percent of marriages end in divorce and it's likely that domestic partnerships are at least as susceptible to break-ups as traditional marriages. If you had a partnership agreement, it would have outlined what each of you brought to the purchase of the property, who contributed what, what percentage of the property each of you owned, and what would happen if you broke up or dissolved your partnership down the line. When nonmarried partners purchase property, I strongly suggest that they invest a few hundred dollars in a partnership agreement that covers all of these issues. From what you've told me, it sounds as though you're in a pretty good position. You're listed on the deed, but you're not responsible for the mortgage. I would suggest that if your partner wants you off the deed, you and she should have to agree on some sort of financial sum that represents your share of the equity in the property. If you own the property equally, you can ask a real estate agent to give you an estimate of what the property would sell for in the current market. You can even hire an independent appraiser (cost: around $250 to $350) to appraise the property. Then, subtract the mortgage from the value of the property and include those costs that you would have had to have paid if you and your partner had sold the home. The costs of the sale might include real estate brokerage commissions, transfer taxes and other fees that a seller ordinarily pays to sell a home. What's left is a number that you can either split in half (or nearly in half, depending on whether you are factoring in the other costs of sale), or you can subtract the cash that each of you put down on the property and then divide the equity that remains. This may not be an easy conversation for you and your ex-partner to have, but it's a necessary one. You should also discuss how the transfer of ownership will take place. I suggest that it happen at the refinancing table. You can find a mortgage lender who will work with you and arrange to have your share of the equity paid to you at the closing, which is where you will sign away your ownership interests in the property. While you likely didn't work with a real estate attorney when you purchased the house (that's the person who would've drawn up the partnership agreement), you should consult with one now to make sure that this process goes smoothly and you wind up with everything you're owed. Q: I have a neighbor who burns freshly cut and wet grass constantly. The spot she burns in is directly across the street from my house, it's on the very back corner of her property very far from her house. The smoke is horrible and the smell is disgusting. It has caused me to have two asthma attacks just this week. I can't let the kids out to play. We either have to leave the area or stay inside with all the windows closed. The fire lasts for at least a week. It smolders and then a wind will come along and it will start kicking up smoke again. The smell lasts the entire week. We have tried to talk to her, but it didn't do any good. She has at least two acres of yard and she cuts her grass almost daily and bags and burns every bit of it. Her burning starts in the early spring and continues through fall. We live in a neighborhood in the country so there are no city laws that apply to us. The county law states there will be no open burning: "No person shall cause, suffer, allow, or permit open burning of refuse composed of animal, fruit, or vegetable matter, garbage, offal, or any other nauseous matter of organic or inorganic matter at any time except within a furnace or incinerator, and then not in a manner which permits the escape or discharge of noxious odors." And yet, my neighbor said that the county health department said she could burn as much landscape waste as she wants. Is there anything we can do to stop this? Thank you very much. A: Why are you taking her version of what the county health department says as the gospel? You already know what the law says, and if what you've quoted is accurate, it seems that she should not be burning grass clippings. Instead of fuming silently, a better idea would be to pay a visit to your county's health and building departments. Have a conversation in person about what your neighbor is burning and ask them whether it is against the law. You can provide photos or even a video for them to see. While your neighborhood may be in an unincorporated part of the country, your neighbor should still be subject to county ordinances. Getting her to follow them may be tougher. You can push the county to enforce its rules and perhaps they will fine your neighbor, but she still may not stop. At that point, you should sit down with a real estate attorney who can advise you as to your legal options, if there are any. In addition to the local ordinance, there may be other laws that your attorney may be aware of that could be used to challenge your neighbor's burning of her yard waste by your home. Finally, even if you are right and your neighbor is wrong, you may just have to consider selling and moving if the burning of her yard waste is making you physically ill. The most important consideration should be your good health. To get even more valuable advice from Ilyce, visit her <a href="http://www.inman.com/glink/" target="blank">Personal Finance and Real Estate Center</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Ilyce R. Glink</div></div></div>

Unpermitted upgrades put seller in pickle

Link - Tue, 13 May 08 00:00:00 -0700 - Email The Author

Description:Should seller get 'as-built' permit or simply sell 'as-is'? Barry Stone <a href='http://www.inman.com' target='_blank'>Inman News</a> Dear Barry, In past articles you've mentioned "as-built permits" for additions and alterations that were done without building permits. I have a property that was totally renovated -- new electrical, plumbing, heating, and roof -- all done without permits. I'm going to list the property for sale and want to know if an as-built permit is a good idea before I sell. Could you explain how this works? --Lou Dear Lou, When you sell a home with nonpermitted alterations, you have two choices: You can sell it "as is," but with full disclosure of nonpermitted work, or you can get an as-built permit and, hopefully, make everything legal. But before you apply for an as-built permit, you should be aware of the pros and cons. Most building departments offer as-built permits as a way to bring maverick additions and alterations into legal conformity. On its face, the concept is quite simple: You submit a set of plans to the building official with an application for a building permit. With a normal building permit, you obtain permission to perform work. With an as-built permit, you seek approval for work that was already completed, to be sure that it complies with the building code. If the proposed plans conform with municipal standards, they are accepted, and a building inspection is scheduled. If the scope of work is not acceptable, the permit is denied, and the building official may order restoration of the building to its original state. Examples of unacceptable changes would be additions that are too close to property lines, a garage conversion where enclosed parking is required, or a second living unit where single-family occupancy is the limit. If the plans are approved, the next hurdle is the building inspection. In the best of cases, the building inspector performs a visual, walk-through inspection of the project area. If no building violations are found, the work is officially approved, and the completed work is given the same status as construction that was permitted in advance. In most cases, some code violations are cited, and a correction notice is given to the property owner. When faulty conditions are corrected, the property is reinspected, and final approval is given. But "cakewalk" approval of this kind is not always the case. If the building inspector finds significant defects that warrant further evaluation, or is overly committed to hardcore scrutiny or just happens to be having a bad-hair-day, you could incur demands that would make your head and pocketbook spin. For example, the inspector might order partial or total removal of drywall and other finish materials so that wiring, plumbing and framing components can be inspected. Excavation of foundations or of buried utility lines might be ordered so that code compliance can be verified. If concealed deficiencies are found, the inspector could demand numerous upgrades and improvements or demolition of all completed work. To prepare for this process, you should hire a qualified home inspector to perform a preliminary inspection. This will alert you to defects likely to be cited by the municipal inspector. With that information, you can make an educated choice between an as-built permit or disclosure of defects and of nonpermitted work. To write to Barry Stone, please visit him on the Web at <a href="http://www.housedetective.com/" target="_blank">www.housedetective.com</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Barry Stone</div></div></div>

Homeowners avoid tax on $1 million capital gain

Link - Mon, 12 May 08 00:00:00 -0700 - Email The Author

Description:Without records of improvements, IRS audit could bring trouble Benny Kass <a href='http://www.inman.com' target='_blank'>Inman News</a> DEAR BENNY: Friends of mine recently sold their home they owned for 22 years for $1.5 million; they paid about $500,000. They told me that they did not have to pay any capital gains tax, because their tax advisor claimed that they must have spent at least $1 million on improvements over the 20 years they owned it, although they did not have any records. He told them that it was within IRS guidelines, and their tax return was accepted without any problems. Do you have any knowledge of those IRS guidelines? It is important for me because the existence of such guidelines will determine if I should sell my home or not. --Russ DEAR RUSS: Hopefully, your friend did not get audited by the IRS. Although there may be an IRS ruling, I know of none. A good source of information can be found in <a href="http://www.irs.gov/pub/irs-pdf/p523.pdf" target="_blank">IRS Publication 523</a>, entitled "Selling Your Home," which is available from the IRS Web site. Basis is basically what you paid for your house. Adjusted basis adds any improvements that you made over the years. The best definition of an improvement is that which adds to the value of your home and prolongs its life. Publication 523 provides a number of examples: "adding a recreation room or another bathroom in your unfinished basement, putting up a new fence, putting in new plumbing or wiring. …" However, repainting your house inside or out, fixing your gutters or floors, or repairing broken windows are considered "repairs" and will not increase basis. The IRS provides a caveat: Adjusted basis does not include the cost of improvements that are replaced and are no longer part of the home. For example, 15 years ago you installed wall-to-wall carpeting. Later you replaced that carpeting. While the cost of the new carpets is an "improvement," you cannot include the cost of the old carpeting. If you have pictures of your house before and after you made improvements, you may be able to convince an IRS agent to allow some of the estimated cost as an improvement. But as far as I am concerned, if you do not have sufficient documentation, you will have an uphill fight should you be audited. DEAR BENNY: I plan to purchase a home at a foreclosure sale. I think I can get it cheaper that way than buying it from the current owner. But I want to rent it to the current, soon-to-be former, owner. He's a bullheaded dunderhead, but he's family and I want to help him out. Once he gets back on his feet I might sell it back to him. However, I'm told that it is illegal to foreclose on a home and then rent it to the former owner. --Gene DEAR GENE: There are a large number of predators throughout the United States that prey on homeowners who are in financial trouble. Some of these characters outright lie: They tell the homeowners that they are going to lend them the money they need to stop a foreclosure and all they have to do is sign a promissory note and a deed of trust. But the unwitting homeowner does not realize that he or she is actually signing over a deed to the house. There have been many lawsuits against these individuals that have resulted in the deed being thrown out and the house restored to the original owner. There are other people who will buy homes from financially distressed homeowners, and let them rent the house back for a fixed term. Typically, the sale price is the amount of the current mortgage, with a little extra thrown in. The arrangement gives the homeowners the ability to buy back the house when their financial situation gets better. But often the repurchase price is steep -- and way above the real market value. Many states have adopted legislation prohibiting (or at least restricting) this "buy-back" provision. You would have to talk with an attorney in your area to get an opinion on whether your plan will work. Since you will be buying the house at a foreclosure sale, I do not think that any such laws will impact on you. But you should confirm this with your attorney. I have a say that you are either a saint or a "dunderhead" also. You want to rent the house back to the family that is about to lose the house. If you are legally permitted to do this, make sure that you have a strong lease, that you understand and comply with the landlord-tenant laws in your state, and that you satisfy yourself that your prospective tenant will be able to make the monthly payments. DEAR BENNY: I read your column with interest (as I do every week) regarding wills, etc. You mention that "everyone over the age of majority should have at least four legal documents: a last will and testament, a durable power of attorney, a power of attorney for health, and a living will (also known as an advanced healthcare directive)." I would appreciate your defining three of the four documents (I am familiar with last will and testament). I thought an advanced directive is the same as a power of attorney for health. And does a durable power of attorney refer to financial matters? This is a very interesting subject for me as I thought we had all the proper documents and now I'm not so sure. --Patricia DEAR PATRICIA: A rose by any other name is still a rose. You can use a durable power of attorney for health purposes, so long as it contains language giving the holder of the power the authority to make health decisions on your behalf. But I prefer to have separate documents. Often, you may want one person to have the power for general and financial matters, but someone else to handle the health issues. For example, if you have grown up children, you might want to give your spouse the power to sign checks, or sell your stocks or your house, but you would want your children to handle your health concerns. Advanced healthcare directives are legal documents that give instructions on what healthcare a person desires to have when he or she is unable to make decisions. An advance directive may include both the appointment of an agent (or proxy) to make medical decisions, as well as specific instructions on what type of care and treatment the individual wishes to have. Although all of these issues can be rolled into one document, I generally recommend that you have two separate documents: one to name a person to make decision on your behalf regarding your health (the durable health power of attorney), and one spelling out what medical care -- if any -- you should be given if your doctors believe that you are about to die. Do you want your life to be sustained at all costs? Do you want to be resuscitated if your heart stops beating? In effect, do you want that "plug" to be pulled? Every state has different forms for these documents, and it is advisable to use the appropriate form. You would not want a doctor (or the attorney for a hospital) to challenge your document claiming technicalities. So, while you may incorporate the living will and a durable power of attorney into one advance directive, I still believe that it is better to prepare separate documents. DEAR BENNY: I had a listing agreement with a Realtor for several multifamily properties last year. In November, I asked for and received a written release on all listings. The properties are in Wisconsin. Because I was going to be in Florida for the winter, I did not want to deal with it. And besides, not much happens with sales in northern Wisconsin in the winter anyway. Now I have been contacted by an interested buyer that looked at one of the properties during the listing period. How long after I have received a written release from the listing am I obligated to the Realtor for a commission if I sell to someone who originally looked at the property while they had it listed? I've been told one year and also six months both by different real estate agents. --D.E. DEAR D.E.: First, I would have to review the release that your agent signed. This may resolve the issue. When a person signs a general release, that means each party completely releases each other; unless there is some exception contained in the release agreement, neither party has any further claims. I have done a quick survey, and it appears that some states limit the so-called "protection period." In fact, in Wisconsin, I understand it can run for one full year after the listing period has ended. The real estate agent can also try to argue that she was the procuring cause and might want to file a lawsuit against you for the commission. However, I believe that the release should resolve the matter in your favor. This is not an easy issue. As we all know, when there are two lawyers, there may be as many as three different opinions. You should consult a local attorney in Wisconsin who can give you a more specific answer after reviewing the release document. 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 <a href="mailto:benny@inman.com">benny@inman.com</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor" target-blank>letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Benny L. Kass</div></div></div>

Buying to flip not smart in today's market

Link - Mon, 12 May 08 00:00:00 -0700 - Email The Author

Description:If home doesn't meet long-term needs, don't buy it Dian Hymer <a href='http://www.inman.com' target='_blank'>Inman News</a> There are deals to be made in the current real estate market. Home buyers in many areas finally have the upper hand. Ironically, buyers tend to pull back when the market is soft and buy when the market is high. Savvy investors attempt to buy when the market it low and sell when it's high. But, it's impossible to time the market, so there is always an element of risk involved. Here are some guidelines to keep in mind if you're considering buying a home in the current market. Short-term investing paid off for many investors a few years ago. In most cases, this strategy should be avoided today. Although the home-sale market is localized, generally the current housing market is soft and is expected to take a year or more to recover. You don't want to be caught having to sell in a year or two when the value of your house might be less than or equal to what you paid for it. After taking into account the costs of sale, you could find yourself selling at a loss. With this in mind, don't buy unless you're economic future is secure, and you're sure you won't be relocating during the next five years. Also, don't base your decision solely on price. You might be able to buy a small two-bedroom, one-bath home for a low price in this market. But, if this won't suit your long-term housing needs, don't buy it. Not too long ago when the market was racing upwards, many first-time buyers bought small starter homes. They stayed in these homes for two or three years and then sold for a profit. This helped fund the purchase of a larger long-term home. This strategy could get you into trouble today. You might be better off waiting to buy until you can afford a home that will provide a long-lasting solution to your housing needs. Avoid houses that could be hard to resell. These are usually houses that lack broad-based buyer appeal, like houses that are too small or that are located next to a freeway. If you do buy one of these houses, make sure you get it for a good price. Keep in mind that unless you sell in a hot market, you could have difficulty selling in the future. HOUSE HUNTING TIP: Some home buyers are so anxious to move that they will settle for less than they need. Or, they buy a home that doesn't quite work with a plan to remodel it to correct its deficiencies. This home-buying scheme is not for everyone. For example, some Oakland, Calif., homeowners purchased several years ago and subsequently completed costly renovations. They sold recently for more than they paid, but not for enough more to cover the renovation costs. The finance markets have been in turmoil. Many mortgage companies have had to shut their doors due to fallout from the subprime lending crisis. Some of these companies left buyers in the lurch when they failed to fund loans just before closing. It might be wise to submit applications to two lenders so that you have a fallback, if necessary. Don't skimp on inspections. Property condition has a big affect on property value. If you buy a property that has deferred maintenance, make sure you buy it for a good price. Plan to take care of correcting defects, many of which will worsen over time. THE CLOSING: Financial planning for a home purchase should include factoring in the cost of curing deferred maintenance, as well as the cost of ongoing maintenance. 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.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor" target-blank>letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Dian Hymer</div></div></div>

Borrowers, insurers would save with new mortgage insurance

Link - Mon, 12 May 08 00:00:00 -0700 - Email The Author

Description:Part 2: Fixing the housing finance system Jack Guttentag <a href='http://www.inman.com' target='_blank'>Inman News</a> (This is Part 2 of a five-part series. Read Part 1, "<a href="http://www.inman.com/buyers-sellers/columnists/jackguttentag/lenders-wise-beef-default-risk-reserves" target="_blank">Lenders wise to beef up default-risk reserves</a>.") The first article in this series pointed to a serious weakness in the way the mortgage system deals with default risk. Interest-rate risk premiums collected from borrowers that are not needed to meet current losses are paid out as income to investors and not reserved to meet future losses. Because major default episodes occur infrequently, perhaps every 12 to 15 years, the system is never adequately prepared for one when it happens. It certainly was not prepared for the one we are now in. The remedy for this systemic vulnerability is to reserve a much larger portion of the risk-based dollars paid by borrowers. This article explains how to do that. Investors in mortgages face two kinds of risk from borrowers who default. Collateral risk is the risk that the investor who forecloses on a loan and sells the property will fail to recover the unpaid balance of the loan plus the foreclosure costs. On loans with small down payments on which the collateral risk is the highest, private mortgage insurance is available to protect investors. Investors also face cash-flow risk. While they ultimately may be made whole from their collateral and mortgage insurance, until that happens a loan in default is a nonperforming asset, which is not generating any income and is not saleable except at substantial loss. There is no insurance now available against cash-flow risk on individual mortgages. On conventional loans (those not insured by FHA or VA), investors pass the cost of both risks to borrowers. The major charge is an interest-rate risk premium -- the greater the perceived risk, the larger the premium. On low-down-payment loans, lenders can also require borrowers to purchase collateral-risk insurance from private mortgage insurers (PMIs). PMIs place roughly half of all the premiums they collect in reserve accounts. Rate risk premiums, on the other hand, are not reserved to any significant extent. The vulnerability of the system could be reduced by extending the reserving principle to cover both collateral risk and cash-flow risk. The best way to do this is to have private mortgage insurance policies cover both types of risk, with the borrower paying a single mortgage insurance premium. The insurers would reserve a major part of the premiums, as they do now on policies that cover only collateral risk. We call this new type of insurance "mortgage payment insurance," or MPI, recognizing that it covers both collateral risk and cash-flow risk. Traditional mortgage insurance, or TMI, covers only collateral risk. Under MPI, the insurer would guarantee timely receipt of the payments so that the loan remains in good standing when the borrower defaults. This is the cash-flow insurance part of the policy. If the default is not corrected, the payments continue until the foreclosure process is completed, at which point the investor is reimbursed under the collateral-risk insurance part of the policy. The insurance premiums covering both types of risk would vary from loan to loan, but since the insurer assumes the default risk there would be no interest-rate risk premiums. All borrowers would pay the prime interest rate on the type of mortgage they select. The incremental cost of MPI above the cost of TMI at worst is very small. That's because one way or another, the insurer ultimately gets back all of the payments it advances. If the loan returns to good standing, the insurer will be reimbursed for the advances it made. If the loan defaults, the advances will reduce -- dollar-for-dollar -- the bill the insurer has to pay after foreclosure. And here is the kicker: Since MPI removes the risk premium from the interest rate, the interest rate will be lower, and this reduces cost to the insurer. On loans that default, a lower rate means more rapid amortization and therefore a lower balance, and it also means smaller accruals of unpaid interest that the insurer must pay when a loan is foreclosed. In many cases, the interest-rate reduction will cause MPI to cost the insurer less than TMI. This is a mind-boggling insight, which I can write without blushing because it is not mine. The insight is Igor Roitburg's, although I have verified it. I have been working with Roitburg to develop MPI since he approached me with the idea last year. In the following weeks I will explain how MPI can protect the system against future default crises, reduce costs to borrowers, AND help get us out of the current mess. Roitburg has a patent pending for MPI in which I have an interest. The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at <a href="http://www.mtgprofessor.com/" target="_blank">www.mtgprofessor.com</a>.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Jack Guttentag</div></div></div>

Debate over biofuels, food supply intensifies

Link - Fri, 09 May 08 00:00:00 -0700 - Email The Author

Description:Proposal to end petroleum dependency not without consequences Arrol Gellner <a href='http://www.inman.com' target='_blank'>Inman News</a> We Americans have happily given our cars the run of the country, paving over a good 40 percent of our cities so they can roam unfettered, and generously ceded a big chunk of our hard-earned homes to keep them warm and dry. But apparently that's not enough. Now some interests are suggesting that, in order to keep our four-wheeled friends tanked up at all costs, we share our food supply with them as well. Imagine creating fuel from plants instead of having to drill for it! We can guzzle all the biofuels we can grow! No more oil wars! No more Third World countries trying to push us around! Alas, as appealing as all this may sound, it's a pipe dream. Among the many pitfalls of the biofuels concept: Economics: Farmers across the globe, whether corporate or independent, will switch to growing plants for biofuel the instant it becomes more profitable than growing food crops. The current price of gasoline will give you a good idea how many seconds this decision might take. Result: Besides ceding even more of our environment to automobiles, we'll also be competing directly with them for food. Logistics: To replace even a small fraction of current fossil fuel consumption, vast portions of arable land would have to be dedicated to growing biofuels crops. It's been calculated that satisfying 10 percent of the European Union's total fuel demand with biofuels would require an agricultural area the size of Spain. Science: U.S. and E.U. leaders alike are jumping on the biofuels bandwagon as a panacea for petroleum woes. Case in point: A 2003 E.U. directive requires that 5.75 percent petrol and diesel must come from renewable sources by 2010 -- a quota the E.U. plans to increase to 10 percent by 2020. Yet the European Environment Agency's Scientific Committee -- the E.U.'s own advisory panel on biofuels -- has concluded that this move will not curb the production of greenhouse gases, and in fact may actually increase them. "I see absolutely no reason to use a lot of energy, money and large swaths of farmland (to produce biofuels)," concluded professor Helmut Haberl, a member of the E.U. panel. "The E.U. should scrap the 10 percent mixture rules." In the United States, a recent study led by Timothy Searchinger, an agricultural expert at Princeton University, concluded: "By using a worldwide agricultural model to estimate emissions from land-use change, we found that corn-based ethanol, instead of producing a 20 percent savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years. Biofuels from switchgrass, if grown on U.S. corn lands, increase emissions by 50 percent." While the scientific news is bad enough, the worst thing about the political push for biofuels is that it only mires us deeper in a broken system, pandering to America's energy addiction and perpetuating a culture and an economy in thrall to the internal-combustion engine. We'd all like a world with adequate energy, a clean environment and fewer conflicts. If biofuels can't help deliver it, what can? In the short run, at least, that answer truly IS easy: Conservation. American technology, not to speak of American resolve, could easily reduce petroleum consumption by 10 percent given the moral leadership to do so. The fault, dear Brutus, is not in our fuels, but in ourselves.  *** What's your opinion? Leave your comments below or send a <a href="http://www.inman.com/opinion/letter-to-editor">letter to the editor</a>. To contact the writer, click the byline at the top of the story. <div class="field field-type-text field-field-copyright"><div class="field-items"><div class="field-item">Copyright 2008 Arrol Gellner</div></div></div>