Home sellers beware::: Undisclosed info comes back to bite
Inman Real Estate News - Home sellers beware: Undisclosed info comes back to bite: "You're getting ready to sell your home. The market is a bit softer than it was a year ago. There's more competition from other sellers.
So, you plan to tidy the place up and you're thinking of down playing the defects. After all, who would buy your place if you revealed the trouble you had with the roof or the fact that your neighbor's son practices on his drums past most people's bedtimes?
Sellers beware! What you don't disclose to the buyer could come back to bite you."
Disclosure laws vary from state to state. Check with your real estate agent or attorney if you have any questions about your disclosure obligations. The trend nationally is toward requiring sellers to disclose more about defects that they're aware of, not less.
For the past few years, buyers have paid record high prices for homes. In some cases, they waived their rights to inspect the property. As the market softens, buyers are less likely to be forgiving of defects they discover after closing, especially if they're sure the seller concealed them.
Your aim is to sell for a nice price and bank the profit. Misleading the buyer about the condition of your property can have serious consequences. Don't risk diminishing your sale proceeds in a legal action. Thorough and careful disclosures not only protect the buyer, they also protect you.
Most home buyers appreciate knowing as much as possible about a property before they buy it. They can usually live with the fact that the place isn't perfect as long as they have a chance to investigate and digest this information upfront. Law suits can develop when material information is withheld, or when buyers are intentionally deceived.
It's a good idea to disclose what's wrong with your property, as well as past problems that you've repaired and areas that require routine maintenance to keep problems from occurring."
Best-case scenario for housing next year
Inman Real Estate News - Best-case scenario for housing next year: "As John and Jane Doe Home Buyer enter the year 2006, driving their Ford Focus down Main Street, they see a moderate number of townspeople buying lunch boxes and new work clothes, signifying modest job growth. As they pass a local bank, the automated ticker display registers interest rates at 6 percent. Best of all, flyers in the window of the local real estate brokerage show house prices reflecting modest appreciation.
At least, that's the best-case scenario for 2006 predicted by experts consulted by Inman News. Not only that, many of them said they believed this scenario was likely."
"A situation where the U.S. economy continues the modest job growth it has produced over the last year is the best-case scenario," said Mark Dotzour, chief economist at Texas A&M University's Real Estate Center.
"Modest job growth creates underlying demand for housing and very little threat in the way of inflation," the economist said. "That's what keeps interest rates at low levels like the ones we've enjoyed for the last five years. If we have moderate job growth resulting in low inflation and in turn a low mortgage interest rate environment, the U.S. will have another successful year."
The best thing that could happen in 2006? Continuation of low interest rates, according to Mike Sklarz, chief valuation officer for Fidelity National Financial. Also, a recovering economy, "which we seem to be in the midst of in a number of sectors," and a rebound in consumer confidence, Sklarz said.
"My guess is that prices will keep going up but at a slower rate," Sklarz said. "Some markets showed double-digit rates of appreciation this year. The more likely appreciation rate is in the single digits in 2006.""
Capital gains tax law for real estate
Inman Real Estate News - Inside capital gains tax law for real estate: "DEAR BOB: I am confused about your recent answer to a home seller who wants to add her mother to the title. You said the mother would be eligible for an Internal Revenue Code 121 principal residence sale tax exemption up to $250,000 after only 24 months of ownership and occupancy. How can she qualify with less than 60 months of ownership? ? Donald M.
DEAR DONALD: Internal Revenue Code 121 is very generous to principal residence sellers. After as little as 24 months of both ownership and occupancy, a home seller can qualify for up to $250,000 tax-free capital gains. That is the situation for the letter writer who plans to add her mother, who will live in the house for 24 months, to the home's title. Both daughter and mother then qualify for $250,000 individual exemptions.
However, a husband and wife can qualify for up to $500,000 tax-free principal residence sale profits if they file a joint tax return in the year of home sale. Only one spouse's name need be on the title, but both spouses must meet the occupancy test of 24 months within the 60 months before the sale.
IRC 121 does not require 60 months of home ownership if the seller meets the 24-month principal residence occupancy test. But there is one exception.
If the property was acquired as a rental residence in an Internal Revenue Code 1031 tax-deferred exchange, then it must be owned at least 60 months to qualify. However, owner-occupancy is only required for 24 of those months. For full details, please consult your tax adviser."
Be careful picking contractors for remodel work before selling
Be careful picking contractors for remodel work before selling: "It's a rare house that doesn't need help before it's put up for sale, even if the problems are only leaky faucets, a few gashes in the walls, or a couple of rooms that should be repainted.
'A few homeowners are always on top of every little problem that arises. But more than 95 percent of them don't have the time, money or energy to be that fastidious,' says Eric Tyson, co-author of 'House Selling for Dummies.'
Tyson says it's never too early for sellers to get serious about home repairs and cosmetic improvements. Yet as he notes, finding competent and reliable contractors can be a challenge.
He says home sellers should exercise caution when hiring contractors to do their presale work. Here are several tips on avoiding snags:
# Seek contractor referrals through your listing agent. Chances are that the agent you engage to list your home will maintain a lengthy roster of reliable contractors. Included should be painters, plumbers, electricians, carpenters, carpet installers and roofers.
Such lists can be a valuable resource for home sellers, says Robert Irwin, author of 'Tips & Traps When Negotiating Real Estate.' Contractors who work closely with real estate agents do so because agents represent a steady stream of repeat business."
Housing Affordability Hits 14-Year Low
RealEstateJournal | Housing Affordability Hits 14-Year Low: "Soaring house prices and higher mortgage rates have put homeownership out of reach for more people than at any time in more than a decade.
Housing affordability in October sank to its lowest levels since 1991, according to the National Association of Realtors' Affordability Index, a widely followed measure of the average household's ability to buy a home at current interest rates. In some areas, including New York City, Los Angeles, San Diego, San Francisco and Miami, housing affordability has dropped to levels not seen since the early to mid-1980s, according to mortgage giant Fannie Mae.
Affordability has long been a problem for low-income home buyers. But as home prices have marched steadily higher in recent years, many buyers with healthier incomes also are being squeezed. Declining affordability mainly affects whether first-time home buyers will enter the market, but in some markets people who already own a home are finding it tough to trade up.
There are signs that the growing costs of homeownership are also beginning to take a toll on the housing market. 'There's a systematic erosion of affordability,' says David Seiders, chief economist of the National Association of Home Builders. That decline is 'the main reason ... the market is starting to cool.' Mortgage applicats fell to an 11-month low last week, the Mortgage Bankers Association reported yesterday, as applications to purchase homes declined."
Fannie Mae::: Home sales to slow in 2006
Inman Real Estate News - Fannie Mae: Home sales to slow in 2006: "Home sales in the U.S. will drop as much as 10 percent in 2006, a decline caused by higher interest rates and housing market jitters, mortgage giant Fannie Mae said in a report Tuesday.
Economists at the government-sponsored enterprise said their best guess is that sales will fall 8.4 percent, to 7.62 million units. That would be the first annual decline since 2000, when national sales dipped slightly, said David Seiders, chief economist of the National Association of Home Builders.
Though the decline will mark the end of a five-year run that helped fuel consumer spending and economic growth, even Fannie's predicted level for 2006 would be the third-strongest year on record for home sales, the economists noted."
Homeowners can profit from real estate remodeling
Inman Real Estate News - Homeowners can profit from real estate remodeling: "Bathroom remodeling projects can pay off for homeowners, according to a report by the National Association of Realtors.
Many homeowners who complete midrange bathroom remodels can expect to make money ? the cost on a national average for this project is $10,499 and the return is $10,727, or 102.2 percent, compared with 87.5 percent in 2002, according to the report, which the trade group published in Realtor Magazine. The report was also published by Hanley Wood LLC in Remodeling Magazine.
On average, major midrange kitchen remodels cost $43,862 and return $39,920, or 91 percent of the costs to remodel, up from 66 percent in 2002, according to the 'Cost vs. Value' report.
Nationally, homeowners who add an attic bedroom spend an average of $39,188, and on resale, they recoup 93.5 percent of the cost. Master suites remodeling projects, which cost $137,891 on average, returns about $110,512 on resale, or approximately 80.1 percent of the remodeling expense, according to an association announcement today."
Should I rush to sell in a changing real estate market?
Inman Real Estate News - Should I rush to sell in a changing real estate market?: "At this time of year, homeowners who are interested in selling figure the home-selling season is winding down and they put their moving plans on hold until spring. But this year, a changing market has given birth to a new mentality.
Many prospective sellers have accelerated their plans and are listing their homes for sale now rather than waiting until next spring.
The rationale runs something like this: Interest rates are rising and this is bound to change the market. If you wait until the spring of 2006 to sell, you could find yourself in a slower market. It might take longer to sell. And, you might not sell for as much as you could today. So, why not put your home on the market now?
HOME SELLER TIP: Resist the temptation to put your home on the market in its "as-is" condition hoping that you'll get lucky and find someone will overlook the clutter and deferred maintenance. Of course, you could ask a bargain price to attract attention. But even if you do discount, you'll be selling to a limited market of buyers who want to buy a fixer-upper from a seller who's desperate to sell.
THE CLOSING: Even though it takes time, you'll have a better chance of a profitable sale if you properly prepare your home for sale before you put it on the market."
Energy law could bring Homeowners Tax Relief
Energy law could bring taxpayers relief-Homeowners can reap benefits of new measure that offers incentives for energy-efficient homes.: "If the thought of rising energy bills has you rushing out to buy insulation, hold off until after Jan. 1, when the recently enacted Energy Tax Incentives Act of 2005 kicks in.
The act includes incentives to make your home more energy efficient and give solar a try. They come in the form of tax credits, reducing federal tax bills dollar for dollar. Unlike many federal programs, they are not phased out for higher incomes.
The most generous credits are available for those who add solar water, heat or power to their homes. It wasn't very long ago that installing virtually any kind of solar device was a labor of love without much economic value. But with the federal incentives -- combined in many places with utility and state incentives -- solar is looking like a much better deal.
The new energy law encourages taxpayers to claim a tax credit each year in 2006 and 2007 for these expenses: 30 percent of the cost of solar water-heating equipment, up to a $2,000 maximum tax credit for each tax year; 30 percent of the cost of solar equipment that generates photovoltaic electricity, up to a $2,000 maximum tax credit for each tax year, and 30 percent of the cost of a fuel-cell power plant, up to a $500 maximum tax credit for installation in a taxpayer's principal residence."
More tips about Foreclosure
Realty Times - Real Estate News and Advice: "Homeowners facing default on their mortgage too often take the head-in-the-sand approach and leave their No. 1 asset exposed to foreclosure.
Homeownership requires proactive financial management even when the payments are on time, but even after the mortgage servicer calls delinquent homeowners about late payments, too many of them too often turn to denial and procrastination -- death knells for home ownership.
Contacting the lender at the first sign of trouble is a rule of thumb for delinquent mortgage holders. Unfortunately, in more than half of all foreclosure cases, the borrower never contacts the lender and loses the home without a whimper."
Historically Strong Home Sales Expected in 2006
article from RIS Media:RISMEDIA, Dec. 13 - The housing market for 2005 is headed for a fifth consecutive annual record, and sales activity in 2006 is expected to be the second best year in history, according to the National Association of Realtors®.
David Lereah, NAR’s chief economist, said that market conditions are still favorable for housing. "The slowdown amounts to a tapping of the brakes on a hot market," said Lereah. "Home sales are coming down from the mountain peak, but they will level-out at a high plateau - a plateau that is higher than previous peaks in the housing cycle. This transition to a more normal and balanced market is a good thing."
The 30-year fixed-rate mortgage should trend up modestly and reach 6.6% during the second half of 2006.
Existing-home sales, expected to rise 4.7% to 7.10 million this year, are likely to decline 3.7% in 2006 to 6.84 million. New-home sales, projected to increase 7.0% to 1.29 million this year, are forecast to drop 4.8% to 1.23 million in 2006 - also the second best on record.
A New Service...
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Study: Delinquent mortgage holders don't know their options
Inman Real Estate News - Study: Delinquent mortgage holders don't know their options: "Nearly two-thirds of borrowers behind on their payments are unaware of the workout options available to them, according to a study by Freddie Mac, the company said today.
The mortgage giant conducted the study to find out why late-paying borrowers risk losing their homes rather than contacting their mortgage servicers. The borrowers never contact their lender in more than half of all foreclosure cases, according to Freddie Mac.
The survey, conducted by Freddie Mac and Roper Public Affairs and Media, was undertaken to help find out why, Freddie Mac said.
The Freddie Mac/Roper survey found that 75 percent of the delinquent borrowers surveyed recall being contacted by their servicers, the government-sponsored enterprise said. Mortgage servicers collect monthly housing payments on behalf of Freddie Mac or other investors.
Of the group surveyed for the study, 28 percent said there was no reason to talk to their servicers or that their servicers could not help them, 17 percent said they could take care of their payment problems without any help, and 7 percent said they didn't call because they didn't have enough money to make the payment, Freddie Mac said."
New Online Local Mapping Options...
Microsoft finally unveiled their answer to Google local maps (
local.google.com). With their new service powered by Virtual Earth called 'Windows Live'. It is strikingly similar to Google Local in every way. A draggable interactive map, and options to find local businesses and services with cool popups and business information that point you directly to the proper address on the map. You can find it at:
http://local.live.com
Inman Real Estate News - Top real estate stories of 2005
Inman Real Estate News - Top real estate stories of 2005: "Real estate fraud high on the radar. There was no shortage of reports of real estate loan fraud in 2005, with the FBI saying this type of fraud is 'pervasive and growing' in the United States, and the Mortgage Asset Research Institute ? which tracks mortgage fraud ? saying a growing number of incidents are being reported. Georgia, which is often noted as being among the states with the highest incidences of fraud, took action this year, passing the Georgia Residential Mortgage Fraud Act, the first law that defines the criminal offense of residential mortgage fraud."
Comparing the Cross to a Swastika???
Realty Times - Agent News and Advice: "Realtors who use religious symbols in their marketing may have the best of intentions, but little insight into why Fair Housing laws frown on mixing business with their beliefs.
One broker writes Realty Times with the following question:
This topic has become relevant because one of my agents, who happens to be an evangelical Christian, wants to advertise using a Christian fish symbol in the ad. I have told the agent that HUD does not allow the use of religious symbols in real estate advertising and that the use of such a symbol could be considered (and appears to me to be obviously so) prima facie evidence for illegal preference for people of similar religious beliefs. It would also seem likely that any general disclaimer (such as a statement or perhaps the Equal Housing symbol) would not overcome this preference. The agent, of course, has pointed out several local agents who use this and other religious symbols in their advertising. Do you think I am correct in what I am telling my agents?
Tom
Dear Tom:
You are correct. It doesn't appear inviting to use a personal religious belief to get customers. Religious symbols like the fish are for recognition purposes and likely to only attract other Christians and repel non-Christians. There's something discriminatory about that, and that's exactly why it's against Fair Housing laws:
According to the Guidance Regarding Advertisements Under 804(c) of the Fair Housing Act, Section 804(c) of the Act "prohibits the making, printing and publishing of advertisements which state a preference, limitation or discrimination on the basis of race, color, religion, sex, handicap, familial status, or national origin."
Being against the law should be enough to end the matter with your agent, but there are other reasons why mixing business and religion in advertising is a bad idea:
How about trying a little experiment? Next morning meeting, show an illustration of a swastika to your agents and ask them what they think the symbol means. Most would say it is the emblem of Nazi Germany, in which millions of Jews, homosexuals, political prisoners, dissidents, and yes, Christians, were eliminated in a horrific mass genocide and world war.
Ask the agents how they would feel if a business card were handed to them with a swastika on it. Of course, they'd be offended. But what if the bearer of the card had something completely different in mind when using the symbol? What if the swastika meant something different to the bearer besides hate and murder? What if it represented ... good fortune?
It wouldn't matter because the bearer would have already lost the sale. She'll never get the chance to explain that the swastika is the oldest cross design in the world, and has been used for centuries by people as diverse as the ancient Greeks, the Chinese, and American Indians, among numerous others. Through the ages, it was the benevolent symbol of good luck, much like the four-leaf clover, which is the exact reason why it was adopted by the Nazis. Yet, it only took one ugly corruption of the meaning to completely change the swastika's impact on people over the entire world.
Selling real estate is about making homeownership available to anyone who wants it, not promoting religious beliefs that have the potential to make some segments feel uncomfortable or segregated."
The TRUTH about current rates
Realty Times - Real Estate News and Advice: "According to Freddie Mac, rates for 30-year financing hit 6.31 percent (with .5 points) last week. For ARMs, the 1-year LIBOR rate stood at 3.2710 while the 11th District Cost of Funds Index was at 2.972 for October. To get the full ARM rate you need to combine the index with a 'margin' of 2 or more percentage points.
The reality of these mortgage levels is that:
* Relative to rates seen during the past five decades, today's mortgages are cheap.
* Every time rates move up or down the pool of potential buyers is impacted.
* With rates rising it is logical to assume that sales will experience some fall-off if only because the pool of potential buyers is somewhat smaller because with higher rates fewer people qualify for given levels of financing. With fewer bidders and less demand, there is less pressure to increase prices.
* That there is less pressure pushing prices up does not mean prices will decline. It could simply mean that prices will go up but not as much as would otherwise be the case with lower rates.
* Slower price increases might well be good for everyone -- when home prices grow too quickly buyers are frozen out of the market because wages do not go up with equal speed.
* What happens locally and what happens nationally may "
A Great Tip about your appraiser
Realty Times - Real Estate News and Advice: "The Appraiser
Despite what others may say, this is the most important visitor you're going to have come by your house. Sometimes even the appraiser downplays his/her visit to the property. I've had some say, 'Oh, don't worry about cleaning up. I'm going to just be a few minutes.' Famous last words.
If you have to 'wow' the buyer to write a contract, then you better 'mesmerize' the appraiser. This is the person who is going to take a first stab and confirming that the seller and buyer have come up with a realistic price for the property.
With a contract price of $351,990 you want an appraisal of $351,990 or higher. If the appraisal is high, it has no bearing on the contract. If the price comes too far below, and the buyer doesn't have enough down payment funds to cover the difference, then the buyer and seller will have to renegotiate who is going to take the financial hit to make the loan work. Is the seller coming down in price, the buyer up in price or are they going to split the difference?"
Inman Real Estate News - Real estate construction spending climbs to $1.13 trillion
Inman Real Estate News - Real estate construction spending climbs to $1.13 trillion: "Real estate construction spending climbs to $1.13 trillion
Residential rate reaches $630 billion in October
Thursday, December 01, 2005
Inman News
Construction spending during October 2005 was estimated at a record seasonally annual rate of $1.13 trillion, about 0.7 percent above the revised September estimate and about 7.9 percent above the October 2004 estimate, the U.S. Census Bureau of the Department of Commerce announced today.
During the first 10 months of this year, construction spending amounted to $930.9 billion, about 8.8 percent above the $855.3 billion for the same period in 2004. The seasonally adjusted annual rate is a projection of a monthly total over a 12-month period, adjusted for seasonal fluctuations in construction activity.
Spending on private construction was at a seasonally adjusted annual rate of $877.8 billion, about 0.3 percent above the revised September estimate of $875 billion. Residential construction was at a seasonally adjusted annual rate of $630 billion in October, about 0.6 percent above the revised September estimate of $626.6 billion and 8.3 percent above the October 2004 rate.
Nonresidential construction was at a seasonally adjusted annual rate of $247.7 billion in October, about 0.3 percent below the revised September estimate of $248.4 billion.
In October, the estimated seasonally adjusted annual rate of public construction spending was $254 billion, about 1.9 percent above the revised September estimate of $249.1 billion. Educational construction was at a seasonally adjusted annual rate of $65.7 billion, about 2.8 percent above the revised September estimate of $63.9 billion. Highway construction was at a seasonally adjusted annual rate of $68.1 billion, about 0.2 percent below the revised September estimate of $68.3 billion, the agencies reported.
Month-to-month changes in seasonally adjusted statistics often show movements which may be irregular, according to the announcement, and it may take two months to establish an underlying trend for total construction and as long as eight months for specific categories of construction. The statistics are estimated from several sources and surveys and are subject to sampling variability as well as non-sampling error including bias and variance from response, non-reporting, and under-coverage.
Statistics for the current month are preliminary estimates subject to revision in following months as additional data become available, the agencies also noted.
