If you or someone you know is facing possible foreclosure, you should know what to expect.
By Jean Folger of Investopedia
Many people have either gone through foreclosure, a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership of the property, or know someone who has.
RealtyTrac released its U.S. Foreclosure Market Report on April 15 for the first quarter of 2010. The report calculates foreclosure filings, including default notices, scheduled auctions and bank repossessions, and showed that 932,234 properties were involved in the first quarter. That was a 7% increase from the last quarter of 2009 and a 16% increase from the first quarter of 2009. An astonishing one in every 138 U.S. housing units received a foreclosure filing during the quarter. If you or a loved one are facing foreclosure, make sure you understand the process. While it varies from state to state, there are normally six phases of a foreclosure.
Phase 1: Payment default
A payment default occurs when a borrower has missed at least one mortgage payment. The lender will send a missed-payment notice indicating that it has not yet received that month's payment. Typically, mortgage payments are due on the first day of each month, and many lenders offer a grace period until the 15th. After that, the lender may charge a late-payment fee and send the missed payment notice.
After two payments are missed, the lender may send a “demand letter.” This is more serious than a missed-payment notice; however, at this point the lender is probably still willing to work with the borrower to make arrangements for catching up on payments. The borrower would normally have to remit the late payments within 30 days of receiving the letter.
Phase 2: Notice of default (NOD)
A notice of default is sent after 90 days of missed payments. In some states, the notice is placed prominently on the home. At this point, the loan will be handed over to the lender's foreclosure department in the same county where the property is located. The borrower is informed that the notice will be recorded. The lender will typically give the borrower another 90 days to settle the payments and reinstate the loan. This is referred to as the reinstatement period.
Phase 3: Notice of trustee's sale
If the loan has not been brought up-to-date within the 90 days after the notice of default, a notice of trustee's sale will be recorded in the county where the property is located. The lender must also publish a notice in the local newspaper for three weeks indicating that the property will be available at public auction. All owners' names will be printed in the notice and in the newspaper, along with a legal description of the property, the property address and when and where the sale will take place.
Phase 4: Trustee's sale
The property is placed for public auction and will be awarded to the highest bidder who meets all of the necessary requirements. The lender, or firm representing the lender, will calculate an opening bid based on the value of the outstanding loan, any liens and unpaid taxes, and any costs associated with the sale. Once the highest bidder has been confirmed and the trustee's sale is completed, a “trustee's deed upon sale” will be provided to the winning bidder. The property is then owned by the purchaser, who is entitled to immediate possession.
Phase 5: Real-estate owned (REO)
If the property is not sold during the public auction, the lender will become the owner and will attempt to sell the property on its own, through a broker or with the assistance of an REO asset manager. These properties are often referred to as "bank-owned." The lender may remove some of the liens and other expenses in an attempt to make the property more attractive.
Phase 6: Eviction
The borrower can often stay in the home until it has been sold either through a public auction or later as an REO property. At this point, an eviction notice is sent demanding that any people vacate the premises immediately. Several days may be provided to allow the occupants sufficient time to remove any personal belongings, and then typically the local sheriff will visit the property and remove the people and any remaining belongings. Belongings may be placed in storage and retrieved later for a fee.
The bottom line
Throughout the foreclosure process, many lenders will attempt to make arrangements for the borrower to get caught up on the loan and avoid a foreclosure. The obvious problem is that when a borrower cannot meet one payment, it becomes increasingly difficult to catch up on multiple payments. If there is a chance that you can catch up on payments -- for instance, you just started a new job after a period of unemployment -- it is worth speaking with your lender. If a foreclosure is unavoidable, knowing what to expect throughout the process can help prepare you.
Thursday, July 22, 2010
Tuesday, July 20, 2010
::8 most overrated home projects::
If you're considering remodeling your home, it may be best to skip these upgrades.
By Melinda Fulmer of MSN Real Estate
In these uncertain times, remodels are more about wringing day-to-day enjoyment out of your house than simply boosting its resale value. But not every project delivers on its promise of luxury and enjoyment.
Some delightful-sounding home improvements can be problematic or overly expensive or simply wind up collecting dust while you're still paying the tab. And some are destined to become white elephants, in the same kitschy category as that 1970s wet bar, sauna or intercom system.
MSN Real Estate consulted with contractors, designers and other home-improvement gurus — as well as homeowners themselves — to come up with a somewhat subjective "honey-do" list that's better left undone.
1. Whirlpool bath
This upgrade, which had become synonymous with luxury in years past, is now on the most endangered list, contractors say.
"We're taking out these bathtubs and making (walk-in) showers out of them," says Fred Spaulding of Quality Home Improvements in Kingwood, Texas.
Indeed, while they became a standard feature in many upscale homes, a hefty percentage of people who have these big whirlpool tubs report never having the time or inclination to soak in them, in part because of the noise and amount of water required to fill them and keep them warm.
"In almost four years, I have never used it," says "sisb" on a home and garden forum.
2. Room additions
These days, the name of the home-improvement game is conversion, or using existing space in a new way, says Don Van Cura, a Chicago-area remodeling contractor who sits on the board of the National Association of the Remodeling Industry.
"The biggest thing I've seen a change in is less room additions," Van Cura says. "Before, it had to be bigger and more, more, more. Now we are seeing more people taking advantage of attic or bedroom space."
Dining rooms are becoming home offices. Basements are becoming family rooms, and there are a lot more unpermitted (and some legitimate) attic-to-bedroom conversions, contractors say.
Forking over an average of $82,756 to build a new family room from the ground up — including foundation, framing, drywall and electric — is more expensive, architects and designers say, than converting your basement. And the addition recoups only 65% of its value at resale, according to Remodeling Magazine's 2009-10 Cost vs. Value Report. That basement remodel, on the other hand, costs just $62,067 on average and recoups 75% of its value.
3. 'Versailles' kitchens
In contrast with Europe, Americans — with their comparatively shorter history — just love anything that looks old and ornate.
If you look at European design books or websites, you'll find page after page of simple, streamlined modern looks. Here, our McMansions boast elaborate Tuscan villa-style kitchens with ornate cabinetry, hardware and tile.
"People will go into hock finding themselves surrounded by $150,000 of polished granite and fancy French or English cabinetry," says TV home-improvement veteran Bob Vila, who coaches people through remodeling projects on BobVila.com.
They'll wind up saying, 'I'm still paying on that and what the hell pleasure am I getting out of it?' Going overboard with any aspect of home remodeling can be a mistake."
Indeed, upscale kitchen remodels carried an average price tag of $111,794 last year, according to Remodeling Magazine, but recouped just $70,641, or 63%, of their value at resale, a decline from the 2008-2009 survey.
4. Marble counters (or other porous surfaces)
Marble is a luxurious material that has been long-favored in kitchen and bath remodels. But it is losing its luster.
Sure, it has a lovely, natural look and a rich history in castles and palaces, but it requires more pampering and attention than a spoiled princess, experts say. Marble can scratch more easily than other surfaces, get burned by hot pans and stain easily, just like limestone and other porous materials. That, coupled with a price between $50 and $100 per square foot, should persuade you to leave it to the museum.
Indeed, while much attention has been focused on the drawbacks to granite countertops, contractors say it and other nonporous surfaces such as man-made quartz counters are better long-term picks than marble, limestone or even heavy poured concrete, a trendy surface that can crack as the cabinets underneath shift over time.
"It's very dependent on well-built cabinets below it," Van Cura says.
5. Deck off the master bedroom
Now here's a project that seems really luxurious, promising views and fresh air along with your morning coffee. Of course, the coffee maker is downstairs or on the other side of the house, so for most people this winds up being one of the most underutilized living spaces, says Stewart Davis, design director of CG&S Design-Build in Austin, Texas.
"90% of the folks we talk to never go out there," Davis says.
Yet it's not an inexpensive project, costing at least $10,000 and requiring regular waterproofing and other maintenance.
6. Elaborate home theaters
Just as McMansions are falling out of favor, so are rooms that serve just one purpose.
With so many nice home-theater packages containing surround-sound speakers, amplifiers, bass modules, media centers and other controls and costing $3,500 or less, you can turn your flat screen in any family room into a home theater, instead of shelling out $20,000 or more for the whole shebang, including cinema seating, tacky red carpeting, projector, Blu-ray player and big screen.
And there's no guarantee that the next buyer will want the "Metropolitan Opera meets bordello" look of many theater rooms.
Another plus to updating your family room's acoustics instead: If you work with what you have, you're not bringing in a lot of new synthetic material, Vila says, and therefore don't have to deal with all of the outgassing, or release of fumes, from these materials.
7. Hot tub
This bubbly oasis seems relaxing and luxurious and is certainly much cheaper to install than a swimming pool, but many homeowners find that its upkeep, heavy energy use and repairs become a burden when compared with the time they actually spend using it.
Moreover, it gobbles up backyard space that could be used for seating, an outdoor kitchen or garden, designers say. And like the movie "Hot Tub Time Machine," it almost transports your backyard décor back to the 1970s or '80s.
Some homeowners weighing in on these fiberglass tubs on gardening websites actually wound up using them as raised beds for gardening, rather than forking over the bucks to rip them out or get them working properly.
If you simply must have it, the better option might be to buy a portable unit. That way, you can take it with you or stash it out of sight when marketing your house.
8. Overly complicated home automation
It's hard to tell people to stay away from something that sounds smart and could save them on their home-energy costs. But it's easy to go too far with home automation, the centralized control of audio, video, lighting, heat and household appliances, experts say.
"You shouldn't aspire to that without knowing that maintenance for that kind of system might be costly," Vila says. "Obsolescence is a matter of fact."
Indeed, "montalvo," a homeowner on a home-remodeling forum who spent $100,000 on a system that controlled everything from audio and video to lighting, security and temperature in his 7,100-square-foot California home, said the convenience continued to cost him even after he built his home.
"It entails significant monitoring, maintaining, repair and replacement costs," he said in a recent post. "For the first two years, the system's installer was at our house several times a month, doing reprogramming, system upgrades, etc."
While some simple radio-frequency lighting systems can be installed for about $2,000 to $3,000, says Brian Scott, president of San Diego Automation, the wiring and equipment involved with more comprehensive systems can cost tens of thousands of dollars. And even software-based solutions are not without costs on the back end, as people feel the need to upgrade.
Scott's firm is now installing wireless systems for audio, video and lighting that are controlled via an Apple iPad. But just as many iPod users have traded up to an iPad, so, too, may many homeowners feel the need to upgrade to the next generation of controllers.
"It will evolve," Scott says. "But it's more about having all the features -- the latest and greatest."
The best advice for people without a big budget or the patience to learn the intricacies of a big system is that old acronym KISS: "Keep it simple, stupid."
By Melinda Fulmer of MSN Real Estate
In these uncertain times, remodels are more about wringing day-to-day enjoyment out of your house than simply boosting its resale value. But not every project delivers on its promise of luxury and enjoyment.
Some delightful-sounding home improvements can be problematic or overly expensive or simply wind up collecting dust while you're still paying the tab. And some are destined to become white elephants, in the same kitschy category as that 1970s wet bar, sauna or intercom system.
MSN Real Estate consulted with contractors, designers and other home-improvement gurus — as well as homeowners themselves — to come up with a somewhat subjective "honey-do" list that's better left undone.
1. Whirlpool bath
This upgrade, which had become synonymous with luxury in years past, is now on the most endangered list, contractors say.
"We're taking out these bathtubs and making (walk-in) showers out of them," says Fred Spaulding of Quality Home Improvements in Kingwood, Texas.
Indeed, while they became a standard feature in many upscale homes, a hefty percentage of people who have these big whirlpool tubs report never having the time or inclination to soak in them, in part because of the noise and amount of water required to fill them and keep them warm.
"In almost four years, I have never used it," says "sisb" on a home and garden forum.
2. Room additions
These days, the name of the home-improvement game is conversion, or using existing space in a new way, says Don Van Cura, a Chicago-area remodeling contractor who sits on the board of the National Association of the Remodeling Industry.
"The biggest thing I've seen a change in is less room additions," Van Cura says. "Before, it had to be bigger and more, more, more. Now we are seeing more people taking advantage of attic or bedroom space."
Dining rooms are becoming home offices. Basements are becoming family rooms, and there are a lot more unpermitted (and some legitimate) attic-to-bedroom conversions, contractors say.
Forking over an average of $82,756 to build a new family room from the ground up — including foundation, framing, drywall and electric — is more expensive, architects and designers say, than converting your basement. And the addition recoups only 65% of its value at resale, according to Remodeling Magazine's 2009-10 Cost vs. Value Report. That basement remodel, on the other hand, costs just $62,067 on average and recoups 75% of its value.
3. 'Versailles' kitchens
In contrast with Europe, Americans — with their comparatively shorter history — just love anything that looks old and ornate.
If you look at European design books or websites, you'll find page after page of simple, streamlined modern looks. Here, our McMansions boast elaborate Tuscan villa-style kitchens with ornate cabinetry, hardware and tile.
"People will go into hock finding themselves surrounded by $150,000 of polished granite and fancy French or English cabinetry," says TV home-improvement veteran Bob Vila, who coaches people through remodeling projects on BobVila.com.
They'll wind up saying, 'I'm still paying on that and what the hell pleasure am I getting out of it?' Going overboard with any aspect of home remodeling can be a mistake."
Indeed, upscale kitchen remodels carried an average price tag of $111,794 last year, according to Remodeling Magazine, but recouped just $70,641, or 63%, of their value at resale, a decline from the 2008-2009 survey.
4. Marble counters (or other porous surfaces)
Marble is a luxurious material that has been long-favored in kitchen and bath remodels. But it is losing its luster.
Sure, it has a lovely, natural look and a rich history in castles and palaces, but it requires more pampering and attention than a spoiled princess, experts say. Marble can scratch more easily than other surfaces, get burned by hot pans and stain easily, just like limestone and other porous materials. That, coupled with a price between $50 and $100 per square foot, should persuade you to leave it to the museum.
Indeed, while much attention has been focused on the drawbacks to granite countertops, contractors say it and other nonporous surfaces such as man-made quartz counters are better long-term picks than marble, limestone or even heavy poured concrete, a trendy surface that can crack as the cabinets underneath shift over time.
"It's very dependent on well-built cabinets below it," Van Cura says.
5. Deck off the master bedroom
Now here's a project that seems really luxurious, promising views and fresh air along with your morning coffee. Of course, the coffee maker is downstairs or on the other side of the house, so for most people this winds up being one of the most underutilized living spaces, says Stewart Davis, design director of CG&S Design-Build in Austin, Texas.
"90% of the folks we talk to never go out there," Davis says.
Yet it's not an inexpensive project, costing at least $10,000 and requiring regular waterproofing and other maintenance.
6. Elaborate home theaters
Just as McMansions are falling out of favor, so are rooms that serve just one purpose.
With so many nice home-theater packages containing surround-sound speakers, amplifiers, bass modules, media centers and other controls and costing $3,500 or less, you can turn your flat screen in any family room into a home theater, instead of shelling out $20,000 or more for the whole shebang, including cinema seating, tacky red carpeting, projector, Blu-ray player and big screen.
And there's no guarantee that the next buyer will want the "Metropolitan Opera meets bordello" look of many theater rooms.
Another plus to updating your family room's acoustics instead: If you work with what you have, you're not bringing in a lot of new synthetic material, Vila says, and therefore don't have to deal with all of the outgassing, or release of fumes, from these materials.
7. Hot tub
This bubbly oasis seems relaxing and luxurious and is certainly much cheaper to install than a swimming pool, but many homeowners find that its upkeep, heavy energy use and repairs become a burden when compared with the time they actually spend using it.
Moreover, it gobbles up backyard space that could be used for seating, an outdoor kitchen or garden, designers say. And like the movie "Hot Tub Time Machine," it almost transports your backyard décor back to the 1970s or '80s.
Some homeowners weighing in on these fiberglass tubs on gardening websites actually wound up using them as raised beds for gardening, rather than forking over the bucks to rip them out or get them working properly.
If you simply must have it, the better option might be to buy a portable unit. That way, you can take it with you or stash it out of sight when marketing your house.
8. Overly complicated home automation
It's hard to tell people to stay away from something that sounds smart and could save them on their home-energy costs. But it's easy to go too far with home automation, the centralized control of audio, video, lighting, heat and household appliances, experts say.
"You shouldn't aspire to that without knowing that maintenance for that kind of system might be costly," Vila says. "Obsolescence is a matter of fact."
Indeed, "montalvo," a homeowner on a home-remodeling forum who spent $100,000 on a system that controlled everything from audio and video to lighting, security and temperature in his 7,100-square-foot California home, said the convenience continued to cost him even after he built his home.
"It entails significant monitoring, maintaining, repair and replacement costs," he said in a recent post. "For the first two years, the system's installer was at our house several times a month, doing reprogramming, system upgrades, etc."
While some simple radio-frequency lighting systems can be installed for about $2,000 to $3,000, says Brian Scott, president of San Diego Automation, the wiring and equipment involved with more comprehensive systems can cost tens of thousands of dollars. And even software-based solutions are not without costs on the back end, as people feel the need to upgrade.
Scott's firm is now installing wireless systems for audio, video and lighting that are controlled via an Apple iPad. But just as many iPod users have traded up to an iPad, so, too, may many homeowners feel the need to upgrade to the next generation of controllers.
"It will evolve," Scott says. "But it's more about having all the features -- the latest and greatest."
The best advice for people without a big budget or the patience to learn the intricacies of a big system is that old acronym KISS: "Keep it simple, stupid."
Thursday, July 15, 2010
::Don't fall victim to a lying home seller::
Don't fall victim to a lying home seller
Be a smart homebuyer and don’t take sellers at their word. If they're holding something back, it could cost you.
By Amy Hoak of MarketWatch
Buyers beware: In a tough real-estate market, it's tempting for sellers to stretch the truth or lie by omission on their disclosures, and cover up minor — but material — problems with a home in order to close the deal. That makes it even more essential for buyers to do their due diligence before closing, including having a professional home inspection and even chatting up the neighbors to make sure they discover all essential facts about a place before buying it.
"When times are tough, people get tougher," said Mike Crowley, broker of Spokane Home Buyers in Spokane, Wash. "Verify that they're telling the truth."
Seller disclosures vary from state to state, but generally require documentation of material problems with the home, such as leaks in the roof, past or present flooding issues, pest problems, presence of structural issues, lead paint, mold problems, electrical problems and water or sewer issues.
"Each state has its own disclosure requirements, and municipalities within the state have specific requirements," said Edward A. Mermelstein, a real estate attorney with Edward A. Mermelstein & Associates in New York.
"Then there's a slew of disclosures that are not required by the state that an experienced broker or attorney would know about and ask about," he said. For example, in some areas, including Florida, there recently has been a high incidence of faulty drywall used in home construction, he said. If it's possible that defective materials were used in the home a buyer is considering, they should demand that be disclosed.
What are homes selling for in your neighborhood? Find out
Sellers are expected to fill out disclosure documents honestly, answering questions about the property to the best of their knowledge. They also aren't supposed to conceal any defects of the home, said Neil B. Garfinkel, a real-estate attorney with Abrams Garfinkel Margolis Bergson, in New York.
But as a buyer, don't take sellers at their word. If they're holding something back, it could cost you.
Burden of proof
Sure, if sellers do fib — and it can be proved that they knowingly weren't upfront about something — a wronged buyer could sue for damages.
"If a purchaser who has children is buying a home and the seller knows there has been lead (paint) discovered in the home, God forbid a child gets sick, and you're going to have a serious lawsuit on your hands," Mermelstein said.
The tricky part is coming up with proof the seller had knowledge of the problem and opted to lie. Proving this kind of fraud can be tough, said Benjamin D. Clark, president of the National Association of Exclusive Buyer Agents. And sometimes the legal costs aren't worth pursuing the case.
That's why you're better off catching discrepancies before closing, when a seller is still willing to negotiate in order to finalize the deal, he said.
Still, sometimes, a buyer can be successful in proving a defect was omitted from disclosures or covered up, and receive compensation to fix the problem after closing — without having to go to court, Crowley said.
As an example, he referenced a case in Colorado. At an open house the buyers attended — and at the walk-through before closing — candles and cookies scented the home. But when the buyers moved in, there was a strong smell of cat urine throughout the house. They called their attorney, a strongly worded letter was written, and the sellers provided money to replace padding and carpeting, Crowley said.
Crowley suspects the buyer could have easily proved a cover-up in court. "The people weren't willing to gamble. They did pay for it."
Michelle McLean also discovered an issue after purchasing a home in Vernal, Utah. It had a septic tank, but she found out only after closing she was required to hook it up to the city's sewer line. Clark said the fact could have been specified within Utah's standard seller disclosures.
McLean contacted her real-estate agent, and the seller ended up paying for the hook-up.
Catch before closing
You'll have a much easier time getting problems taken care of prior to the completion of the sale. Get a professional home inspection to reveal issues, but don't stop there.
The more information you can request, the better off you are, Garfinkel said. "It puts you in a better position to avoid those kinds of problems," he said.
Before closing, Clark and a client of his discovered there was a history of sewer problems at one particular home, which the seller didn't disclose. The seller was confronted about it, and he spent between $5,000 and $7,000 to get it repaired.
"We talked to the neighbors," Clark said, and one of them indicated that a tenant moved out of the home due to plumbing issues. "We hired a plumber because of that tip, to snake the sewer line with a camera. A lot of connections were broken, parts had cracked and fallen in," he said. Roots interfered with the line as well.
Talking with neighbors that surround the property will often help turn up any big problems with a home or uncover property boundary disputes, Clark said.
All of this isn't to say that most — or even many — sellers lie on their forms, or that the disclosures aren't useful to buyers.
"In my mind, the two benefits of those forms are that a buyer gets information from sellers, but also buyers are reminded of the things that might be on a property," said Ralph Holmen, the National Association of Realtors' legal counsel. "It's like a checklist of things to investigate."
Remember, too, that when you're buying an existing home it's important to have realistic expectations, Crowley said. Know what you're getting into, but understand that sellers might not know about a particular problem in the home. And there's nothing to say that things won't pop up right after you close.
"If you have unreasonable expectations, you will always find something to be disappointed with," Crowley said. "There's always going to be a surprise with a used home. My water heater went out the first week."
Be a smart homebuyer and don’t take sellers at their word. If they're holding something back, it could cost you.
By Amy Hoak of MarketWatch
Buyers beware: In a tough real-estate market, it's tempting for sellers to stretch the truth or lie by omission on their disclosures, and cover up minor — but material — problems with a home in order to close the deal. That makes it even more essential for buyers to do their due diligence before closing, including having a professional home inspection and even chatting up the neighbors to make sure they discover all essential facts about a place before buying it.
"When times are tough, people get tougher," said Mike Crowley, broker of Spokane Home Buyers in Spokane, Wash. "Verify that they're telling the truth."
Seller disclosures vary from state to state, but generally require documentation of material problems with the home, such as leaks in the roof, past or present flooding issues, pest problems, presence of structural issues, lead paint, mold problems, electrical problems and water or sewer issues.
"Each state has its own disclosure requirements, and municipalities within the state have specific requirements," said Edward A. Mermelstein, a real estate attorney with Edward A. Mermelstein & Associates in New York.
"Then there's a slew of disclosures that are not required by the state that an experienced broker or attorney would know about and ask about," he said. For example, in some areas, including Florida, there recently has been a high incidence of faulty drywall used in home construction, he said. If it's possible that defective materials were used in the home a buyer is considering, they should demand that be disclosed.
What are homes selling for in your neighborhood? Find out
Sellers are expected to fill out disclosure documents honestly, answering questions about the property to the best of their knowledge. They also aren't supposed to conceal any defects of the home, said Neil B. Garfinkel, a real-estate attorney with Abrams Garfinkel Margolis Bergson, in New York.
But as a buyer, don't take sellers at their word. If they're holding something back, it could cost you.
Burden of proof
Sure, if sellers do fib — and it can be proved that they knowingly weren't upfront about something — a wronged buyer could sue for damages.
"If a purchaser who has children is buying a home and the seller knows there has been lead (paint) discovered in the home, God forbid a child gets sick, and you're going to have a serious lawsuit on your hands," Mermelstein said.
The tricky part is coming up with proof the seller had knowledge of the problem and opted to lie. Proving this kind of fraud can be tough, said Benjamin D. Clark, president of the National Association of Exclusive Buyer Agents. And sometimes the legal costs aren't worth pursuing the case.
That's why you're better off catching discrepancies before closing, when a seller is still willing to negotiate in order to finalize the deal, he said.
Still, sometimes, a buyer can be successful in proving a defect was omitted from disclosures or covered up, and receive compensation to fix the problem after closing — without having to go to court, Crowley said.
As an example, he referenced a case in Colorado. At an open house the buyers attended — and at the walk-through before closing — candles and cookies scented the home. But when the buyers moved in, there was a strong smell of cat urine throughout the house. They called their attorney, a strongly worded letter was written, and the sellers provided money to replace padding and carpeting, Crowley said.
Crowley suspects the buyer could have easily proved a cover-up in court. "The people weren't willing to gamble. They did pay for it."
Michelle McLean also discovered an issue after purchasing a home in Vernal, Utah. It had a septic tank, but she found out only after closing she was required to hook it up to the city's sewer line. Clark said the fact could have been specified within Utah's standard seller disclosures.
McLean contacted her real-estate agent, and the seller ended up paying for the hook-up.
Catch before closing
You'll have a much easier time getting problems taken care of prior to the completion of the sale. Get a professional home inspection to reveal issues, but don't stop there.
The more information you can request, the better off you are, Garfinkel said. "It puts you in a better position to avoid those kinds of problems," he said.
Before closing, Clark and a client of his discovered there was a history of sewer problems at one particular home, which the seller didn't disclose. The seller was confronted about it, and he spent between $5,000 and $7,000 to get it repaired.
"We talked to the neighbors," Clark said, and one of them indicated that a tenant moved out of the home due to plumbing issues. "We hired a plumber because of that tip, to snake the sewer line with a camera. A lot of connections were broken, parts had cracked and fallen in," he said. Roots interfered with the line as well.
Talking with neighbors that surround the property will often help turn up any big problems with a home or uncover property boundary disputes, Clark said.
All of this isn't to say that most — or even many — sellers lie on their forms, or that the disclosures aren't useful to buyers.
"In my mind, the two benefits of those forms are that a buyer gets information from sellers, but also buyers are reminded of the things that might be on a property," said Ralph Holmen, the National Association of Realtors' legal counsel. "It's like a checklist of things to investigate."
Remember, too, that when you're buying an existing home it's important to have realistic expectations, Crowley said. Know what you're getting into, but understand that sellers might not know about a particular problem in the home. And there's nothing to say that things won't pop up right after you close.
"If you have unreasonable expectations, you will always find something to be disappointed with," Crowley said. "There's always going to be a surprise with a used home. My water heater went out the first week."
Tuesday, July 13, 2010
::7 sins of first-time renters::
::7 sins of first-time renters::
Ready to get your own place? Whether you're moving out of the dorms, taking a summer internship or starting a new job, you'll want to avoid these costly mistakes.
Ah, your first apartment. It may be smaller than a closet with a next-door neighbor who likes to blast Celine Dion into the wee hours of the morning, but hey, it's a space to call your own. Whether you're moving away from college or out of Mom and Dad's house, getting your first real place can be a liberating — and nerve-wracking — experience.
Trust us, there are worse situations you can find yourself in as a first-time renter than tight spaces and annoying neighbors. Moving into your own apartment may be one of the biggest financial steps you've taken thus far in your life. In this rite of passage, you're committing to stay put for a long time while shelling out a pretty penny on rent, utilities and furniture. So, naturally, you want to do it right. We detail seven sins that can threaten your financial soul — and your sanity — upon moving into your own space. Avoid these missteps for a smoother transition, whether you're a first-timer or a seasoned renter.
1. Underestimating the cost
The first item of business when looking for a place to live: How much can you afford to spend on housing? Use this handy calculator to help you tally your monthly expenses and see how much money you'll have left to spend on rent. Then, find out how much apartments cost in your desired neighborhood by browsing newspaper classified ads or online rental sites such as Move.com or Craigslist.org. This will help you determine if you can even afford to make the move, and whether you'll need a roommate (or two) to split the costs.
But rent isn't the only cost for which you have to budget. Don't forget to anticipate your "startup" expenses when you first move in. For example, you may need to pay an application fee for the apartment (say, $50), a security deposit (usually equal to one month's rent), your first month's rent, a deposit to turn on the electricity (maybe $75), a deposit to turn on the gas (another $75), fees to get your cable and telephone turned on, a deposit for any pets you may have, and maybe even a fee for a parking space. And let's not forget the cost of furnishing your new pad and stocking it with life's essentials (yes, you really do need soap). All in all, it can cost you upward of $4,000 in your first month at your new apartment, according to research firm Twentysomething Inc.
One note of caution: Don't rely on your credit cards to fund your move-in expenses. You don't want to start out your new life of independence by being chained to ruthless interest payments. Once you get into debt, it's hard to break away.
Once your startup expenses are covered, don't forget to account for other monthly expenses that come with your new space, including gas and electricity bills and garbage and water fees. And if you're moving from campus housing where your phone service, cable TV and Internet connection were either free or cut-rate, remember to factor real-world prices into your budget. Consider this, too, if you're moving into a place by yourself when you're used to splitting costs among roommates or living free under Mom and Dad's roof. Make it easy on yourself to keep track of your expenses by setting up a budget. (Get additional first-time budgeting tips on MSN Money.)
2. Not getting your priorities straight
Before you embark on an apartment hunt, write down a list separating your needs from your wants. Needs are those things without which you just can't live. For example, my husband and I own just one car, so for us, proximity to work or to public transportation is a need. Wants, however, are those things that would be nice to have, but you could live without for the right price. For example, you may want a gym or a first-floor unit, but they may not be deal breakers.
Sorting out your needs and wants will help keep you from making a choice you may regret later — say, snagging an apartment with a great city view but having to suffer a grueling commute to work. Remember, your first place isn't going to be perfect, so you need to know which things you can let slide beforehand. Besides, you can always move up to a better apartment when your lease is up. Learn more about what to consider when looking for a new apartment.
3. Not seeing the apartment before moving in
It's a good idea to take a look at the place you plan to call home before you arrive on moving day and discover your sofa won't fit through the front door. If possible, this means you should inspect the actual apartment you'll be moving into — not a model. Bring a measuring tape and try to visualize your furniture in the space. You should also take note of the number and location of phone and cable jacks and electrical outlets.
Don't be afraid to put the apartment through its paces. Turn on the faucets and flush the toilet to make sure the water is running properly (and that it isn't brown). If the power is on, turn on the lights, oven, air conditioner and other appliances to make sure they work. Tune in to the surroundings — is there a lot of traffic or neighbor noise, or any strange smells? Are the building's hallways, common areas and parking lots clean and well-lit? Are there enough washers and dryers in the laundry room? And don't forget to check out your cell phone's reception from inside the apartment.
You also should inspect the space for damage and request that serious problems be fixed before you move in your stuff. Then, on moving day, go through the apartment with a pen and paper — and a fine-toothed comb. Write down every defect, no matter how small, date and sign your list, make a copy of it and give one to your landlord. You don't want to be held liable for pre-existing damages.
4. Failing to read the lease
A lease is a legally binding contract between you and the landlord, spelling out each of your rights and the rules you must abide by while living in the space. This means it's written in that kind of legal-speak that causes your eyes to glaze over and your mind to go numb. But it's worth your while to f-o-c-u-s and read it all the way through or you may find yourself on the hook for different fees, penalties and restrictions after you've signed on the line. Don't worry about digesting it all on the spot. In fact, you should take it home to read through before you sign, advises consumer advocate Clark Howard. "If you don't understand something, put question marks next to the item and get an explanation," he says.
Every lease will include some basic information, such as the address of the apartment, the length of the lease (say, six months or one year), the amount of rent due, the amount of the security deposit, and the signatures of the landlord and all tenants. That's all pretty straightforward, but there are additional clauses that could have a big impact on your wallet and your lifestyle. Keep an eye out for penalties for late rent, policies for owning pets, what utilities the landlord pays and which ones you're responsible for, policies on painting or altering the apartment, protocol for what to do if something breaks or needs repair, penalties for moving before your lease term is up, policies on subletting and having roommates or even stipulations for having roommates of the opposite sex. I once even had a lease that specifically prohibited owning a piano or organ.
Also, make sure you know what happens to your lease agreement at the end of the term. Usually, your contract will become a month-to-month arrangement, but read the fine print ahead of time to be sure and to learn how much notice is required before moving out. Pick up a copy of "Every Tenant's Legal Guide" from Nolo Press to learn more about your rights and responsibilities as a renter.
5. Not asking about utilities — or forgetting to turn them on
On occasion, eating takeout by candlelight may be romantic. But doing it every night, storing your garbage on your balcony and taking cold showers every morning is just plain sad. So before you move in, make sure you ask your landlord specifically what utilities you're responsible for paying — and for turning on. Some apartment buildings, for example, will provide the garbage and water service as part of your rent but leave you to arrange your own gas and electric service. Others may require you to handle everything. And don't forget the extras, such as a phone line, Internet service and cable TV.
Once you know what you need, find out whom to call. Your landlord should be able to provide you with the names and numbers of the local utility companies. Call them at least one week before you move in and arrange to have your service turned on the day before your arrival.
6. Going without renter's insurance
Unless you have enough money saved to replace everything you own in case of theft, fire or other disaster, you need renter's insurance. Sure, your landlord probably has insurance, but it only covers the building and the infrastructure — not the stuff you keep in your own unit, says Doug Culkin, executive vice president of the National Apartment Association. You may not think you own much of anything of value, but once you tally up the cost of all your clothes, furniture, computer, software, entertainment system, microwave and CD collection, renter's insurance can add up to a real bargain. Besides, some landlords may require renter's insurance before you move in.
Expect to pay $150 to $250 a year, or $12 to $21 a month. You may pay more or less depending on your neighborhood and level of coverage. You can get quotes from several companies online at InsWeb.com or NetQuote.com, but check with your auto insurer first to see if you can get a discount for having more than one policy with the company. (Read MSN Money's "The basics of renter's insurance.")
7. Forgetting basic items to make a home
If you've never lived on your own before, you're bound to be short a few essentials. For example, I didn't realize when I moved into my first place that a shower curtain wasn't included. I also thought I had planned ahead by packing a bunch of canned food to subsist on for a couple days before my roommate (with the car) moved in — only to realize she was bringing the can opener, too. Oh, and then there's the time I lived in an apartment for a month without a couch — cozying up for a night of watching my favorite TV show on a metal kitchen chair just wasn't the same. Hopefully, you've already thought of the big stuff, like seating, bedding, a dresser, etc. (Learn more about how to furnish your new place on a budget.)
But you'll need some smaller basics, too. In addition to the aforementioned shower curtain and can opener, don't forget to bring a waste basket (and liners), lamps, dinnerware, bookshelves, a full-length mirror, cleaning supplies, sponges, towels, bathroom rug, flashlight, vacuum, broom and dustpan. Plus, invest in a small toolkit with a hammer, pliers and screwdrivers so you can hang pictures and assemble your new furniture. For more help on what you'll need, print off these apartment checklists from About.com.
You might want to share the cost of outfitting your new place with your roommates. One person can buy the DVD player, for example, while another picks up a vacuum. This is better than splitting the cost of a single item because then there's no question about who owns it when one person moves out. Get more financial tips for living with roommates.
Ready to get your own place? Whether you're moving out of the dorms, taking a summer internship or starting a new job, you'll want to avoid these costly mistakes.
Ah, your first apartment. It may be smaller than a closet with a next-door neighbor who likes to blast Celine Dion into the wee hours of the morning, but hey, it's a space to call your own. Whether you're moving away from college or out of Mom and Dad's house, getting your first real place can be a liberating — and nerve-wracking — experience.
Trust us, there are worse situations you can find yourself in as a first-time renter than tight spaces and annoying neighbors. Moving into your own apartment may be one of the biggest financial steps you've taken thus far in your life. In this rite of passage, you're committing to stay put for a long time while shelling out a pretty penny on rent, utilities and furniture. So, naturally, you want to do it right. We detail seven sins that can threaten your financial soul — and your sanity — upon moving into your own space. Avoid these missteps for a smoother transition, whether you're a first-timer or a seasoned renter.
1. Underestimating the cost
The first item of business when looking for a place to live: How much can you afford to spend on housing? Use this handy calculator to help you tally your monthly expenses and see how much money you'll have left to spend on rent. Then, find out how much apartments cost in your desired neighborhood by browsing newspaper classified ads or online rental sites such as Move.com or Craigslist.org. This will help you determine if you can even afford to make the move, and whether you'll need a roommate (or two) to split the costs.
But rent isn't the only cost for which you have to budget. Don't forget to anticipate your "startup" expenses when you first move in. For example, you may need to pay an application fee for the apartment (say, $50), a security deposit (usually equal to one month's rent), your first month's rent, a deposit to turn on the electricity (maybe $75), a deposit to turn on the gas (another $75), fees to get your cable and telephone turned on, a deposit for any pets you may have, and maybe even a fee for a parking space. And let's not forget the cost of furnishing your new pad and stocking it with life's essentials (yes, you really do need soap). All in all, it can cost you upward of $4,000 in your first month at your new apartment, according to research firm Twentysomething Inc.
One note of caution: Don't rely on your credit cards to fund your move-in expenses. You don't want to start out your new life of independence by being chained to ruthless interest payments. Once you get into debt, it's hard to break away.
Once your startup expenses are covered, don't forget to account for other monthly expenses that come with your new space, including gas and electricity bills and garbage and water fees. And if you're moving from campus housing where your phone service, cable TV and Internet connection were either free or cut-rate, remember to factor real-world prices into your budget. Consider this, too, if you're moving into a place by yourself when you're used to splitting costs among roommates or living free under Mom and Dad's roof. Make it easy on yourself to keep track of your expenses by setting up a budget. (Get additional first-time budgeting tips on MSN Money.)
2. Not getting your priorities straight
Before you embark on an apartment hunt, write down a list separating your needs from your wants. Needs are those things without which you just can't live. For example, my husband and I own just one car, so for us, proximity to work or to public transportation is a need. Wants, however, are those things that would be nice to have, but you could live without for the right price. For example, you may want a gym or a first-floor unit, but they may not be deal breakers.
Sorting out your needs and wants will help keep you from making a choice you may regret later — say, snagging an apartment with a great city view but having to suffer a grueling commute to work. Remember, your first place isn't going to be perfect, so you need to know which things you can let slide beforehand. Besides, you can always move up to a better apartment when your lease is up. Learn more about what to consider when looking for a new apartment.
3. Not seeing the apartment before moving in
It's a good idea to take a look at the place you plan to call home before you arrive on moving day and discover your sofa won't fit through the front door. If possible, this means you should inspect the actual apartment you'll be moving into — not a model. Bring a measuring tape and try to visualize your furniture in the space. You should also take note of the number and location of phone and cable jacks and electrical outlets.
Don't be afraid to put the apartment through its paces. Turn on the faucets and flush the toilet to make sure the water is running properly (and that it isn't brown). If the power is on, turn on the lights, oven, air conditioner and other appliances to make sure they work. Tune in to the surroundings — is there a lot of traffic or neighbor noise, or any strange smells? Are the building's hallways, common areas and parking lots clean and well-lit? Are there enough washers and dryers in the laundry room? And don't forget to check out your cell phone's reception from inside the apartment.
You also should inspect the space for damage and request that serious problems be fixed before you move in your stuff. Then, on moving day, go through the apartment with a pen and paper — and a fine-toothed comb. Write down every defect, no matter how small, date and sign your list, make a copy of it and give one to your landlord. You don't want to be held liable for pre-existing damages.
4. Failing to read the lease
A lease is a legally binding contract between you and the landlord, spelling out each of your rights and the rules you must abide by while living in the space. This means it's written in that kind of legal-speak that causes your eyes to glaze over and your mind to go numb. But it's worth your while to f-o-c-u-s and read it all the way through or you may find yourself on the hook for different fees, penalties and restrictions after you've signed on the line. Don't worry about digesting it all on the spot. In fact, you should take it home to read through before you sign, advises consumer advocate Clark Howard. "If you don't understand something, put question marks next to the item and get an explanation," he says.
Every lease will include some basic information, such as the address of the apartment, the length of the lease (say, six months or one year), the amount of rent due, the amount of the security deposit, and the signatures of the landlord and all tenants. That's all pretty straightforward, but there are additional clauses that could have a big impact on your wallet and your lifestyle. Keep an eye out for penalties for late rent, policies for owning pets, what utilities the landlord pays and which ones you're responsible for, policies on painting or altering the apartment, protocol for what to do if something breaks or needs repair, penalties for moving before your lease term is up, policies on subletting and having roommates or even stipulations for having roommates of the opposite sex. I once even had a lease that specifically prohibited owning a piano or organ.
Also, make sure you know what happens to your lease agreement at the end of the term. Usually, your contract will become a month-to-month arrangement, but read the fine print ahead of time to be sure and to learn how much notice is required before moving out. Pick up a copy of "Every Tenant's Legal Guide" from Nolo Press to learn more about your rights and responsibilities as a renter.
5. Not asking about utilities — or forgetting to turn them on
On occasion, eating takeout by candlelight may be romantic. But doing it every night, storing your garbage on your balcony and taking cold showers every morning is just plain sad. So before you move in, make sure you ask your landlord specifically what utilities you're responsible for paying — and for turning on. Some apartment buildings, for example, will provide the garbage and water service as part of your rent but leave you to arrange your own gas and electric service. Others may require you to handle everything. And don't forget the extras, such as a phone line, Internet service and cable TV.
Once you know what you need, find out whom to call. Your landlord should be able to provide you with the names and numbers of the local utility companies. Call them at least one week before you move in and arrange to have your service turned on the day before your arrival.
6. Going without renter's insurance
Unless you have enough money saved to replace everything you own in case of theft, fire or other disaster, you need renter's insurance. Sure, your landlord probably has insurance, but it only covers the building and the infrastructure — not the stuff you keep in your own unit, says Doug Culkin, executive vice president of the National Apartment Association. You may not think you own much of anything of value, but once you tally up the cost of all your clothes, furniture, computer, software, entertainment system, microwave and CD collection, renter's insurance can add up to a real bargain. Besides, some landlords may require renter's insurance before you move in.
Expect to pay $150 to $250 a year, or $12 to $21 a month. You may pay more or less depending on your neighborhood and level of coverage. You can get quotes from several companies online at InsWeb.com or NetQuote.com, but check with your auto insurer first to see if you can get a discount for having more than one policy with the company. (Read MSN Money's "The basics of renter's insurance.")
7. Forgetting basic items to make a home
If you've never lived on your own before, you're bound to be short a few essentials. For example, I didn't realize when I moved into my first place that a shower curtain wasn't included. I also thought I had planned ahead by packing a bunch of canned food to subsist on for a couple days before my roommate (with the car) moved in — only to realize she was bringing the can opener, too. Oh, and then there's the time I lived in an apartment for a month without a couch — cozying up for a night of watching my favorite TV show on a metal kitchen chair just wasn't the same. Hopefully, you've already thought of the big stuff, like seating, bedding, a dresser, etc. (Learn more about how to furnish your new place on a budget.)
But you'll need some smaller basics, too. In addition to the aforementioned shower curtain and can opener, don't forget to bring a waste basket (and liners), lamps, dinnerware, bookshelves, a full-length mirror, cleaning supplies, sponges, towels, bathroom rug, flashlight, vacuum, broom and dustpan. Plus, invest in a small toolkit with a hammer, pliers and screwdrivers so you can hang pictures and assemble your new furniture. For more help on what you'll need, print off these apartment checklists from About.com.
You might want to share the cost of outfitting your new place with your roommates. One person can buy the DVD player, for example, while another picks up a vacuum. This is better than splitting the cost of a single item because then there's no question about who owns it when one person moves out. Get more financial tips for living with roommates.
Friday, July 9, 2010
Buy your next home from Uncle Sam
Buy your next home from Uncle Sam
As a result of rising foreclosures, some Americans will buy their next home from the U.S. government.
Rising foreclosuresAmericans who are brave enough to buy a home despite persistent predictions of a double dip in housing may want to contact the federal government, as the recession and financial crisis have turned Uncle Sam into one of the largest owners of real estate in the United States.
The housing bust has led to an unprecedented number of foreclosures in the U.S. In May, 322,920 foreclosure notices were filed against homeowners, and more than 3 million homes have been seized over the last five years from delinquent borrowers.
While most homebuyers may assume that banks are the only source of foreclosures, the U.S. government also owns many residential properties because of its role in buying and guaranteeing mortgages. Many of these properties are held because of the conservatorship established in 2008 over the government-sponsored enterprises popularly known as Freddie Mac and Fannie Mae.
Freddie Mac is furiously attempting to dispose of these homes, and has been fairly successful; the company's average holding period for real estate is less than one year. The company markets the homes through HomeSteps, where buyers can search by state and city.The Federal Home Loan Corp., or Freddie Mac, owned approximately 45,000 multifamily and single-family homes at the end of 2009. The company put a gross value on these properties of $5.13 billion. Freddie Mac obtained these properties by being the highest bidder at foreclosure auctions when the properties were used as collateral for loans owned by the company, or when owners just transferred the property to Freddie Mac without going through foreclosure.
Fannie Mae
The Federal National Mortgage Association, or Fannie Mae, is also a large owner of foreclosed property. The company owned more than 86,000 single-family homes at the end of 2009, with a value of $8.5 billion. These homes are concentrated in states that were ground zero of the housing bust, with 28% of its inventory in California, Nevada, Arizona and Florida.
The Federal National Mortgage Association, or Fannie Mae, is also a large owner of foreclosed property. The company owned more than 86,000 single-family homes at the end of 2009, with a value of $8.5 billion. These homes are concentrated in states that were ground zero of the housing bust, with 28% of its inventory in California, Nevada, Arizona and Florida.
Fannie Mae also markets these homes intensively, and sold 123,000 in 2009. The company's official website to sell homes is called HomePath, where buyers can look up inventory near their location.
Other agencies
Another source of homes owned by the government is the Department of Housing and Urban Development. HUD obtains its properties through foreclosure auctions on Federal Housing Administration-insured loans. HUD has a website at hud.gov/homes.
Another source of homes owned by the government is the Department of Housing and Urban Development. HUD obtains its properties through foreclosure auctions on Federal Housing Administration-insured loans. HUD has a website at hud.gov/homes.
Next up is the Federal Deposit Insurance Corp., which owns its inventory through its role in seizing failed banks. The FDIC owns single-family homes but also has a large number of other properties, including industrial and commercial properties and raw land.
The Veterans Affairs Department and the Agriculture Department also play roles in financing and guaranteeing home loans, so both own single-family home and other properties. Buyers can look for their dream home through these agencies as well.
Buyer beware
Buyers shopping for homes from the government should be aware of the disadvantages of the process. Many agencies offer properties "as is," with no warranties on their condition. There is also little flexibility on negotiating the terms of the contract if the government accepts your offer. Fannie Mae, for example, does not accept offers for houses that are contingent on a buyer selling a currently owned home.
Buyers shopping for homes from the government should be aware of the disadvantages of the process. Many agencies offer properties "as is," with no warranties on their condition. There is also little flexibility on negotiating the terms of the contract if the government accepts your offer. Fannie Mae, for example, does not accept offers for houses that are contingent on a buyer selling a currently owned home.
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