Article From HouseLogic.com
Donna Fuscaldo
December 04, 2009
The Making Home Affordable program offers financially stable homeowners the chance to refinance mortgages to lower rates.
Making Home Affordable, the federal program aimed at aiding struggling homeowners, offers two options: refinancing and loan modification. An otherwise financially stable homeowner who can't secure a lower rate on a mortgage because property values have fallen could benefit from the refinancing option.
Don't expect to breeze through the Making Home Affordable qualifying process. You'll need a lot of documentation and patience. With so many homeowners looking
for help, lenders are scrambling to keep up with demand. Have all your paperwork in order before applying for a refinance to speed up the process.
Qualifying for making home affordable
Making Home Affordable refinancing option (http://www.makinghomeaffordable.gov/refinance_eligibility.html) is known as the Home Affordable Refinance program, or HARP. It's designed for homeowners who, although keeping up with payments, are prevented from refinancing their mortgages to lower rates due to declining home values. HARP might be right for you if your rate is above-market and your current mortgage amount is near or more than what your house is worth.
You need to be current on your mortgage payments to qualify, and have good credit and income. Contact your mortgage lender to apply. If you're behind on your mortgage payments and running the risk of foreclosure, instead look into Making Home Affordable loan modification option (http://makinghome affordable.gov/modification _eligibility.html).
Keep in mind that to be eligible for HARP, your primary mortgage--alternatively called a first lien--can't exceed 125% of the current value of your home. That means if your house is worth $200,000, for example, you can't owe more than $250,000 on your mortgage. The mortgage also must be guaranteed by Fannie Mae or Freddie Mac. To find out if yours is, call Fannie Mae at 1-800-7FANNIE or Freddie Mac at 1-800-FREDDIE, or contact your lender.
Does refinancing make sense for you?
According to Bob Walters, chief economist at Quicken Loans, HARP makes sense if you owe more than your house is worth. HARP interest rates aren't subsidized; they're based on current rates. The real benefit of the program is gaining approval for a refinancing when you otherwise wouldn't. As a rule of thumb, for fixed-rate mortgages you'll want your new rate to be at least a half-point better than your old one.
HARP might also make sense if you can convert an adjustable-rate mortgage to a fixed-rate mortgage. Even if the ARM's monthly payment is lower now, it'll likely shoot up once the introductory rate expires.
A predictable fixed-rate mortgage is usually better, especially if you plan to remain in your home for several years.
When applying for HARP, you'll need to gather pay stubs, tax returns, mortgage statements, account balances, and debt totals (for credit cards, student loans, car loans, and such). You'll also need to provide details about any second mortgages or home equity lines of credit. A refinancing under HARP must be completed by June 30, 2011.
Lowering your interest can pay off immediately. Let's say you took out a 30-year fixed-rate mortgage three years ago for $250,000. The rate was 7%. By refinancing to a similar mortgage at 5.5%, you'd lower your monthly payment by about $290. Pay attention to the fees associated with the refinancing, which the lender must disclose up front, and ask if those costs can be rolled into the new loan if you're strapped for cash. Use this online calculator (http://www.hsh.com/usnrcalc.html) to run the numbers for yourself.
Stay on top of paperwork
Because the approval process could be delayed if you don't provide the proper documentation, it pays to have everything in order from the start. Ask your lender for a detailed list of required documents. Assembling the documentation can be difficult and takes time. Give yourself two weeks.
If possible, submit the entire packet at once via certified mail. Sending in documents piecemeal could result in lost paperwork and your loan application falling to the bottom of the pile, says Nicole Hall, editor of LendingTree.com.
Keep detailed records of any phone calls you make, and dates you mail or fax correspondences.
There are companies that will offer to take care of the paperwork for a fee, but you don't need to pay. You can access free help through a housing counselor (http://www.hud.gov/offices/hsg/sfh/hcc/fc/) approved by the U.S. Department of Housing and Urban Development. Counselors will help you understand the Making Home Affordable program and aid in gathering the documents needed for your loan servicer.
Donna Fuscaldo has written about mortgage refinancing for Dow Jones, the Wall Street Journal, and Fox Business News for more than a decade. Like many homeowners, her mortgage is precariously close to being underwater.
Thursday, September 22, 2011
Thursday, September 15, 2011
Wednesday, August 17, 2011
Do-It-Yourself Home Security Check: Essential Steps
Article From HouseLogic.com
By: Joseph D'Agnese
Published: November 12, 2010
Conduct a do-it-yourself home security check by walking around your house to assess what needs to be done to reduce the risk of a break-in.
A professionally installed and monitored home security system (http://www.houselogic.com/articles/home-security-system-installation-how-they-work/) is a nice addition to your home's defenses, but it shouldn't be step one. First, conduct your own home security check. After you've inspected your home's doors and windows (http://www.houselogic.com/articles/do-it-yourself-home-security-windows-may-leave-you-vulnerable/), make sure these essential steps are covered:
Keep your home well-maintained on the outside
Burglars want an easy target. Stand on the street outside your house and ask yourself: Does my property look neglected, hidden, or uninhabited? A front door or walkway that's obscured by shrubbery offers crooks the perfect cover they need while they break a door or window. To improve security, trim shrubs away from windows and widen front walks.
Install motion detector lights
All sides of your house should be well-lit with motion-activated lighting, not just the front. Simple motion-activated floodlights cost less than $50 each, and installing them is an easy DIY job if the wiring is already in place.
Store your valuables
Thieves want easy-to-grab electronics, cash, jewelry, and other valuables, though some are not above running down the street with your flat-screen TV. Most make a beeline for the master bedroom, because that's where you're likely to hide spare cash, jewelry, even guns.
Tour each room and ask yourself: is there anything here that I can move to a safe deposit box? Installing a home safe ($150 to $500) that's bolted to your basement slab is a good repository for items you don't use on a daily basis.
Secure your data
While you probably won't be putting your home computer in a safe anytime soon, take steps to back up the personal information (http://www.houselogic.com/articles/home-office-security-check/) stored on it. Password protect your login screen, and always shut off your computer (http://www.houselogic.com/articles/tips-for-savings-energy-in-home-office/) when not in use (you'll save energy, too!) Don't overlook irreplaceable items whose value may hard to quantify, like digital photos.
Prepare ahead of time in case the worst happens
He lives in North Carolina.
By: Joseph D'Agnese
Published: November 12, 2010
Conduct a do-it-yourself home security check by walking around your house to assess what needs to be done to reduce the risk of a break-in.
A professionally installed and monitored home security system (http://www.houselogic.com/articles/home-security-system-installation-how-they-work/) is a nice addition to your home's defenses, but it shouldn't be step one. First, conduct your own home security check. After you've inspected your home's doors and windows (http://www.houselogic.com/articles/do-it-yourself-home-security-windows-may-leave-you-vulnerable/), make sure these essential steps are covered:
Keep your home well-maintained on the outside
Burglars want an easy target. Stand on the street outside your house and ask yourself: Does my property look neglected, hidden, or uninhabited? A front door or walkway that's obscured by shrubbery offers crooks the perfect cover they need while they break a door or window. To improve security, trim shrubs away from windows and widen front walks.
Install motion detector lights
All sides of your house should be well-lit with motion-activated lighting, not just the front. Simple motion-activated floodlights cost less than $50 each, and installing them is an easy DIY job if the wiring is already in place.
Store your valuables
Thieves want easy-to-grab electronics, cash, jewelry, and other valuables, though some are not above running down the street with your flat-screen TV. Most make a beeline for the master bedroom, because that's where you're likely to hide spare cash, jewelry, even guns.
Tour each room and ask yourself: is there anything here that I can move to a safe deposit box? Installing a home safe ($150 to $500) that's bolted to your basement slab is a good repository for items you don't use on a daily basis.
Secure your data
While you probably won't be putting your home computer in a safe anytime soon, take steps to back up the personal information (http://www.houselogic.com/articles/home-office-security-check/) stored on it. Password protect your login screen, and always shut off your computer (http://www.houselogic.com/articles/tips-for-savings-energy-in-home-office/) when not in use (you'll save energy, too!) Don't overlook irreplaceable items whose value may hard to quantify, like digital photos.
Prepare ahead of time in case the worst happens
- Take a photo or video inventory (http://www.houselogic.com/articles/home-inventory-tools/) of items of value in your home, and store the file online or in your home safe.
- Check that you're properly insured for theft (http://www.houselogic.com/articles/homeowners-insurance-time-for-annual-check-up/). Note that high-ticket items in your home office, such as computers, professional camera equipment, or other business essentials, may require an additional rider or a separate policy.
He lives in North Carolina.
What Affects Credit Scores? 7 Misconceptions
Article From HouseLogic.com
By: Gwen Moran
Published: October 22, 2010
If you're trying to raise your credit score to get a good rate for a refinance or HELOC, you might be surprised by what affects--or doesn't affect--your score.
You have to keep your credit score up in case you want to take out a second mortgage or home equity line of credit (http://www.houselogic.com/articles/home-equity-line-tips/) (HELOC), or get the lowest premiums on your home owners insurance (http://www.houselogic.com/articles/improve-your-insurance-score/). Here's the 411 on how various money management tactics goose up or ding your credit score.
• More money improves your credit score •
False. Your level or sources of income don't affect your credit score, although lenders may look at it when making loan decisions, according to the Fair Isaac Corp., the company that issues the commonly used FICO credit scores.
• Ownership of several credit cards can hurt your credit score •
Mostly false. Having many credit lines isn't necessarily a bad thing, says credit expert Liz Weston, author of Your Credit Score. Multiple lines give you a favorable debt-to-available-credit ratio. But use them correctly: It's best to keep any balances below 10% or 20% of the total credit line, she says. Anything more will affect the ratio of debt-to-available-credit, which can decrease your credit score.
• Opening and closing credit lines can hurt your credit score •
True. New credit applications can decrease your credit score, so be careful about applying for new credit cards or personal loans before applying for a HELOC, second mortgage, automobile loan, or other large line of credit. Surprise: Closing existing credit lines may also hurt your credit score, since it'll damage your debt-to-available-credit ratio. A good rule is not to make any credit changes in the months leading up to a major credit request, such as for a HELOC.
• Consolidating credit lines will help your credit score •
Mostly false. Although it may seem like a good idea to move all your balances to one card, that can actually hurt your credit score, since your debt-to-available-credit ratio will spike on that card, says Weston. However, credit expert Harrine Freeman says such a slight decline isn't necessarily a deal-breaker for a loan, especially if the card has a lower interest rate and will allow you to pay off the balance sooner. Your score will increase as soon as that ratio goes down.
• Changing jobs can hurt your credit score •
Partly true. Taking a new job or losing your job doesn't affect your credit score. However, if you have a spotty employment history, lenders may hold that against you in making a loan. Dips in income may signal that it could be difficult to pay bills in a timely manner.
• Co-signing for others can hurt your credit score •
Partly true. Simply co-signing on a loan for someone else may not affect your score, but if that person is late on paying the loan, it's likely to show up on your report, says Freeman. And that's a nasty surprise if you didn't know the person was late.
• Judgments and liens aren't considered in your credit score •
False. If you've had a judgment or lien filed against you, it's considered in your payment history, which represents 35% of your score. Similarly, while most utility companies don't report payment history to credit bureaus, your account will likely be reported if it is seriously delinquent and referred to a collection agency.
Additional details on how to manage your FICO score are available on the FICO site (http://www.myfico.com/crediteducation/whatsinyourscore.aspx).
Gwen Moran is a freelance business and finance writer from the Jersey shore. She's the co-author of The Complete Idiot's Guide to Business Plans and writes frequently about real estate.
By: Gwen Moran
Published: October 22, 2010
If you're trying to raise your credit score to get a good rate for a refinance or HELOC, you might be surprised by what affects--or doesn't affect--your score.
You have to keep your credit score up in case you want to take out a second mortgage or home equity line of credit (http://www.houselogic.com/articles/home-equity-line-tips/) (HELOC), or get the lowest premiums on your home owners insurance (http://www.houselogic.com/articles/improve-your-insurance-score/). Here's the 411 on how various money management tactics goose up or ding your credit score.
• More money improves your credit score •
False. Your level or sources of income don't affect your credit score, although lenders may look at it when making loan decisions, according to the Fair Isaac Corp., the company that issues the commonly used FICO credit scores.
• Ownership of several credit cards can hurt your credit score •
Mostly false. Having many credit lines isn't necessarily a bad thing, says credit expert Liz Weston, author of Your Credit Score. Multiple lines give you a favorable debt-to-available-credit ratio. But use them correctly: It's best to keep any balances below 10% or 20% of the total credit line, she says. Anything more will affect the ratio of debt-to-available-credit, which can decrease your credit score.
• Opening and closing credit lines can hurt your credit score •
True. New credit applications can decrease your credit score, so be careful about applying for new credit cards or personal loans before applying for a HELOC, second mortgage, automobile loan, or other large line of credit. Surprise: Closing existing credit lines may also hurt your credit score, since it'll damage your debt-to-available-credit ratio. A good rule is not to make any credit changes in the months leading up to a major credit request, such as for a HELOC.
• Consolidating credit lines will help your credit score •
Mostly false. Although it may seem like a good idea to move all your balances to one card, that can actually hurt your credit score, since your debt-to-available-credit ratio will spike on that card, says Weston. However, credit expert Harrine Freeman says such a slight decline isn't necessarily a deal-breaker for a loan, especially if the card has a lower interest rate and will allow you to pay off the balance sooner. Your score will increase as soon as that ratio goes down.
• Changing jobs can hurt your credit score •
Partly true. Taking a new job or losing your job doesn't affect your credit score. However, if you have a spotty employment history, lenders may hold that against you in making a loan. Dips in income may signal that it could be difficult to pay bills in a timely manner.
• Co-signing for others can hurt your credit score •
Partly true. Simply co-signing on a loan for someone else may not affect your score, but if that person is late on paying the loan, it's likely to show up on your report, says Freeman. And that's a nasty surprise if you didn't know the person was late.
• Judgments and liens aren't considered in your credit score •
False. If you've had a judgment or lien filed against you, it's considered in your payment history, which represents 35% of your score. Similarly, while most utility companies don't report payment history to credit bureaus, your account will likely be reported if it is seriously delinquent and referred to a collection agency.
Additional details on how to manage your FICO score are available on the FICO site (http://www.myfico.com/crediteducation/whatsinyourscore.aspx).
Gwen Moran is a freelance business and finance writer from the Jersey shore. She's the co-author of The Complete Idiot's Guide to Business Plans and writes frequently about real estate.
What Affects Credit Scores? 7 Misconceptions
Article From HouseLogic.com
By: Gwen Moran Published: October 22, 2010
If you're trying to raise your credit score to get a good rate for a refinance or HELOC, you might be surprised by what affects--or doesn't affect--your score.
You have to keep your credit score up in case you want to take out a second mortgage or home equity line of credit (http://www.houselogic.com/articles/home-equity-line-tips/) (HELOC), or get the lowest premiums on your home owners insurance (http://www.houselogic.com/articles/improve-your-insurance-score/). Here's the 411 on how various money management tactics goose up or ding your credit score.
More money improves your credit score
False. Your level or sources of income don't affect your credit score, although lenders may look at it when making loan decisions, according to the Fair Isaac Corp., the company that issues the commonly used FICO credit scores.
Ownership of several credit cards can hurt your credit score
Mostly false. Having many credit lines isn't necessarily a bad thing, says credit expert Liz Weston, author of Your Credit Score. Multiple lines give you a favorable debt-to-available-credit ratio. But use them correctly: It's best to keep any balances below 10% or 20% of the total credit line, she says. Anything more will affect the ratio of debt-to-available-credit, which can decrease your credit score.
Opening and closing credit lines can hurt your credit score
True. New credit applications can decrease your credit score, so be careful about applying for new credit cards or personal loans before applying for a HELOC, second mortgage, automobile loan, or other large line of credit. Surprise: Closing existing credit lines may also hurt your credit score, since it'll damage your debt-to-available-credit ratio. A good rule is not to make any credit changes in the months leading up to a major credit request, such as for a HELOC.
Consolidating credit lines will help your credit score
Mostly false. Although it may seem like a good idea to move all your balances to one card, that can actually hurt your credit score, since your debt-to-available-credit ratio will spike on that card, says Weston. However, credit expert Harrine Freeman says such a slight decline isn't necessarily a deal-breaker for a loan, especially if the card has a lower interest rate and will allow you to pay off the balance sooner. Your score will increase as soon as that ratio goes down.
Changing jobs can hurt your credit score
Partly true. Taking a new job or losing your job doesn't affect your credit score. However, if you have a spotty employment history, lenders may hold that against you in making a loan. Dips in income may signal that it could be difficult to pay bills in a timely manner.
Co-signing for others can hurt your credit score
Partly true. Simply co-signing on a loan for someone else may not affect your score, but if that person is late on paying the loan, it's likely to show up on your report, says Freeman. And that's a nasty surprise if you didn't know the person was late.
Judgments and liens aren't considered in your credit score
False. If you've had a judgment or lien filed against you, it's considered in your payment history, which represents 35% of your score. Similarly, while most utility companies don't report payment history to credit bureaus, your account will likely be reported if it is seriously delinquent and referred to a collection agency. Additional details on how to manage your FICO score are available on the FICO site (http://www.myfico.com/crediteducation/whatsinyourscore.aspx).
Gwen Moran is a freelance business and finance writer from the Jersey shore. She's the co-author of The Complete Idiot's Guide to Business Plans and writes frequently about real estate.
Tuesday, August 16, 2011
Tuesday, July 26, 2011
Friday, July 1, 2011
Fourth of July: Take a Step Toward Energy & "Independence" ™
Article From BuyAndSell.HouseLogic.com
By: John Riha
Published: July 01, 2011
The Fourth of July -- Independence Day -- is a great time to reflect on how lucky we are to live in the United States of America, and what we can do to make our nation better, stronger, and more prosperous. As President Kennedy famously said many years ago, "Ask what you can do for your country."
The Fourth of July is a great time to reflect on how lucky we are to live in the United States of America, and what we can do to make our nation better, stronger, and more prosperous. As President Kennedy famously said many years ago, "Ask what you can do for your country. " We'd all like to do our part. But our individual efforts sure seem small compared with the goings-on of world politics and global economies.
How can we, average American home owners, really achieve big goals, such as influencing national energy policy and building a strong economy? After all, we've got our own daily stuff to deal with: work, home repairs (http://www.houselogic.com/articles/value-home-maintenance/), getting the kids to softball practice, and the dog to the vet. One good way is to reduce energy consumption in our own homes. This simple act can have a major impact. Not just in terms of helping hold the line on the family budget (http://www.houselogic.com/articles/3-green home-improvements-pay/), but in slowing the ever-spiraling costs of energy. Lessening demand - even incrementally - eases the price of energy, which can free up capital that creates jobs and helps get our economy kicking.
Here are examples of small contributions you can make:
By: John Riha
Published: July 01, 2011
The Fourth of July -- Independence Day -- is a great time to reflect on how lucky we are to live in the United States of America, and what we can do to make our nation better, stronger, and more prosperous. As President Kennedy famously said many years ago, "Ask what you can do for your country."
The Fourth of July is a great time to reflect on how lucky we are to live in the United States of America, and what we can do to make our nation better, stronger, and more prosperous. As President Kennedy famously said many years ago, "Ask what you can do for your country. " We'd all like to do our part. But our individual efforts sure seem small compared with the goings-on of world politics and global economies.
How can we, average American home owners, really achieve big goals, such as influencing national energy policy and building a strong economy? After all, we've got our own daily stuff to deal with: work, home repairs (http://www.houselogic.com/articles/value-home-maintenance/), getting the kids to softball practice, and the dog to the vet. One good way is to reduce energy consumption in our own homes. This simple act can have a major impact. Not just in terms of helping hold the line on the family budget (http://www.houselogic.com/articles/3-green home-improvements-pay/), but in slowing the ever-spiraling costs of energy. Lessening demand - even incrementally - eases the price of energy, which can free up capital that creates jobs and helps get our economy kicking.
Here are examples of small contributions you can make:
- Ask cable or satellite providers for an energy-efficient set-top box, (the device that receives and dispatches TV signals to your DVR). Set-top boxes, which run 24 hours a day, have become a leading energy drain in the home. Newer Energy Star-rated models (http://www.energystar.gov/index.cfm?fuseaction=find_a_product.showProductGroup pgw_code=ST) are at least 30% more efficient. If all set-top boxes sold in the U.S. were Energy Star-rated, energy savings would total $2 billion each year, and greenhouse gases would be reduced by an amount equivalent to 3 million cars and trucks.
- Replacing an old, kaput dishwasher with an Energy Star (http://www.energystar.gov) -qualified model cuts the annual energy cost of the machine by 50% - to $60 from $120. If every clothes washer (http://www.energystar.gov/index.cfm?fuseaction= find_a_product. showProductGroup&pgw_code=CW) purchased in the U.S. this year were an efficient Energy Star model, the national energy savings would total $350 million, not to mention conserving 32 billion gallons of water.
- Buying a high-efficiency gas or electric water heater, when yours reaches the end of its useful life, saves 3% to 4% on the average home's hot water bill. Energy standards enacted by the U.S. Dept. of Energy in 2010 were designed to cut energy usage of new water heaters by 3% to 4%. Over a 30-year period, U.S. consumers should save $8.7 billion (http://www.aceee.org/press/2010/04/new-national-water-heater-standards-give-efficiency-majo) and reduce CO2 emissions by 170 million tons - that's equal to the yearly emissions of 30 million cars.
- Replacing a 60-watt incandescent light bulb with a 13-watt compact fluorescent equivalent saves $30 over the life of the bulb. Alternative: LED bulbs, although costly ($30 for 7-watts), last 3 to 4 times longer than CFLs, burn cooler, and - unlike CFLs - contain no mercury. If every home in America replaced just one incandescent bulb (http://www.house logic.com/articles/turning-incandescent-light-bulb/) with an Energy Star-qualified CFL, the savings would be enough to light more than 3 million homes. The savings would also reduce greenhouse gas emissions caused by fossil-fuel energy production equivalent to 800,000 autos.
- Create a breeze with a ceiling fan (http://www.houselogic.com/articles/ceiling-fans-keep-your-cool-save-money-too/) instead of using the AC. For every degree you raise the air conditioning thermostat above 78 degrees, you can save 3% to 8% on cooling costs.
- Install a programmable thermostat (http://www.houselogic.com/articles/no-sweat-programmable-thermostats-save-energy-costs/) and save as much as $180 per year.
- Plump up attic insulation (http://www.houselogic.com/articles/attic-insulation-saves you-money/) from R-11 to R-49 and save up to $600 per year.
- Turn down the thermostat on your refrigerator (http://www.houselogic.com/articles/10-tips-for-saving-energy-kitchen/) and save $22 per year.
- Outsmart sneaky energy vampires (http://www.houselogic.com/articles/saving-electricity-reduce-standby-power-consumption/) by turning off (or putting "to sleep") computers, printers, and other electronics when not in use: Shave another $100 from your annual energy bill.
Thursday, June 16, 2011
6 Tips for Buying a Home in a Short Sale
BuyAndSell.HouseLogic.com
G. M. Filisko
Published: March 19, 2010
By preparing for a real estate short sale, you can emerge with a great home at a favorable price. When sellers need to sell their home for less than they owe on their mortgage, they're shooting for a short sale. Short sale homes can sometimes be bargains, but only if you do your homework, stay patient, and remain unemotional during the sometimes lengthy and difficult short sale process.
Here are six tips for protecting yourself emotionally and financially when bidding on a short sale.
1. Get Help from a Short Sale Expert
A real estate agent experienced in short sales can identify which homes are being offered as short sales, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they've represented in short sales and, of those, how many successfully closed the transaction.
2. Build a Team
Ask agents to recommend real estate attorneys knowledgeable in short sales and title experts. A title officer can do a title search to identify all the liens attached to a property you're interested in. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic's and condominium liens, or homeowners association liens, will be harder to purchase. A title search may cost $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.
3. Know the Home's Fair Market Value
By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home's fair market value, it may be rejected. Your agent can help you identify the price that's good for you. The lender will determine whether approval is in its best interest.
4. Expect Delays
There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit it to their lender, along with documentation to convince the lender to agree to the sale. The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.
5. Firm up your Financing
Lenders will weigh your ability to close the transaction. If you're preapproved for a mortgage, have a large downpayment, and can close at any time, they'll consider your offer stronger than that of a buyer whose financing is less secure.
6. Avoid Contingencies
If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it. Also, consider ordering an inspection so you're fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You'll probably have to purchase the home "as is," which means in its present condition. This article includes general information about tax laws and consequences, but isn't intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.
G.M. Filisko is an attorney and award-winning writer who luckily has avoided the need for a short sale on her properties. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
G. M. Filisko
Published: March 19, 2010
By preparing for a real estate short sale, you can emerge with a great home at a favorable price. When sellers need to sell their home for less than they owe on their mortgage, they're shooting for a short sale. Short sale homes can sometimes be bargains, but only if you do your homework, stay patient, and remain unemotional during the sometimes lengthy and difficult short sale process.
Here are six tips for protecting yourself emotionally and financially when bidding on a short sale.
1. Get Help from a Short Sale Expert
A real estate agent experienced in short sales can identify which homes are being offered as short sales, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they've represented in short sales and, of those, how many successfully closed the transaction.
2. Build a Team
Ask agents to recommend real estate attorneys knowledgeable in short sales and title experts. A title officer can do a title search to identify all the liens attached to a property you're interested in. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic's and condominium liens, or homeowners association liens, will be harder to purchase. A title search may cost $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.
3. Know the Home's Fair Market Value
By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home's fair market value, it may be rejected. Your agent can help you identify the price that's good for you. The lender will determine whether approval is in its best interest.
4. Expect Delays
There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit it to their lender, along with documentation to convince the lender to agree to the sale. The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.
5. Firm up your Financing
Lenders will weigh your ability to close the transaction. If you're preapproved for a mortgage, have a large downpayment, and can close at any time, they'll consider your offer stronger than that of a buyer whose financing is less secure.
6. Avoid Contingencies
If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it. Also, consider ordering an inspection so you're fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You'll probably have to purchase the home "as is," which means in its present condition. This article includes general information about tax laws and consequences, but isn't intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.
G.M. Filisko is an attorney and award-winning writer who luckily has avoided the need for a short sale on her properties. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
Foreclosure Alternative: The Short Sale
From HouseLogic.com
Gwen Moran
Published: July 08, 2010
A short sale is far from hassle-free, but it's a better alternative than foreclosure. And now you've got a little help from your friends in D.C. Here are the facts about short sales and how to get started.
Facing foreclosure and tempted to stay in your home until the bank pulls it out from under you? Bad idea. Don't do it. A much more graceful exit is a short sale, an agreement between you and your lender to sell your home for less than you owe. Although there's no guarantee that your lender will let you avoid foreclosure with a short sale, new government regulations are aimed at encouraging lenders to do so.
Short sales get government incentives
Although short sales are not hassle-free, at least you've got the government backing you. The Home Affordable Foreclosure Alternatives (https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.html) (HAFA) program provides financial incentives for lenders and borrowers to avoid foreclosure through short sales or deeds in lieu of foreclosures (http://www.houselogic.com/articles/foreclosure-alternative-deed-lieu/).
Participation in the HAFA program requires adherence to guidelines--including a standard process and minimum time frames--that speed the process, says Dallas-based REALTOR® Tom Branch, co-author of Avoiding Foreclosure: The Field Guide to Short Sales. The HAFA program is for homeowners who can't keep their homes with the help of a loan modification (http://www.houselogic.com/articles/making-home-affordable-modification-option/).
Advantages of a short sale
Gwen Moran
Published: July 08, 2010
A short sale is far from hassle-free, but it's a better alternative than foreclosure. And now you've got a little help from your friends in D.C. Here are the facts about short sales and how to get started.
Facing foreclosure and tempted to stay in your home until the bank pulls it out from under you? Bad idea. Don't do it. A much more graceful exit is a short sale, an agreement between you and your lender to sell your home for less than you owe. Although there's no guarantee that your lender will let you avoid foreclosure with a short sale, new government regulations are aimed at encouraging lenders to do so.
Short sales get government incentives
Although short sales are not hassle-free, at least you've got the government backing you. The Home Affordable Foreclosure Alternatives (https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.html) (HAFA) program provides financial incentives for lenders and borrowers to avoid foreclosure through short sales or deeds in lieu of foreclosures (http://www.houselogic.com/articles/foreclosure-alternative-deed-lieu/).
Participation in the HAFA program requires adherence to guidelines--including a standard process and minimum time frames--that speed the process, says Dallas-based REALTOR® Tom Branch, co-author of Avoiding Foreclosure: The Field Guide to Short Sales. The HAFA program is for homeowners who can't keep their homes with the help of a loan modification (http://www.houselogic.com/articles/making-home-affordable-modification-option/).
Advantages of a short sale
- You can be a homeowner again more quickly with a short sale in your past than with a foreclosure. New Fannie Mae guidelines help you qualify for a new mortgage in as little as two years after a short sale, as opposed to up to seven years after a foreclosure.
- You will have more time to make relocation plans and save money than with a deed in lieu. A short sale may take four to 12 months. A deed in lieu of foreclosure arrangement typically requires you vacate your home within 30 to 60 days of signing, according to real estate attorney Lance Churchill.
- You can receive up to $3,000 from your lender for moving expenses at the time of closing of a HAFA short sale or a HAFA deed in lieu of foreclosure. Relocation funds are part of the incentives of HAFA, but not necessarily for other short sale or deed in lieu programs of the lenders.
- You can help your community's home values. Because the lender often receives a higher amount of the remaining loan balance than it would from the sale of a home after a foreclosure, short sales help support home values in the surrounding community.
- Your credit score (http://www.houselogic.com/articles/how-foreclosure-affects-credit-score/) will take a severe hit. But that would happen anyway with a foreclosure. Fair Isaac, creator of the FICO score, says foreclosure and short sales have virtually identical impacts on your credit score. VantageScore--a company that has created a credit score model for consumers--says a short sale will lead to only a marginally lighter hit when compared with foreclosure.
- You may owe additional taxes. In the past, if your outstanding mortgage was $100,000 and your lender accepted a short-sale purchase offer of $90,000, you were liable for income tax on the forgiven $10,000, says Harlan D. Platt, economist and professor of finance at Northeastern University in Boston. However, the Mortgage Forgiveness Debt Relief Act of 2007, which runs through 2012, generally allows taxpayers to exclude income from the discharge of debt on their principal residence (http://www.irs.gov/individuals/article/0,,id=179414,00.html) in some circumstances.
Full relief is available only if the amount of forgiven debt doesn't exceed the debt that was used to acquire, construct, or rehabilitate a principal residence. Consult a tax professional and an attorney to minimize or avoid this liability. - In some states, your lender may still be able to come after you for the difference between the short sale price and the amount needed to pay off the mortgage. Your actual agreement with your lender and state and local laws and regulations spell out the details. Consult a tax professional and an attorney to minimize or avoid this liability.
- Find a qualified REALTOR® experienced in short sales. Short sales are tough to navigate, and they're further complicated by your loan type--FHA vs. Veterans Administration vs. conventional loans. Real estate agents who specialize in short sales will know the proper steps and order of the steps involved. They'll also be able to navigate the many parties involved in the process and over-burdened loss mitigation departments. Look especially for agents who have Short Sales and Foreclosure Resource (SFR) Certification, which requires specialized training.
- Gather evidence to support your need for a short sale as opposed to a foreclosure. You'll need to prove that you have little or no equity in your home, you're behind on your payments, and you're no longer able to afford your home. You'll need to write a hardship letter to the lender describing your circumstances, such as a divorce, job loss, illness, death, or other event that has impacted your income.
Friday, May 13, 2011
99-Cent Store Solution: Patch Drywall Hole
Article from: BuyAndSell.HouseLogic.com
By: Harmon Leon
Published: May 11, 2011
Yesterday's torn-screen fix cost all of $1.98 (including an impulse purchase). Today's is the priciest in this week-long series--but still under $10.
If Charlie Sheen is a friend of yours (no judgment), you're probably ready for most anything, i.e., you keep a defibrillator in your living room. But do you have a drywall repair kit to patch the holes he'll punch in your wall during your annual Memorial Day party? Scrap the call to a handyman or the police, and stop by the dollar store for what you'll need to set things right post-bacchanal. Supplies:
• Wire screen, 99 cents (actually an envelope sorter made out of screen-a big savings since a roll of screen at the big box store is about $20 or more)
• String, 99 cents
• Pencil, 99 cents
• Joint knife, 99 cents
• Masking tape, 99 cents
• Sandpaper, 99 cents
• Drywall compound, 3.58
• Sizzle cologne, 99 cents (to get party-ready)
Total: $10.51 (if you can't resist the Sizzle)
What you do:
•Cut the wire screen 2 inches larger than the hole.
•Tie one end of the string to the pencil and thread the other end through the middle of the screen-then bend the screen, and insert it and the pencil into the hole.
•Pull the string until the screen is flat against the hole (the pencil helps push the screen
flat against the drywall) and hold it taut while you apply the drywall compound.
•Tape the string to the wall to hold the screen in place as the compound dries.
•Cut the string when dry.
•Sand and smooth compound with joint knife.
By: Harmon Leon
Published: May 11, 2011
Yesterday's torn-screen fix cost all of $1.98 (including an impulse purchase). Today's is the priciest in this week-long series--but still under $10.
If Charlie Sheen is a friend of yours (no judgment), you're probably ready for most anything, i.e., you keep a defibrillator in your living room. But do you have a drywall repair kit to patch the holes he'll punch in your wall during your annual Memorial Day party? Scrap the call to a handyman or the police, and stop by the dollar store for what you'll need to set things right post-bacchanal. Supplies:
• Wire screen, 99 cents (actually an envelope sorter made out of screen-a big savings since a roll of screen at the big box store is about $20 or more)
• String, 99 cents
• Pencil, 99 cents
• Joint knife, 99 cents
• Masking tape, 99 cents
• Sandpaper, 99 cents
• Drywall compound, 3.58
• Sizzle cologne, 99 cents (to get party-ready)
Total: $10.51 (if you can't resist the Sizzle)
What you do:
•Cut the wire screen 2 inches larger than the hole.
•Tie one end of the string to the pencil and thread the other end through the middle of the screen-then bend the screen, and insert it and the pencil into the hole.
•Pull the string until the screen is flat against the hole (the pencil helps push the screen
flat against the drywall) and hold it taut while you apply the drywall compound.
•Tape the string to the wall to hold the screen in place as the compound dries.
•Cut the string when dry.
•Sand and smooth compound with joint knife.
Thursday, April 28, 2011
Research looks at how mortgage delinquencies affect scores
(Courtesy of FICO™ Banking Analytics Blog)
How much impact does a short sale have on FICO® Scores? How about a foreclosure?
Since I frequently hear these questions from clients and others, I thought I’d share new FICO research that sheds light on this very subject.
How much impact does a short sale have on FICO® Scores? How about a foreclosure?
Since I frequently hear these questions from clients and others, I thought I’d share new FICO research that sheds light on this very subject.
The FICO study simulated various types of mortgage delinquencies on three representative credit bureau profiles of consumers scoring 680, 720 and 780, respectively. I say “representative profiles” because we focused on consumers whose credit characteristics (e.g., utilization, delinquency history, age of file) were typical of the three score points considered. All consumers had an active currently-paid-as-agreed mortgage on file.
Results are shown below. The first chart shows the impact on the score for each stage of delinquency, and the second shows how long it takes the score to fully “recover” after the fact. (Click on charts for larger view)
All in all, we saw:
- The magnitude of FICO® Score impact is highly dependent on the starting score.
- There's no significant difference in score impact between short sale/deed-in-lieu/settlement and foreclosure.
- While a score may begin to improve sooner, it could take up to 7-10 years to fully recover, assuming all other obligations are paid as agreed.
- In general, the higher starting score, the longer it takes for the score to fully recover.
- Even if there’s minimal difference in score impact between moderate and severe delinquencies, there may be significant difference in time required for the score to fully recover.
This study provides good benchmarks of score impact from mortgage delinquencies. However, it is important to note that research was done only on select consumer credit profiles. Given the wide range of credit profiles that exist, results may vary beyond what's in the charts above.
If you have questions about this research, I encourage you to post them here on the blog.
Sunday, April 10, 2011
Appliance Maintenance: Water Heaters
Article From HouseLogic.com
By: Douglas Trattner
Published: August 20, 2010
Keep your water heater running efficiently and reliably with this simple maintenance routine.
Depending on a homeowner's water quality, a hot water heater can be expected to last eight to 12 years, says Frank Czeronka, a licensed master plumber and Mr. Rooter franchise owner. Completing the following routine maintenance schedule, however, can greatly extend the unit's lifespan.
Here's a list of maintenance tips to keep your water heater running efficiently
and reliably:
• Always adjust the thermostat to 120 degrees to avoid the risk of scalding.
• Always maintain 2 feet of clearance around the appliance unless the manual specifically states otherwise.
• Annually, flush the heater to remove the sediment and debris in the bottom of the tank. Hook up a garden hose to the drain valve and run until the water is clear. This also makes the unit operate more quietly.
• Annually, test the temperature-pressure relief valve by quickly discharging it two or three times. Following the testing, keep an eye out for small leaks from the valve.
• Every three to five years, examine the sacrificial anode rod by loosening the hex head screw and removing it. If more than six inches of the core steel wire is exposed, replace the rod for abut $20.
• Insulate older units with a fiberglass jacket to improve efficiency, being careful to avoid contact with the flue. Newer units already are optimized for peak energy efficiency.
• When leaving town, adjust the thermostat on gas heaters to "Vacation" setting, which maintains the pilot light without heating the water.
Douglas Trattner has covered household appliances and home improvement for HGTV.com, DIYNetworks, and the Cleveland Plain Dealer. During the 10-year stewardship of his 1925 Colonial, he's upgraded almost every household appliance. After lengthy deliberation, he recently replaced an aging top-load washing machine with an energy-efficient front-load unit.
By: Douglas Trattner
Published: August 20, 2010
Keep your water heater running efficiently and reliably with this simple maintenance routine.
Depending on a homeowner's water quality, a hot water heater can be expected to last eight to 12 years, says Frank Czeronka, a licensed master plumber and Mr. Rooter franchise owner. Completing the following routine maintenance schedule, however, can greatly extend the unit's lifespan.
Here's a list of maintenance tips to keep your water heater running efficiently
and reliably:
• Always adjust the thermostat to 120 degrees to avoid the risk of scalding.
• Always maintain 2 feet of clearance around the appliance unless the manual specifically states otherwise.
• Annually, flush the heater to remove the sediment and debris in the bottom of the tank. Hook up a garden hose to the drain valve and run until the water is clear. This also makes the unit operate more quietly.
• Annually, test the temperature-pressure relief valve by quickly discharging it two or three times. Following the testing, keep an eye out for small leaks from the valve.
• Every three to five years, examine the sacrificial anode rod by loosening the hex head screw and removing it. If more than six inches of the core steel wire is exposed, replace the rod for abut $20.
• Insulate older units with a fiberglass jacket to improve efficiency, being careful to avoid contact with the flue. Newer units already are optimized for peak energy efficiency.
• When leaving town, adjust the thermostat on gas heaters to "Vacation" setting, which maintains the pilot light without heating the water.
Douglas Trattner has covered household appliances and home improvement for HGTV.com, DIYNetworks, and the Cleveland Plain Dealer. During the 10-year stewardship of his 1925 Colonial, he's upgraded almost every household appliance. After lengthy deliberation, he recently replaced an aging top-load washing machine with an energy-efficient front-load unit.
Thursday, March 24, 2011
Cleaning Rain Gutters
Clean gutters to protect your siding and landscape plantings, and prevent thousands of dollars of damage to your foundation.
In a downpour, a clogged roof gutter (http://www.houselogic.com/articles/rain-gutters-trap-water-easy-fixes/) sends a cascade of water down the side of your house, making canyons of your flowerbeds and saturating your foundation. Clean gutters of leaves and debris to help prevent damage to your landscaping and siding, and to head off expensive repairs to your foundation that may cost $10,000 or more.
How often to clean gutters
Clean gutters at least once a year-twice a year if you have overhanging trees. Also, clean clogged gutters after big storms. Clogs often occur where downspouts join the gutter system-check these areas closely.
How to clean gutters
If climbing ladders is not your cup of tea, you can hire someone to do the job for you for between $50 and $250, depending on the size and height of your house.
Gutter covers
Interested in an ounce of prevention? You can slow clogging (http://www.houselogic.com/articles/repair-sagging-and-leaking-rain-gutters-save-money/) by installing gutter covers in the form of mesh screens, clip-on grates, or porous foam. However, the cost can be more than the gutters themselves and covers need regular maintenance to keep them clear. Expect to pay $6 to $8 per running foot for gutter covers, installed.
Remodeler, Pat Curry is a former senior editor at BUILDER, the official magazine of the National Association of Home Builders, and a frequent contributor to real estate and home-building publications.
In a downpour, a clogged roof gutter (http://www.houselogic.com/articles/rain-gutters-trap-water-easy-fixes/) sends a cascade of water down the side of your house, making canyons of your flowerbeds and saturating your foundation. Clean gutters of leaves and debris to help prevent damage to your landscaping and siding, and to head off expensive repairs to your foundation that may cost $10,000 or more.
How often to clean gutters
Clean gutters at least once a year-twice a year if you have overhanging trees. Also, clean clogged gutters after big storms. Clogs often occur where downspouts join the gutter system-check these areas closely.
How to clean gutters
- Wear a shirt with long sleeves. Wear rubber gloves.
- Have a good extendible ladder available. Standoff stabilizers (ladder "horns") are ideal to keep the ladder from damaging the gutter.
- Use a small plastic scoop to remove gunk (http://www.houselogic.com/articles/replacing-rain-gutters-and-downspouts/). Buy a gutter scoop from the hardware store ($25) or try a child's sand shovel.
- Spare your lawn by dumping the stuff onto a plastic tarp.
- After you've cleared the muck, flush the gutters and downspouts with a garden hose-also a great way to spot any leaks.
If climbing ladders is not your cup of tea, you can hire someone to do the job for you for between $50 and $250, depending on the size and height of your house.
Gutter covers
Interested in an ounce of prevention? You can slow clogging (http://www.houselogic.com/articles/repair-sagging-and-leaking-rain-gutters-save-money/) by installing gutter covers in the form of mesh screens, clip-on grates, or porous foam. However, the cost can be more than the gutters themselves and covers need regular maintenance to keep them clear. Expect to pay $6 to $8 per running foot for gutter covers, installed.
Remodeler, Pat Curry is a former senior editor at BUILDER, the official magazine of the National Association of Home Builders, and a frequent contributor to real estate and home-building publications.
Wednesday, March 16, 2011
How to Use Comparable Sales to Price Your Home
Article From BuyAndSell.HouseLogic.com
By: Carl Vogel
Published: August 05, 2010
Before you put your home up for sale,
use the right comparable sales
to find the perfect price.
How much can you sell your home for? Probably about as much as the neighbors got, as long as the neighbors sold their house in recent memory and their home was just like your home.
Knowing how much homes similar to yours, called comparable sales (or in real estate lingo, comps), sold for gives you the best idea of the current estimated value of your home. The trick is finding sales that closely match yours.
What makes a good comparable sale?
Your best comparable sale is the same model as your house in the same subdivision-and it closed escrow last week. If you can't find that, here are other factors that count: Location: The closer to your house the better, but don't just use any comparable sale within a mile radius. A good comparable sale is a house in your neighborhood, your subdivision, on the same type of street as your house, and in your school district. Home type:
Agents can help adjust price based on insider insights
Even if you live in a subdivision, your home will always be different from your neighbors'. Evaluating those differences-like the fact that your home has one more bedroom than the comparables or a basement office-is one of the ways real estate agents add value.
An active agent has been inside a lot of homes in your neighborhood and knows all sorts of details about comparable sales. She has read the comments the selling agent put into the MLS, seen the ugly wallpaper, and heard what other REALTORS & reg;, lenders, closing agents, and appraisers said about the comparable sale.
More ways to pick a home listing price
If you're still having trouble picking out a listing price for your home, look at the current competition. Ask your real estate agent to be honest about your home and the other homes on the market (and then listen to her without taking the criticism personally).
Next, put your comparable sales into two piles: more expensive and less expensive. What makes your home more valuable than the cheaper comparable sales and less valuable than the pricier comparable sales?
Are foreclosures and short sales comparables?
If one or more of your comparable sales was a foreclosed home or a short sale (a home that sold for less money than the owners owed on the mortgage), ask your real estate agent how to treat those comps.
A foreclosed home is usually in poor condition because owners who can't pay their mortgage can't afford to pay for upkeep. Your home is in great shape, so the foreclosure should be priced lower than your home. Short sales are typically in good condition, although they are still distressed sales. The owners usually have to sell because they're divorcing, or their employer is moving them to Kansas.
How much short sales are discounted from their market value varies among local markets. The average short-sale home in Omaha in recent years was discounted by 8.5%, according to a University of Nebraska at Omaha study. In suburban Washington, D.C., sellers typically discount short-sale homes by 3% to 5% to get them quickly sold, real estate agents report. In other markets, sellers price short sales the same as other homes in the neighborhood. So you have to rely on your REALTOR's® knowledge of the local market to use a short sale as a comparable sale.
Carl Vogel, a freelance writer and former editor of The Neighborhood Works magazine, lives in a home in Chicago that is not typical of those nearby, so he appreciates a savvy comp.
By: Carl Vogel
Published: August 05, 2010
Before you put your home up for sale,
use the right comparable sales
to find the perfect price.
How much can you sell your home for? Probably about as much as the neighbors got, as long as the neighbors sold their house in recent memory and their home was just like your home.
Knowing how much homes similar to yours, called comparable sales (or in real estate lingo, comps), sold for gives you the best idea of the current estimated value of your home. The trick is finding sales that closely match yours.
What makes a good comparable sale?
Your best comparable sale is the same model as your house in the same subdivision-and it closed escrow last week. If you can't find that, here are other factors that count: Location: The closer to your house the better, but don't just use any comparable sale within a mile radius. A good comparable sale is a house in your neighborhood, your subdivision, on the same type of street as your house, and in your school district. Home type:
- Try to find comparable sales that are like your home in style, construction material, square footage, number of bedrooms and baths, basement (having one and whether it's finished), finishes, and yard size.
- Amenities and upgrades: Is the kitchen new? Does the comparable sale house have full A/C? Is there crown molding, a deck, or a pool? Does your community have the same amenities (pool, workout room, walking trails, etc.) and homeowners association fees?
- Date of sale: You may want to use a comparable sale from two years ago when the market was high, but that won't fly. Most buyers use government-guaranteed mortgages, and those lending programs say comparable sales can be no older than 90 days.
- Sales sweeteners: Did the comparable-sale sellers give the buyers down-payment assistance, closing costs, or a free television? You have to reduce the value of any comparable sale to account for any deal sweeteners.
Agents can help adjust price based on insider insights
Even if you live in a subdivision, your home will always be different from your neighbors'. Evaluating those differences-like the fact that your home has one more bedroom than the comparables or a basement office-is one of the ways real estate agents add value.
An active agent has been inside a lot of homes in your neighborhood and knows all sorts of details about comparable sales. She has read the comments the selling agent put into the MLS, seen the ugly wallpaper, and heard what other REALTORS & reg;, lenders, closing agents, and appraisers said about the comparable sale.
More ways to pick a home listing price
If you're still having trouble picking out a listing price for your home, look at the current competition. Ask your real estate agent to be honest about your home and the other homes on the market (and then listen to her without taking the criticism personally).
Next, put your comparable sales into two piles: more expensive and less expensive. What makes your home more valuable than the cheaper comparable sales and less valuable than the pricier comparable sales?
Are foreclosures and short sales comparables?
If one or more of your comparable sales was a foreclosed home or a short sale (a home that sold for less money than the owners owed on the mortgage), ask your real estate agent how to treat those comps.
A foreclosed home is usually in poor condition because owners who can't pay their mortgage can't afford to pay for upkeep. Your home is in great shape, so the foreclosure should be priced lower than your home. Short sales are typically in good condition, although they are still distressed sales. The owners usually have to sell because they're divorcing, or their employer is moving them to Kansas.
How much short sales are discounted from their market value varies among local markets. The average short-sale home in Omaha in recent years was discounted by 8.5%, according to a University of Nebraska at Omaha study. In suburban Washington, D.C., sellers typically discount short-sale homes by 3% to 5% to get them quickly sold, real estate agents report. In other markets, sellers price short sales the same as other homes in the neighborhood. So you have to rely on your REALTOR's® knowledge of the local market to use a short sale as a comparable sale.
Carl Vogel, a freelance writer and former editor of The Neighborhood Works magazine, lives in a home in Chicago that is not typical of those nearby, so he appreciates a savvy comp.
Monday, March 7, 2011
Contractor Dispute? Local Licensing Authorities are On Your Side
Article From HouseLogic.com
By: Gwen Moran
Published: February 24, 2011
When a contractor dispute erupts, state and local licensing authorities have the muscle to get you satisfaction.
When you can't resolve a contractor dispute (http://www.houselogic.com/articles/how-fight-back-against-bad-contractor/) on your own, you can access a powerful local ally: Many contractors are subject to various licensing requirements, and you can call upon the regulating authorities for help. It may save you time, money, and the hassle of an expensive lawsuit.
What does it mean to be licensed?
This varies from one location to another and one profession to another. Plumbers (http://www.houselogic.com/articles/replacing-plumbing-pipes-costs-and-options/) and electricians (http://www.houselogic.com/articles/when-time-for-electrical-wiring-upgrade/) typically have strict and near-universal licensing requirements. General home contractors may face fewer licensing requirements. If a contractor has a license, however, you can usually assume he has:
There is no absolute guarantee-licensed professionals of all stripes face charges all the time. But with a licensed professional, you're far more likely to have your project turn out well, and a better chance of redress (http://www.houselogic.com/articles/how-resolve-general-contractor-dispute-your-legal-options/) if it doesn't. Note also that licenses usually refer to professional competence, not general business practices. For example, a licensed plumber may be in violation of his license if he improperly installs a pipe so that it floods your kitchen.
However, if all he's guilty of is taking a month to install a new bathroom when he promised it would be done in two weeks, that's probably not a violation of his license. In that case, you may have recourse with a lawsuit (http://www.houselogic.com/articles/how-resolve-general-contractor-dispute-your-legal-options/) or a bond (http://www.houselogic.com/articles/contractor-bond-when-handshake-isnt-enough-assurance/).
Who supervises the contractors?
With those caveats in mind, if you do face a case of actual contractor incompetence, you may be able to hit them where it hurts by reporting them to whichever agency regulates them. You need to check your area-state, county, or town-to discover who, if anyone, is regulating (http://www.contractors-license.org) the guy working on your home. Check your local government website to see which work your town or county licenses. Unfortunately, regulators can't fight every scam (http://www.houselogic.com/articles/top-5-contractor-scams-and-how-avoid-them/) or help with every contractor dispute.
Regulation is a patchwork affair, with no federal standards:
In short, these agencies can temporarily or even permanently take away their right to work. In addition, some states also have recovery funds available to home owners who have suffered monetary losses to a licensed contractor. Again, this varies by state, and the amount available may be limited. Of course, you can't get help unless your contractor is licensed, so check at the above site before your sign a contract to make sure the firm you're considering has all the relevant state and local licenses.
Registration-it ain't a license
Before you rev yourself up to settle a contractor dispute (http://www.houselogic.com/articles/how-resolve-general-contractor-dispute-your-legal-options/), however, know your terms: In some areas, firms have to register with a local authority, but this is different from licensing, says Carmen Amabile, a Michigan residential maintenance and alteration contractor, and author of How to Hire, Manage, and Fire Your Contractor. Registration is usually little more than a list. Almost anyone can easily register by providing name and address to a local authority and paying a fee. You'll get little traction in reporting a firm that merely had to "register." Gwen Moran is a freelance business and finance writer from the Jersey shore. She's the co-author of The Complete Idiot's Guide to Business Plans and writes frequently about real estate.
By: Gwen Moran
Published: February 24, 2011
When a contractor dispute erupts, state and local licensing authorities have the muscle to get you satisfaction.
When you can't resolve a contractor dispute (http://www.houselogic.com/articles/how-fight-back-against-bad-contractor/) on your own, you can access a powerful local ally: Many contractors are subject to various licensing requirements, and you can call upon the regulating authorities for help. It may save you time, money, and the hassle of an expensive lawsuit.
What does it mean to be licensed?
This varies from one location to another and one profession to another. Plumbers (http://www.houselogic.com/articles/replacing-plumbing-pipes-costs-and-options/) and electricians (http://www.houselogic.com/articles/when-time-for-electrical-wiring-upgrade/) typically have strict and near-universal licensing requirements. General home contractors may face fewer licensing requirements. If a contractor has a license, however, you can usually assume he has:
- A certain level of education or training.
- A minimum level of experience.
- Passed an examination.
- Kept up with changes in code.
There is no absolute guarantee-licensed professionals of all stripes face charges all the time. But with a licensed professional, you're far more likely to have your project turn out well, and a better chance of redress (http://www.houselogic.com/articles/how-resolve-general-contractor-dispute-your-legal-options/) if it doesn't. Note also that licenses usually refer to professional competence, not general business practices. For example, a licensed plumber may be in violation of his license if he improperly installs a pipe so that it floods your kitchen.
However, if all he's guilty of is taking a month to install a new bathroom when he promised it would be done in two weeks, that's probably not a violation of his license. In that case, you may have recourse with a lawsuit (http://www.houselogic.com/articles/how-resolve-general-contractor-dispute-your-legal-options/) or a bond (http://www.houselogic.com/articles/contractor-bond-when-handshake-isnt-enough-assurance/).
Who supervises the contractors?
With those caveats in mind, if you do face a case of actual contractor incompetence, you may be able to hit them where it hurts by reporting them to whichever agency regulates them. You need to check your area-state, county, or town-to discover who, if anyone, is regulating (http://www.contractors-license.org) the guy working on your home. Check your local government website to see which work your town or county licenses. Unfortunately, regulators can't fight every scam (http://www.houselogic.com/articles/top-5-contractor-scams-and-how-avoid-them/) or help with every contractor dispute.
Regulation is a patchwork affair, with no federal standards:
- Plumbers and electricians almost always need state or local licenses, so they're the easiest to confront at this level.
- Other firms may require licenses for all their work, certain kinds of work, or none at all.
- Sometimes independent professional organizations set standards, even though local authorities enforce them.
- What can licensing authorities do?
- A lot! You can contact the state or local licensing agency, and if your claim has merit, you can have your contractor disciplined, says Kia Ricchi, a Florida licensed building contractor and author of Avoiding the Con in Construction. Remedies may include:
- Fines, on top of refunds for poorly done work.
- Suspension or revocation of a professional license.
- Loss of membership in a professional organization.
In short, these agencies can temporarily or even permanently take away their right to work. In addition, some states also have recovery funds available to home owners who have suffered monetary losses to a licensed contractor. Again, this varies by state, and the amount available may be limited. Of course, you can't get help unless your contractor is licensed, so check at the above site before your sign a contract to make sure the firm you're considering has all the relevant state and local licenses.
Registration-it ain't a license
Before you rev yourself up to settle a contractor dispute (http://www.houselogic.com/articles/how-resolve-general-contractor-dispute-your-legal-options/), however, know your terms: In some areas, firms have to register with a local authority, but this is different from licensing, says Carmen Amabile, a Michigan residential maintenance and alteration contractor, and author of How to Hire, Manage, and Fire Your Contractor. Registration is usually little more than a list. Almost anyone can easily register by providing name and address to a local authority and paying a fee. You'll get little traction in reporting a firm that merely had to "register." Gwen Moran is a freelance business and finance writer from the Jersey shore. She's the co-author of The Complete Idiot's Guide to Business Plans and writes frequently about real estate.
Wednesday, February 23, 2011
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