John Beckett's Real Estate Blog

Waiver for 90-day resales extended through 2012

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For the second year in a row, the Federal Housing Administration is extending a temporary waiver of its “anti-flipping” rule, meaning homebuyers relying on FHA-insured financing will continue to be able to buy homes that have changed hands in the last 90 days. The waiver is a boon for investors seeking to rehab and flip properties, because it expands the pool of eligible borrowers to include those relying on FHA-backed loans, popular with first-time homebuyers and others who lack the cash to make large down payments. In extending the waiver through 2012, FHA said all transactions must continue to be arms-length. In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender can document the justification for the increase in value, FHA said. FHA instituted the anti-flipping rule in 2003 to protect its mutual mortgage insurance program from losses on homes that were merely flipped, rather than rehabbed. Homes repossessed by Fannie Mae, Freddie Mac, and state- and federally chartered financial institutions were exempt from the rule. In February 2010, the Obama administration waived the waiting period for resales — including homes purchased and rehabbed by private investors — in the hopes of stabilizing home prices and revitalizing communities hit by foreclosures. It often takes less than 90 days to acquire, rehabilitate and sell properties, the Department of Housing and Urban Development said at the time. Some sellers of rehabbed properties had been reluctant to enter into contracts with FHA buyers because of the cost of holding a property for 90 days, HUD said. In extending the waiver through 2011, FHA said it insured 21,000 90-day property flip loans worth more than $3.6 billion in 2010 that would otherwise not have qualified for financing. That number has since grown to nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.

Read at: http://lowes.inman.com/newsletter/2011/12/30/news/169364

Where to find reliable contractors

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You’re not alone if your roof is leaking and you’re kicking yourself for not having called a roofer during the summer months. Most people have a limited concept of preventative maintenance. This can lead to big problems that end up being more expensive than if you had routine maintenance in place. Many buyers don’t understand that home maintenance goes with homeownership. When you rent, someone else usually pays for repairs. As a homeowner, you’re responsible for keeping your home in good condition. Unless you’re handy at home repairs, it can be costly to maintain a home properly. But there is a benefit at the end of the line. Buyers pay more for homes that are well-maintained and show a pride of ownership. It can be a hassle to properly maintain your home unless you organize and prioritize the projects that need to be done. You also need to set a schedule and stick to it. Most home maintenance can be done annually: roof maintenance (including gutters and downspouts); sealing exterior cracks; weatherproofing; a furnace and air conditioning inspection; and inspecting and cleaning the drainage system. Mark these events on your calendar so that they can be scheduled for about a month before you’d like to have the work done. If you wait until just before the rainy season to start your annual maintenance, you could have trouble finding good contractors to help you. Don’t wait until your roof is leaking to repair or replace it. There will be collateral damage to the interior of the house. Your homeowners insurance company might pay to repair the interior damage, less the amount of your deductible, but it won’t pay to replace the roof. Too many claims could be grounds for not renewing your policy. HOUSE HUNTING TIP: Assemble a crew of contractors and tradespeople who can help you with your home maintenance. It’s not always easy to find reliable people who do good work. You’ll end up frustrated and having to do more oversight if you work with people who don’t show up or do the job right. Ask your real estate agent or acquaintances who own homes in the area to recommend tradespeople to you. If the seller is happy with people who have worked on the property, ask for a list of names and contact information when you close the sale. Homeowners who haven’t the time or expertise to determine what needs to be done to keep their home in good shape you could ask the home inspector that inspected the house for them to do a reinspection periodically to point out areas that need attention. One of the keys to good home maintenance is to take care of critical items as soon as they become apparent. For instance, don’t postpone repairing a plumbing pipe leak. Have it repaired as soon as you notice it. Don’t assume that because your house is new that you won’t have any maintenance issues. If the gutters back up on any house, even a new house, water can leak into the house or down the inside of the walls. This, left unchecked, can lead to a major repair to the framing. If repaired right away, you may just need to seal and touch up the paint. Likewise, even though you just had the exterior painted, you still may have areas that will need touch up every year or so, especially if they receive intense sun exposure.

THE CLOSING: Don’t go for the cheapest contractor or building materials just to save money. If an inferior-quality job has to be redone sooner than anticipated, your savings will dwindle.

Read at: http://lowes.inman.com/newsletter/2011/12/27/news/168574

Q: I have a contract on a home to purchase, but I have changed my mind. Can I back out prior to the closing without any penalty or repercussions?

A: That, as it so often does, depends. First: the formalities. Depending on your state, it’s highly likely that the real estate purchase contract you signed offers some sort of an out, with conditions. In some states, these are known as contingencies — basically, contractual provisions that allow the buyer to back out of the deal within a set number of days.

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These provisions usually also give the buyer the access and opportunity to have the property inspected and appraised, to have her loan underwritten, and to undo the deal, without penalty, if her loan is not approved or the property condition does not meet her standards within the agreed-upon contingency period (usually around two weeks, plus or minus a couple of days, by default, but the time period itself is fully negotiable between buyer and seller). In other states, the relevant provisions provide an objection period in which the buyer must voice her objections or intent to back out, or forever hold her peace. At the end of an objection period, a buyer usually retains the right to back out, but will forfeit any earnest money deposit she placed on the property if she bails. At the end of a contingency period, the buyer must either:

• remove the contingency, signaling that she plans to close the deal, and rendering her deposit nonrefundable if she doesn’t;
• exercise the contingency, killing the deal; or
• request an extension of the contingency until her outstanding due diligence is complete.

Those are the basics, but there are two important caveats if you happen to be buying a distressed property. If you’re in contract on a short sale, your contingency or objection period likely doesn’t even begin to elapse until you’ve received the bank’s approval of the deal. If you change your mind before that happens, chances are good that you can back out, penalty-free. On the flip side, if you’re in contract to buy a bank-owned property and you’re in a contingency state, chances are good that the bank has effectively converted the contingency period into an objection period, so that your deposit becomes instantly nonrefundable if you haven’t backed out of the deal by the end of your contingency period. Hopefully, you know where your own contract falls within the above schemes. If not, check with your agent or attorney to understand whether you can actually back out, under the terms of your contract with the seller, without penalty. With that said, just because you can back out doesn’t mean you should. Buying a home is sort of like getting married in that anyone who takes it seriously will have a moment (or day, or week!) of doubt. If the fact that a few thousand dollars’ penalty would sway your decision in favor of moving forward with the transaction, that might be a sign that your desire to back out is just buyer’s remorse. Alternatively, if you’re in contract on a short sale you’re not sure actually can or will close and you happen to have found another property you like better, at the right price, that is more certain to close (i.e., is not a short sale), your change of mind might make more sense. The inevitability of buyer’s remorse at the prospect of such a major commitment as a mortgage is why I suggest buyers-to-be actually write down their “visions of home,” getting clear on what they want their lives to look like on a daily basis once they own the home they envision, and determining what characteristics, features and amenities a home would need to have to facilitate that vision. When buyer’s remorse rears its head, it can be a useful exercise to revisit any written documentation you have of your original wants, needs, priorities or vision; compare the home against that; and use the comparison to quell any emotional freak-outs that might incline you to back out irrationally, or supply logic and reason to a rational decision to cancel the contract. Finally, if a serious problem with your job, loan, health or life is what’s making you want to back out, it might make sense to cancel the contract even if you will incur a penalty for doing so.

Read at: http://lowes.inman.com/newsletter/2011/12/19/news/167138

Q: Our house was built around 1940; the fireplace is original; and we installed forced-air gas heating about 10 years ago. We haven’t had the fireplace or furnace inspected. What do you guys recommend to get the fireplace and the furnace ready for winter?

A: Regular inspection and servicing of fireplaces and furnaces adds to comfort, makes them more economical, and most important, keeps them safe. Regular inspections can prevent a deadly house fire or the introduction of a silent killer: carbon monoxide. Here’s our checklist to keep you cozy and safe during the winter months:

Wood-burning fireplaces

1. Inspection by a certified chimney sweep is a must. For heavy use, the chimney should be inspected and cleaned annually. Go up to five years if the fireplace is used only occasionally. The sweep should inspect for proper operation of the damper and for cracks in the flue liner, as well as sweeping the flue to remove creosote and other combustion byproducts.

2. Close the damper when the fireplace isn’t in use.

3. Install a chimney cap if you don’t already have one. You don’t want creatures building their nest in your flue.

4. When starting a fire, “prime” the flue by holding lighted newspaper at the back wall of the firebox to start the warm air rising.

5. Burn aged, dry hardwood if possible. Fir or pine burns hot and deposits creosote in the chimney. Don’t burn construction debris. It may contain toxic chemicals that will vaporize in the fire and could enter the living space.

6. Do not clean out the fireplace when the ashes are still hot. And dispose of the ashes in a place where wayward embers won’t start a fire.

Fireplace with gas starter

1. If the flame goes out, wait at least five minutes before attempting to relight the fireplace. This allows time to clear the fireplace of gas.

2. Be alert for unusual odors or odd-colored flames, which are often a sign that the fireplace is not operating properly. In such cases, contact your dealer or licensed technician for servicing. Contact the gas company if you smell gas when the unit is off.

Gas furnace maintenance

1. An annual maintenance check of a gas furnace extends the life of the appliance and ferrets out any hidden problems. A qualified heating contractor should vacuum out the unit, inspect the blower motor, inspect the heat exchanger for cracks, check the electronics and perform a multipoint checklist to make sure the furnace is operating properly.

2. Clean or replace the furnace filter frequently during the heating season. This ensures that air returning from the inside of the house is unobstructed and clean when entering the combustion chamber.

3. Keep vents, space heaters and baseboards clear of furniture, rugs and drapes to allow free air movement.

4. Ensure there is free airflow around your furnace and make sure there are no storage items obstructing airflow.

5. Do not store or use combustible materials, such as chemicals, paint, rags, clothing, draperies, paper, cleaning products, gasoline, or flammable vapors and liquids in the vicinity of the furnace.

6. Carbon monoxide is a colorless, odorless and lethal gas that can occur any time there is incomplete combustion or poor venting. Any home that contains fuel-burning appliances, such as a fireplace or furnace, should have a carbon monoxide alarm installed according to the manufacturer’s instructions.

Read at: http://lowes.inman.com/newsletter/2011/12/09/news/165839

Image by Gerard Stolk vers Noël via Flickr

It’s that time of year when most of us start to count our blessings, look back at what we’ve accomplished in 2011 and think about what we’ll get done in 2012. If selling your home is part of your resolution list for next year, there’s plenty of prep work you can do to set yourself up for home selling success. Here are 5 things you can and should start working on without further ado, if you want to get your home sold – smoothly and for top dollar – in 2012.

1. Put your intentions in writing. The first step to any real estate transaction – actually, to anything important in life! – is to get clear on your goals. Unexpected challenges and situations might very well come up in the course of selling your home, so having a clear idea of your ultimate goals at the outset is a must to help you make the right decisions along the way and to remind you when you might need to course correct. When you’re setting your objective and writing it down, it’s critical to be specific and holistic, drilling down to the details of what result it is you want your home sale to achieve in your life. Also, establish where your priorities lie: with speed or with dollars? For example, your goal might be to sell your house as quickly as possible so you can relocate your family by spring. Or, your goal may be to sell your house at the best possible price no matter how long it takes. Getting as clear as possible from the very beginning on your priorities and ultimate life objectives for the sale will allow you to communicate these crucial things clearly to your agent, and will power your decisions on issues like:

• which home improvement projects, if any, to complete before you sell;
• whether to accept a particular offer; and
• how aggressively to negotiate counter-offers, and on which points to push back against a buyer’s offer.

2. Study the local market. The most successful home sales are the listings that are priced right from day one. Ask any agent: even in the toughest markets, there are listing that sell quickly, mostly because the one-two punch of the property and its price look to buyers like a very strong value. In order to position yourself and your property at the point of pricing nirvana, you’ll need to do some leg work. stat. You don’t need to pick an exact price this moment, unless you’re planning to list your home super soon, but you can get started on what I like to think of as the ‘thinking seller’s’ three-pronged approach to pricing now, by:

• visiting open houses,
• studying nearby listings, and
• talking with local agents.

Before the year is up, try to visit a handful of open houses in your neighborhood. This will help you get a sense of the types of homes that are on the market, what condition they’re in, and how they are priced. Keep in mind that no home is going to be exactly like yours, but if it’s similar in size, location and features, then buyers that see that property will probably be the same buyers that come to see yours – and they will be comparing list prices. Pay particular attention to what features they have, how they are described and priced, any incentives the sellers are offering (e.g., closing cost credits, etc.) and how long they’ve been on the market. (Hint: you might not want to price your home right in line with one that’s been on the market over a year. Obviously, that home is overpriced, and that is NOT a result you want to replicate!) Finally, one of the most efficient and nuanced ways to get to know your local market is to begin speaking with agents who sell homes in your area. Get a few referrals, call them up and tour them through your home. Then, ask these pros for their opinion on what you should list your home for, what recent sales they think are the most comparable (and why), and how long they would expect your sale to take given their experience and current conditions. You can use these same home tours to get a head start on selecting your listing agent by asking the agents you interview to give you a preview of what they would recommend in the way of preparing your home, timing your listing and marketing your house to achieve the objectives you set in Step 1.

3. Gather your paperwork. In planning for your sale next year, you can get a great head start by pulling together the necessary paperwork now. Keep in mind that the specific requirements vary by state, so this is not an exhaustive list. In general, you’ll need to have these ready:

• Disclosure documents: This includes any documentation of anything that might impact a buyer’s decision about your home, whether it be inspection reports, repair receipts or estimates for repairs you haven’t actually had done yet. Your local real estate pro will help determine what exactly is needed here.
• Compliance certificates: In some cities, the local government will require certain conditions be met before a property is transferred to another owner. Examples of these requirements include sewer line condition guidelines, and energy conservation ordinances that require low-flow toilets and shower heads to be installed. Again, your  real estate agent and your city’s website can help you figure out which, if any, of these types of ordinances might apply to your home.
• Mortgage statements: Before the property’s title can transfer to another owner, the escrow or title company will need your mortgage statements to order payoff demands from any mortgage holder who has to get paid before that can happen.
• Financials: If you’re planning on a short sale, you’ll have a lot more paperwork to gather in your process, including paycheck stubs, bank and investment account statements, and two years’ W-2 forms or tax returns – the bank will review these to determine whether they will authorize you to sell the home for less than what you owe.

4. Prep your listing plan and timeline. After you’ve done all your pricing homework and have chosen a listing agent, you can create a plan and timeline for how all the moving pieces will come together – including who is responsible for getting which tasks done. At minimum, your plan should specify:

• prep work you’ll be doing to your property before it’s listed for sale – including decluttering, staging and any repairs or cosmetic power-tweaks you plan to make;
• if you’re planning a short sale, a timeline for submitting an application to your lender for approval (this might be before or after the property is listed – consult with your lender and your agent on the matter)
• planned list price (based on current local market conditions – this could change if you don’t plan to list your home for several months);
• the target date on which your home will be listed for sale in the local MLS; and
• how showing arrangements will work so that local agents can get prospective buyers into your house to see the place, and what.

5. Get a head start on your ‘home’work. How much prep work your home needs really depends on its current condition. A good starting point for many sellers is to order an inspection. Most buyers will get their own inspection before closing a deal, but getting ahead of them with your own will help you avoid any unwanted surprises later on in the transaction. An inspection will give you a reality check on your home’s condition, enabling you to decide upfront whether it’s worth it to fix something now or simply reduce the price in consideration thereof.

Your holiday vacation from work is a great time to:
(a) obtain any advance inspections your real estate agent recommends,
(b) have any reasonable repairs completed,
(c) pre-pack and declutter your place, and
(d) prettify your home’s curb appeal – painting the shutters and sprucing the landscaping goes a long way toward attracting buyers.

Kudos, in advance, for taking the time now to prepare for your home sale in 2012!  Selling in today’s market is no easy task, and doing the heavy lifting now – before your home goes on the market and, hopefully, while you’re on vacation! – will help tremendously in making things go as smoothly, and profitably, as possible.

Read story at: http://www.trulia.com/blog/taranelson/2011/12/5_things_to_do_now_to_get_your_home_sold_in_2012?ecampaign=cnews201112B&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F12%2F5_things_to_do_now_to_get_your_home_sold_in_2012