Forever Homes: Homeowners Make Their Homes Retirement-Ready

Provided by Realty Times

It's been called aging in place, universal design and now the more eloquent term: "Forever Homes".

"I don't like to call it aging in place because it's depressing. Nobody likes to think about when they're old. So I call it a 'Forever Home.' Really what that means is that you're planning on staying in your home forever and eventually you're going to get older and so to plan for the future is wise," says Steven Mark, Senior Design Consultant with Marrokal Design & Remodeling.

According to American Association of Retired Persons, the majority of older homeowners prefer to live in their homes as they age rather than move to a nursing facility or other retirement center.

With that in mind, if you're purchasing a home and it isn't yet a "forever home", not to worry, says Mark. He point out that if you think things through from the start you can have your home remodeled in such a way that it provides for room to age.

Mark is a Certified Aging In Place Specialist. He helps homeowners stay in their homes forever by planning for the future and making sure they'll be comfortable, safe, and secure.

"I don't think there is one most important thing. I think it's all important. I think it's vital to discuss everything and let the clients decide what they feel is most important," says Mark.

Some of the top trends in forever homes are wider entry ways, showers that are wheelchair accessible, and grab bars that are placed in key places in the bathroom showers but are also decorative.

"There are lots of things that we can do for a client. For instance, something as simple as wider doorways can be a big help," says Mark.

He says making the doorway just a couple of inches wider can ensure later that a wheelchair will be accessible. At the same time, it doesn't look any different and is undetectable.

"It doesn't cost any more money but if there's ever a wheelchair in the house, [the homeowners] will be glad that there are just a couple more inches on every single doorway in the house," says Mark.

Another feature that's vital for multi-level homes is an elevator. Mark says that sometimes homeowners don't want to put out the money for the elevator before they really need it.

"A lot of times what I'll do in my designs is prepare for a future elevator. I can take a closet downstairs and a closet upstairs and that will be the shaft for the elevator," explains Mark.

The company then prepares it so that if in the future an elevator is put in, it is wired properly and ready to go. "They will lose the two closets but they get the elevator when they need it."

"The most important thing is to consult with somebody who is knowledgeable in this field and certified because there is nothing worse than doing a project today and then having to redo the project to add the necessary features," says Mark.

A little bit of time learning about your options can provide a lifetime of comfort and safety.

Real Estate Outlook: New Home Sale Surge

 

Provided by Realty Times

There was a 5.7 percent increase in the number of sales of newly built, single-family homes in the month of September according to HUD and U.S. Census Bureau. This is the fastest pace since April 2010, when first-time home buyers rushed to take advantage of the home buyer tax credit.


"Combined with consistent, positive reports on housing starts, permits, prices and builder confidence in recent months, today's data provides further confirmation that a gradual but steady housing recovery is underway across much of the nation," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. "Consumers who have been on the sidelines during the past few years are deciding now is the time to go forward with a new-home purchase, assuming they can qualify for a good mortgage under today's exceedingly stringent guidelines."



"New-home sales this year have consistently and significantly out-paced their year-ago levels as favorable interest rates, rising prices and improving consumer confidence have driven demand higher," noted NAHB Chief Economist David Crowe. "Meanwhile, despite a small increase in the inventory of new homes on the market in September, the number of completed new homes for sale is now at an all-time low and the month's supply is at its tightest since October 2005. This is an indication that builders continue to have a tough time obtaining construction credit, even as demand for new homes increases." The inventory is now at a 4.5 month supply.

Regionally, gains were widespread, with both the Northeast and South posting double-digit gains, 16.7 and 16.8 percent respectively.



The good news extends past just new home sales this month. The latest National Association of Home Builders/First American Improving Market Index (IMI) shows that 22 new markets have made the list, which now totals 125 housing markets showing consistent -- 6 months worth -- improvement data in employment growth from the Bureau of Labor Statistics, housing price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau.



Markets added to the list in November include such geographically diverse locations as San Diego, Calif.; Gainesville, Ga.; Omaha, Neb.; Louisville, Ky.; and Charlotte, N.C.



"Ninety-seven out of 103 markets retained their spots on the list from the previous month," observed Rutenberg. . "This shows that a housing recovery is firmly taking root and helping generate needed jobs and economic growth across much of the country -- though we know that this expansion could be even stronger were it not for ongoing challenges including overly tight lending conditions and difficult appraisals."



"The solid increase in the number of improving housing markets this month illustrates the degree to which the housing recovery has gained momentum since we initiated the IMI last year," noted NAHB Chief Economist David Crowe. "Compared to the 30 markets that made the list as of November 2011, we now have 125, which is about one-third of all the markets surveyed for this index."

Is housing turning a corner? Experts think the latest data may point to just that.

Basic Tips for First-time Buyers

Provided By Realty Times

It's a scary step going from renter to first-time homeowner. Where does one start on the search for the perfect home? How much home can you really afford? Are you ready to sign on that dotted line?

Homeownership is a good long-term investment. The keyword, though, is long-term. There are many extra costs associated with owning a home, including such things as repairs, maintenance, insurance, and cosmetic upgrades. Additionally, homes across the nation are still experiencing declines in value. This means you'll need to stay in a home longer before you'll build equity, likely in excess of five years.

The most logical place to start then is with how much you can really afford.

1. What can you afford? This is a tricky question. Of course, there is the number your lender gives you. "You qualify for X amount." It's up to you, however, to decide if that amount is reasonable for your lifestyle. Just because you qualify for X amount doesn't mean you should buy a home priced at that. You may find a cheaper home services all of your needs, while leaving you plenty of extra monthly cash for traveling, entertainment, and other of life's pleasures.
2. Long-term use: Think long-term in terms of the size of the home and its location. You may be a single person or a young couple now, but kids can be a game changer. A once perfectly sized home can seem cramped. With homeowners needing to stay put longer in order not to sell at a loss, it's even more important for first-time buyers to think long-term.
3. Fixer or move-in ready? Some buyers love to buy a fixer-upper home in a prestigious neighborhood. It's a foot in the door, literally. With a few upgrades and cosmetic fixes you can bring an outdated home into the new decade. Other buyers abhor projects. They want a home that needs nothing. They love the kitchen, baths, and even paint colors. Which type of buyer are you?
4. Attached or Detached living? A condo can be maintenance free, but it will also come with HOA fees. A townhouse may give you more outdoor space, but you'll still be sharing walls with a neighbor. Are you wanting lots of privacy? Are you looking forward to the autonomy that a detached home affords you? Be sure to discuss all of your options with your real estate agent.
5. Hiring an agent: If you are like most first-time buyers you'll start your search online. That's a great place to start, but to traverse the roads of real estate competently and safety, you should enlist the help of a real estate agent. They will not only show you the newest listings and the best fitting homes, but will also guide you through all the carefully worded contracts coming your way.
6. Be ready to pull the trigger: While it is currently a buyers market in most areas of the nation, you still need to be ready to buy when a good deal presents itself. Some first-time buyers can become trigger shy when the time finally comes to make an offer. It's no wonder. Seeing your name next to all those zeros can be quite a pill to swallow. So, mentally prepare ahead of time for the act of signing on the dotted line.
7. Lender Pre-qualification: Sellers want pre-qualified buyers viewing their homes. This shows that you are serious about buying. It will also show you how much you can spend and even if you can qualify for a mortgage. Lending is tight and if you have blighted credit you may have a hard time procuring a loan.
8. Downpayment: How much of a downpayment do you have saved? Are there family members who might be willing to help out? Most lenders are now requiring 20 percent down on any home purchase. This means for a $100,000 home you'll need $20,000 in cash to put down.
9. Resale: If you are planning on staying put for the long haul, resale might not be a real concern, but if this is going to be a starter house, you should be sure to consider how easy a home will be to resell later down the road.
10. Finally, be sure to consider the "what ifs" of life. What if you or your spouse lose your job? Will you still be able to afford your mortgage payments? What if you become ill? Will you still want to climb those three flights of stairs? What if you have children? Will you quickly outgrow your home? All of these scenarios should be given careful consideration.

Homeownership can be a genuine joy. It can bring stability and a sense of pride to any household. Take the time to think over these ten tips and you'll be sure to make a great decision for your first purchase!

Fannie and Freddie becoming 'wards of the state'?

Provided By InmanNews.com

The government's failure to overhaul mortgage giants Fannie Mae and Freddie Mac is pushing the U.S. toward nationalization of the mortgage market, and would-be homeowners will be the losers if competition between private companies isn't restored.

That's according to Jim Millstein, the former Treasury Department official who oversaw the reorganization of American International Group Inc., who thinks the government will have to get into the business of reinsuring mortgages if it wants to restore the private sector's role in mortgage securitization, and reduce taxpayer exposure to Fannie and Freddie.

Millstein, the Treasury Department's chief restructuring officer from 2009 to 2011, says neither the Obama administration nor Congress has put forward a workable plan to lift mortgage giants Fannie Mae and Freddie Mac out of conservatorship.

Increasing the fees charged by the companies and taking all of their earnings threatens to make Fannie and Freddie "permanent wards of the state," Millstein argues in an editorial he co-wrote with Phillip Swagel, a professor at the University of Maryland School of Public Policy.

Four years after the takeover of Fannie and Freddie, they say, "the government now backstops 90 percent of all new mortgages and has no plan to reduce its market share, no plan to protect taxpayers against future losses on the trillions of dollars of mortgage credit underwritten since the firms were placed under government control."Millstein and Swagel have proposed legislation that would create a new government reinsurance program, and turn Fannie and Freddie into one of many private "first loss" insurers that would pay into it.

The Treasury Department's decision to claim Fannie and Freddie's earnings as dividends is intended to make sure that taxpayers recoup the $141 billion they're still owed from bailing the companies out (Treasury has invested $187 billion in the companies and received in $46 billion in dividends). But the government's "cash sweep" prevents Fannie and Freddie from building up capital reserves that would protect taxpayers against potential losses on $4.5 trillion in mortgage guarantees, Millstein and Swagel argue.

In a similar fashion, recent increases in Fannie and Freddie's guarantee fees mandated by the Federal Housing Finance Agency would seem "sensible and long-overdue," the two maintain. Fannie and Freddie, they say, "had grossly underpriced the insurance they provided on mortgages before the crisis, putting taxpayers at risk for the bailout that inevitably came and making it difficult for other private companies to compete with them."

But the fees are still "significantly below" what private companies would charge, and the increases are all going to the government, rather than helping Fannie and Freddie build up capital and reserves.

"With Washington hungry for revenue, there will be inexorable pressure to milk Fannie and Freddie's guarantee fees to support other government spending," Millstein and Swagel warn. "The losers will be potential homeowners, as mortgage availability will be determined by government regulators rather than by private firms competing for their business."

Ironically, they say, the quickest way to get Fannie and Freddie out of conservatorship and restore competition among private firms is for the government to get into the mortgage reinsurance business. Millstein and Swagel envision a system in which private mortgage insurers would take on a growing proportion of the first loss on bad mortgages before government reinsurance would kick in.

Fannie and Freddie would themselves be transformed into private, "first loss" insurers, and forced to compete with other private companies willing to pay the government for reinsurance.

With "strict regulation to ensure that community banks can originate and securitize mortgages on an even playing field with the giant banks," competition would breed new entrants in mortgage finance. Any of them, including Fannie and Freddie, could fail without the threat of a housing market collapse, Millstein and Swagel maintain.

A government reinsurance program will be a tough sell to conservatives, they acknowledge. But the government, having placed Fannie and Freddie in conservatorship, is already "creeping" toward nationalization of the mortgage market.

A government reinsurance program with private insurers ahead of the government is perhaps the only way, they say, to shrink Fannie and Freddie's portfolios, reduce taxpayer exposure, and jump start a competitive private market.

"Today, we're doing massive guarantees through the conservatorships of Fannie and Freddie," Millstein tells the Wall Street Journal's Nick Timiraos. "But it's a ham-fisted, convoluted way of delivering the guarantee. Taxpayers aren't being protected at all. There's no capital ahead of us."

Mortgage Rates Relatively Unchanged

Provided By Realty Times

In Freddie Mac's results of its Primary Mortgage Market Survey®, fixed mortgage rates moved slightly higher while continuing to remain near their all-time lows helping to support the housing market.

30-year fixed-rate mortgage (FRM) averaged 3.41 percent with an average 0.7 point for the week ending October 25, 2012, up from last week when it averaged 3.37 percent. Last year at this time, the 30-year FRM averaged 4.10 percent. 

15-year FRM this week averaged 2.72 percent with an average 0.6 point, up from last week when it averaged 2.66 percent. A year ago at this time, the 15-year FRM averaged 3.38 percent. 

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.75 percent this week with an average 0.6 point, the same as last week. A year ago, the 5-year ARM averaged 3.08 percent.

1-year Treasury-indexed ARM averaged 2.59 percent this week with an average 0.4 point, down from last week when it averaged 2.60 percent last week. At this time last year, the 1-year ARM averaged 2.90 percent.  

According to Frank Nothaft, vice president and chief economist, Freddie Mac:

"Mortgage rates remained relatively unchanged this week and should continue to support the housing market and mortgage refinance. Existing home sales in September eased slightly to 4.75 million but was the second strongest annualized pace since May 2010. Moreover, new home sales rose to the most since April 2010. In addition, low rates and strong demand have already pushed the FHFA purchase-only home price index in August to its highest level (seasonally adjusted) since June 2010. And not surprisingly, the Federal Reserve in its October 24th monetary policy announcement acknowledged the further signs of improvement in the housing sector, albeit from a depressed level."

How Much Home Can I Afford?

Provided By Realty Times

Are you gearing up to buy a home? Now is a great time to make a move in the real estate market. Interest rates are at historic lows. Compare today's 30-year fixed-rate average of between 3 and 4 percent to the 13 to 18 percent rates of the 1980's and you'll see why everyone is buzzing about the great deals to be had!

Additionally, homes are now at their most affordable on record. This is because home values have dropped across much of the nation. There is also a huge supply of distressed properties on the market which sell for steep discounts.

With all these great deals it's easy to get carried away, but the lesson learned by millions of foreclosed homeowners is to buy within your means. Just because you're approved for X amount doesn't mean you should spend that much.

So, how much home can you really afford? Consider the following.

What is your monthly income?If you have a salaried job, this can as simple to calculate as looking at your paystubs, but if you work on commission and tips, it's important you consider both high income and low income months.

What is your monthly debt load?Consider the monthly cost of child support, alimony, student loans, credit cards payments, car loans, and other debts that must be paid each month.

Is your job stable?

Today's job market is still a little shaky. While the unemployment rate has improved, many still struggle to find jobs. What would happen if you were to lose your job? Would you still be able to pay your mortgage?

What are your monthly expenses?This is different than your monthly debt load. These are extra expenses including: cable, internet, cell phone, gas, food, entertainment, clothes, travel, etc.

How long will you be staying put?Homes just aren't appreciating at the rate they used to. You will probably need to stay put for at least five years before you would break even on a sale.

How much do you have saved?Lenders expect for today's buyers to have at least 20 percent to put down in addition to closing costs. A $200,000 house will require a $40,000 down payment. Do you have this money in addition to an emergency fund? If not, you might want to consider a less expensive house or waiting to buy.

Quiz: Moving Up

Provided By Realty Times

Attractive interest rates and bottomed-out home prices have many homeowners wondering if now is the time to make a move. Is the climate right for purchasing that dream home? It all depends on your personal needs, finances, and of course, the state of your local housing market. Find out if now's the time to make a move by taking this quick quiz.

How much do you owe on your home? Many homeowners today find themselves owing more than their homes are worth. These owners should think long and hard before selling homes at a loss.

What are your housing needs in the decade to come? Are you a new couple expecting to expand your family? Today's market presents great deals that can facilitate you moving up to a bigger home.

Are you nearing retirement age? While it may be appealing to buy the dream McMansion you've had your eye on, it's important to remember that bigger homes require bigger maintenance, something many seniors look to avoid.Still other families are moving up to bigger homes that have the room for multiple generations.

Are you willing to take on a larger mortgage? Even though interest rates are low, a larger home will not only cost more in taxes and utilities, but you could also find yourself with a steep mortgage payment.

Do you have an 8-month emergency fund? There is still much uncertainty in the job market. Every household should be sure to saved back at least 8 months worth of cash for an emergency fund.

How are your retirement savings? The same line of thought applies to number five. Housing isn't turning out to be quite the booming investment it once was and while home prices are starting to rebound, a home is never a substitute for a solid retirement plan that is in full swing.

Why are you buying? Is it for more space, a better school district, or to take advantage of today's screaming deals? These can all be admirable pursuits. Are you instead buying for the status and prestige of a neighborhood? Homeownership is still a hefty responsibility, even with low interest rates and high levels of affordability. It should never be entered into lightly.

How quickly are homes selling? Most households cannot afford to carry two mortgages, so be sure that you are able to sell your home first before buying that dream home. Talk to your local real estate agent about the current market conditions, such as how long a home is taking to sell, sale prices, etc.

What do you need? This last question is more philosophical and may take some extra time and thought. After the 2009 recession, many consumers are asking themselves, “What do I really need?” Wants versus needs are sometimes a hard pill to swallow in a consumer-driven society, but many families are finding that they are happier with smaller homes and more family time.There are great deals to be had in today's market. If your family is ready, financially and emotionally, for a move up, then be sure to contact your local real estate agent for more details on the condition of your local market and for some of today's hottest listings.

Buying a Short Sale

Provided By Realty Times

An ailing economy has had far-reaching effects. Homeowners nationwide have struggled to manage ballooning mortgage payments in the aftermath of layoffs and long unemployment lines. They've seen home values plummet, all while becoming upside down in their loans.

Foreclosure rates remain high and account for one-third of all home sales. Some homeowners have found relief in the form of short sales.

A short sale is a sale where the home sells for less than the seller owes, but the lien holder (bank, etc) agrees to this price and this loss. A short sale means the seller can avoid foreclosure, a stain that would have otherwise remained on their credit reports for seven years.

What does buying a short sale home mean? First, a short sale can mean a bargain. That's what all buyers want to know, right!?

If you are planning on searching out a short sale bargain, however, it's important you understand what this sort of purchase will entail. Are there reasons you shouldn't buy a short sale?

First, short sales will require you to be a patient buyer. You may have agreed to a price and terms with the seller, but the lender must then agree to all terms before you can close. They are notorious for taking their time -- up to several months. There is legislation currently in Congress that would require lenders to answer within 45 days.

Lenders also want to be sure you have financing in order. They love cash offers, which keep deals short and sweet. Come to the table with pre-qualification and approval in order.

A short sale probably means any contingencies are out the window. This isn't a time for hard-nosed negotiations. A bank has few emotions. They are all about the bottom-line. Are you wanting repairs? That probably won't happen.

Only two out of five short sales are approved by lenders. So, you may spend a lot of time waiting on a reply, only to be rebuffed.

Additionally, short sales can be contractual nightmares. You'll need to employ a good real estate attorney so that you know what you are buying. Most buyers aren't fluent in legal terminology.

After the robo-signing nightmare of the past decade it's more important than ever that you get a clear title on any home you buy. Do not enter into a quit-claim deed. Be sure you are getting a good, clear title to any home. This may also mean enlisting the expertise of a title officer to see if there are any additional liens on a property.

Short sales are a time to be sure all legal aspects of the deal are clear and gone over with a fine-toothed comb by the appropriate professionals. Do this and you could be in for a great deal during a time of historically low interest rates.

All About FHA Loans

Provided By Realty Times

When it comes time to buy a home you’ll be faced with an important decision. How will you be financing this purchase? 

Around a third of all home purchases are paid in cash, but that leaves a full two-thirds of buyers seeking a mortgage. From adjustable rate (ARM) to fixed-rate mortgages there are a lot of choices. 

Today’s buyers are also faced with one big issue: the downpayment. In the aftermath of the 2009 recession many lenders are requiring at least a 20 percent downpayment. This helps the lender to ensure their investment in the unfortunate event that the buyer defaults on the loan down the road. 

Not every buyer can afford a 20 percent downpayment, however. That’s where an FHA loan comes in. How does an FHA loan differ from a conventional loan?  

According the the Federal Housing Administration (FHA) your downpayment amount can be as low as 3.5 percent (depending on your credit score). Additionally, most of your closing costs and fees can be included in the loan and you are more apt to be able to qualify for credit. There are also no penalties for early pay-off -- one peculiar loophole with some conventional mortgages.  

There are, however, FHA loan limits, which may be problematic for buyers who live in high cost areas.

As of October 1, 2011, there are new limits. HUD reports that the FHA reduced loan limits in the highest cost metro areas of the country. They noted that "the new "ceiling" loan limit for higher cost areas was reduced from $729,750 to $625,500 for one-unit properties. FHA loan limits vary based on area median home price, but all will fall within the range of $271,050 and $625,500 for one unit properties." Not every sort of dwelling or property is eligible for an FHA, however.  

Additionally, an FHA loan is transferrable. This means the borrower can transfer the loan to another qualified borrower without this new party having to apply for a brand new mortgage.  

What about a fixer-upper home? FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. You can even take out an FHA Energy-Efficient Mortgage that includes the purchase price and funds for energy efficient upgrades!  

The List Of Improving Housing Markets Is Increasing

Provided By Realty Times

If you've been keeping a list, then, just like Santa, you'd better check it twice–not for who's naughty or nice–but rather which real estate markets are improving. According to the National Association of Home Builders (NAHB), "the number of improving housing markets across the country rose to 99 in September."

The data comes from NAHB's First American Improving Markets Index (IMI), released just this month. The figure is up from last month when there were only 80 metro areas on the list. Over six consecutive months, the Index looks at three categories: housing permits, employment, and house prices, to see how much they have improved from previous dips. The most recent IMI shows metro areas from 33 states as well as the District of Columbia.

The growth spurt is, obviously, good news to Barry Rutenber, chairman of NAHB and a Gainesville, Florida home builder. "This solid growth is an encouraging sign that housing continues on a slow but steady recovery path that is gradually advancing from one local market to the next."

NAHB reported that the list grew, overall, by 19. Retaining their spots on the current list were 68 metro areas. An additional 31 new metros were added, while only 12 dropped off.

"More metros across the country are experiencing a sustained uptick in house prices, employment and new building activity as rising consumer confidence in local market conditions pushes more people to consider a new-home purchase," stated NAHB Chief Economist David Crowe in a news release. The downside, according to Crowe, is the "overly tight lending conditions" which are slowing the pace for both builders and buyers.

Still, the NAHB reports that this is a positive sign. The IMI nationally tracks housing markets that are showing signs of improving economic health. In order to get a ranking on the top improving Metropolitan Statistical Areas, the index measures three sets of independent monthly data. Indicators analyzed are from the following areas and sources: employment growth (Bureau of Labor Statistics), home price appreciation (Freddie Mac) and single-family housing permit growth (U.S. Census Bureau). For a Metropolitan area to rank on the IMI, NAHB requires data to confirm improvements in all three measures for a period of at least six months following those measures' respective lows.

On the most current IMI, there are diverse geographical locations including: Tucson, Arizona; Jacksonville, Florida; Springfield, Illinois; Greenville, North Carolina; and Bend, Oregon.

This report will likely be touted as an indication that the housing market is, indeed, rebounding. What does that mean for sellers? It could mean perfect timing. The end of the year is nearing and many sellers are hoping to close escrow before 2012 wraps up. Seeing metro areas across the country improving may be the fuel needed to accelerate the process for the once hesitant and wary buyer.

If your home is on the market, check the full list of 99 improving housing markets on NAHB.org. If your metro area is listed, capitalize on the good news and be sure to have print materials with the information available for your potential buyers.

Red flags you're dealing with a bad contractor

Provided By Yahoo!

Your home is your sanctuary from all of life's stresses. So it makes sense that when it comes time to remodel, you want to find a professional home contractor that you can trust.

First things first, you'll want to do your homework and look to resources like your local Better Business Bureau (BBB).

"BBB handles a lot of inquiries and complaints about home contractors, and we constantly remind people - do your research first and make sure you select someone you feel comfortable with," says Katherine Hutt, director of communications and media relations at the Council of Better Business Bureaus.

To help you start the evaluation process, we've compiled a list of potential red flags to help you avoid fraudulent or just plain shady contractors.

Red Flag #1 - No References

Warning: Be wary of a contractor that can't provide you with any references.

"The only reason that someone may not have a lot of references is if the construction company is just getting started and does not have a lot of work under their belt," said Joe Rongisch, owner of Vantage Design & Construction in Gretna, Neb.

Prefer getting a reference from someone you know? Consider asking for personal recommendations from people you trust - family, friends, neighbors, or colleagues.

In fact, according to the National Association of the Remodeling Industry (NARI), nearly half of all projects completed by a remodeling contractor are the result of client referrals.

Red Flag #2 - No Listed Address

As a contractor, wouldn't you want the public to know your location?

It sounds like a no-brainer, but some contractors still don't advertise their address - and this is a warning sign to look out for.

"If a contractor is not willing to disclose his work address, it may mean he is working from his home," says Rongisch. That may not be a bad thing, unless a contractor is trying to stay under the radar, he adds.

When trying to determine if a contractor you're looking into has a legitimate address, here are a few tips: Look on the contracting company's website or in old phone books. You can also try calling the BBB or your local chamber of commerce to see if the company is listed with them.

Don't be afraid to ask the contractor why the business address isn't disclosed. If he or she avoids the question, it's probably wise to find another person for the job.

Red Flag #3 - No Permit

Steer away from contractors who say they won't need any permits to start building, repairing, or remodeling.

"If there is no permit, most likely, there is not going to be professional tradesmen on the project, and no way for city inspectors to verify that everything is being done to code," says Rongisch.

Besides requiring government inspection to make sure everything is up to code structurally, a permit can better ensure home insurance coverage. For example, if you don't have a building permit and damage occurs to the newly remodeled area, your insurance may not cover the replacement or liability costs, according to Rongisch.

And depending on your home's location, a permit might be necessary for changing the roofline, putting in new electrical wiring or plumbing, adding a deck, or building a new room, adds Rongisch.

Red Flag #4 - Door-to-Door Solicitation

Although legitimate businesspeople could solicit door-to-door, be cautious and do your research if you decide to hire a contractor who has knocked on your door.

Chip Voelsch, owner of BellaVita Builders, Inc. in Geneva, Ill., doesn't recommend hiring contractors that show up at your doorstep.

"They are looking for a quick turn and quick cash," says Voelsch. "They must be looking for work, and that is a red flag to me. I have never seen that good of craftsmanship when you are doing something quick."

Just keep in mind that not all door-to-door contractors are untrustworthy.

For instance, Rongisch says that some contractors - including his company - use door-to-door solicitation to get their name out in specific parts of a town.

"We have done this on occasion and have seen great results," adds Rongisch.

Red Flag #5 - No Certification or Insurance

A contractor without insurance is like pizza without cheese: It's just not right. To name just one example, if a contractor has no insurance and something happens while on the job, you are responsible for paying the cost in damages.

So how do you know if they are insured? Ask that the contractor's certificate of insurance be mailed or emailed directly to you from the insurance company. Don't accept a copy - it might not be legitimate.

"The true scam of all time is companies paying their insurance on Jan. 1, and then canceling it the next day to get all their money back," says Rich Cowgill, president of the National Association of the Remodeling Industry (NARI) Greater Chicagoland and owner of Vision Design and Build, Inc. in Willow Springs, Ill.

In fact, these sneaky contractors make copies of their certificate and use it all year, even though they really aren't insured, Cowgill adds.

On the other hand, trustworthy contractors will carry personal liability, property damage, and worker's compensation coverage, according to the Federal Trade Commission, a federal agency that protects American consumers.

Red Flag #6 - Full Payment Requested Prior to Starting Any Work

Another red flag to look out for: a contractor that requests the entire cost of the project up front.

You never want to pay the entire cost at once - especially if the contractor hasn't even started your project yet.

"No one ever asks for the full price of the job unless something is fishy," says Voelsch.

Consider a payment option like the BBB's rule of thirds: pay one third at the beginning of the project, one third when work is underway, and the final third when you are pleased with the final results, says the BBB's 2012 article "BBB Warns Contractors: Promising to Pay Insurance Deductibles is Illegal."

Just keep in mind that up-front costs may vary depending on the project and cost of materials.

"As a contractor, I don't want to be stuck with a bill to the lumberyard for someone's job," says Voelsch. "So, I usually ask for the price of the material by showing them the estimate of what it will cost."

Red Flag #7 - No Written Contract

What's another red flag to help you identify a sketchy home contractor? Answer: a contractor who fails to provide a written contract detailing the entire project's terms and conditions.

"A contract or proposal is very important for any job of any size," says Rongisch. "If there is no contract, there is nothing holding the contractor to what was said. Things are always forgotten or understood differently."

So what items need to be included? According to Cowgill, the contract should lay out details of the project - products and brand names with serial numbers - with the total price, including labor.

And if there are any changes along the way, they must be written and signed in a change order, adds Cowgill.

Red Flag #8 - No Chemistry

Just like in dating, you might feel that a contractor isn't "the one" after your first meeting.

"If he is a jerk in the beginning, he will be a jerk at the end," says Voelsch. "This has to be a good relationship back and forth."

This may sound like a no-brainer, but go with your instincts. If you feel uneasy after the first meeting, don't hire the contractor. There needs to be trust, and you need to feel comfortable around the person who will be working on - and in - your home.

The Bottom Line

This is your home and your money. So if you want to find the best contractor for your needs, you should take the time to research and ask Qs.

A Return To Normalcy?

Provided By Realty Times

As the residential real estate market continues to recover, developments in Southern California point to new trends within Los Angeles and throughout the nation. Specifically, the economic crisis - and all the attendant developments related to the rise and fall of prices in the last few years - now offers a return to normalcy. That is, the push by investors to buy foreclosed properties and distressed homes, resulting in purchases at the expected resale price, now has owners in a holding pattern -- which is not necessarily a bad thing.

This situation, which furthers a more conservative buy-and-hold strategy among investors, is good for everyone: residential brokers have qualified clients who want to own something, prices have a chance to stabilize and the market as a whole - the historic criteria by which we measure financial appreciation - revert to more predictable standards. These events offer all real estate brokers a reliable example of how to respond to increased demand in their respective cities.

To the extent that investors view the Los Angeles housing market as an inviting opportunity, and my professional experiences underscore this fact, they believe we are in a new era - a more attractive environment - where speculation is less common and growth is more steady. Brokers should welcome this news because it gives them the strongest argument about buying residential real estate: that a home is an investment, something that can steadily grow, provide income (for rental properties) and weather economies of both expansion and contraction. Indeed, brokers should work even more ambitiously with investors; their assets - knowledge and analysis about long-term performance for housing within a certain city or neighborhood - are they key to transforming a home from an inflated commodity into a tangible source of success.

The lesson here is simple: brokers and investors can work together, so the outcome is a restorative one; both parties can identify properties where, despite competitive bidding by other investors, the price for a home - and its relative worth among similar homes in the same neighborhood - can foster a sense of patience. For the one thing this market does not need - the chief agent responsible for distorting prices - is wild speculation. Fueled with easy access to credit, and accelerated by inexperienced buyers with unrealistic expectations, those factors are (and were) a recipe for financial disaster. Hence the importance for brokers and seasoned investors to collaborate with each other, creating a climate of reassurance and economic vitality.

By following these principles, Los Angeles can go from city with an asterisk (denoting excess inventory and massive foreclosures) to a place where the real estate market is alive and well. Brokers in other cities can replicate the success of Southern California, and bring depressed neighborhoods back to life. This period may, in fact, become a new golden age of recovery, stability and ultimate success.

The duty rests with investors and brokers to devise a plan away from speculation and towards stability. These groups are already near that point; they simply need to continue working with each other, for their own mutual benefit and the good of the community. The rewards will reverberate far beyond Los Angeles and the rest of Southern California.

Real Estate Outlook: New Home Sales Rise

Provided By Realty Times

The sales rate of newly built, single-family homes was on the rise during the month of July: this is welcome news to builders all across the nation.

According to the latest figures from HUD and the U.S. Census Bureau, sales of newly built homes rose by 3.6 percent for the month to a seasonally adjusted annual rate of 372,000 units.

"Sales of new homes in July returned to the same solid pace they set in May, which was the fastest sales rate we'd seen in more than two years," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. "This is further evidence that consumers are becoming more confident in local housing markets as they look to take advantage of today's very favorable prices and interest rates."

Noting that the three-month moving average of new-home sales has been edging up consistently since last September, NAHB Chief Economist David Crowe said, "Today's good report is the latest indicator of a gradual, upward trend that we expect to continue through the remainder of this year." However, he added that "The fact that the inventory of new homes for sale reached an all-time low in July is a worrisome signal that ongoing, unnecessarily tight credit conditions are keeping builders from being able to replenish supplies as consumer demand improves."

Will this trend continue into our current month? The Mortgage Bankers Association (MBAA) reports that this week mortgage applications declined by 7.4 percent. Refinance activity also decreased by 9 percent. This is the lowest level since July.

Mortgage Refinancing now makes up 80.0 percent of total applications, down just slightly -- one percentage point -- from the week prior.

Affordability remains a hot topic in today's market. While affordability rates remain near record lows, will they remain so? And what about the low-income portion of the population?

A new report from HUD indicates that since its inception, the nation's low-income housing Tax Credit Program has helped produce more than 2.2 million affordable apartments. Now that the initial 15-year required "affordability period" has passed, the vast majority of theses LIHTC properties remain affordable for working families.

The HUD-commissioned report cautions, however, that this could all change as state and local use restrictions expire. Over a million units could become market-rate properties out of the reach of low-income households.

"This report is a wakeup call to all of us interested in preserving our nation's affordable housing," said HUD Secretary Shaun Donovan.  "As LIHTC properties age, especially in high-cost areas with escalating market demand, State Housing Finance Agencies must do everything they can to protect the opportunities for working families to live in neighborhoods they might otherwise not be able to afford."

The study's authors suggest that Housing Finance Agencies should place the highest priority on the developments that are most likely to be repositioned in the market -- as higher-rent housing or conversion to homeownership or another use.

TEXAS ECONOMY OUTPACES NATION'S

Provided By TAMU RECON

The Texas economy continues to grow at a rate higher than the national average, according to the Real Estate Center's latest Monthly Review of the Texas Economy.

The state gained 226,800 nonagricultural jobs from July 2011 to July 2012, an annual growth rate of 2.2 percent compared with 1.4 percent for the United States.

The state’s nongovernment sector added 260,400 jobs, an annual growth rate of 3 percent compared with 1.8 percent for the nation’s private sector.

Texas’ seasonally adjusted unemployment rate fell to 7.2 percent in July 2012 from 8.1 percent in July 2011. The nation’s rate decreased from 9.1 to 8.3 percent.

All Texas industries except the information industry had more jobs in July 2012 than in July 2011, but the state’s government sector continues to lose jobs. The state’s mining and logging industry ranked first in job creation, followed by the construction industry, the leisure and hospitality industry, and the professional and business services industry.

All Texas metro areas except Killeen-Temple-Fort Hood, Wichita Falls, Beaumont-Port Arthur, Abilene and Brownsville-Harlingen had more jobs in July 2012 than in July 2011. Texarkana ranked first in job creation followed by Odessa, Corpus Christi, Midland and Tyler.

The state’s actual unemployment rate in July 2012 was 7.5 percent. Midland had the lowest unemployment rate followed by Odessa, Amarillo, San Angelo and Abilene.

The Monthly Review of the Texas Economy was written by Center Research Economist Dr. Ali Anari and Chief Economist Dr. Mark Dotzour. It can be downloaded free from the Center's website.

Interest Rate Watch

Provided By Realty Times

Selected Rates as of September 7, 2012:

30 yr fixed:	3.55%
15 yr. fixed:	2.86%
1 yr. adj:	2.61%

Do I need private mortgage insurance?

Every lender wants security—some form of collateral that can be claimed, and if necessary, liquidated—in the event that the borrower doesn't pay.

Properties tend to be secured by "equity." That's the margin between the loan balance and the value of the underlying property. Consider a $60,000 loan secured by a $100,000 home. There is plenty of equity ($40,000 of it), so the lender has plenty of security. If the monthly payments don't come in, the lender can claim the home in a foreclosure.

When the equity is not so substantial, however, the lender has a problem. Even if the home is taken in foreclosure, its value may not match the money that's owed on the mortgage. And the lender must factor in the added costs of hiring lawyers, owning the home for a while, and then maybe paying a broker's commission to resell it.

Enter the solution: Private Mortgage Insurance, or PMI. Traditionally, when a loan balance exceeds 80 percent of the home's value, the owner has been required to insure his ability to pay. If he didn't pay, the insurer would step in and pay if off for him.

PMI has long been required of homebuyers with less than 20 percent to put down. The rates are determined by a formula like this: Multiply the loan balance by .005. So an $80,000 balance would require annual PMI of $400, which is divided into monthly payments of $33.

Most homebuyers need PMI because 20 percent of the sale price on a home is a big chunk of money. But when the principle balance drops below 80 percent of the home value (perhaps after a few years of payments) lenders are required to notify homeowners and drop the PMI requirement.

With the looser lending standards of the past decade, the lending industry devised ways for borrowers to dodge the PMI requirement. A borrower lacking a 20 percent payment was allowed to take out a "second" loan to make up the difference.

Someone with only a 10 percent down payment, for example, could accept one loan for 80 percent of the purchase price and a second one for 10 percent. The "second" has a higher interest rate because the lender is at greater risk and if the home is foreclosed, his lien is in a junior position to the first lender. And voila! No more PMI. Another advantage to the buyer was that interest paid on the second loan was tax deductible—unlike PMI.

However, financing tricks like that are mostly a thing of the past. At this point, very few lenders have much cash to put into second-position loans on purchases that are already highly leveraged. Another option in the past was to pay more interest on your first-position note. Some lenders were willing to waive the PMI requirement in exchange for interest rates .75 percent to 1 percent higher. Nice terms if you can find them. But if you do, check your calendar—you may be stuck in a 10-year time warp.

What Do You Buy When Nothing is Perfect?

How do you decide what to buy - whether to buy - when nothing's perfect?

Today's "dream home" emphasis on buying real estate makes it tough for buyers whose wish list and budget do not match. If you have designer tastes and a fixer-upper budget, should you buy now, or wait until you can afford more?

That question is simple to ask. Buyers should always ask and answer this question before they start the dream home search. The problem is that this simple question has a very complex answer which is all about you. I've been answering it by raising relevant issues and topics in the 600 plus articles written for this column, "Decisions & Communities," and I can always see more considerations…and more articles to write.

The real answer: Only you know what to buy and if you should buy.

To prepare yourself and your partner to answer this question with foresight - not wish you had in hind sight - there are strategies to consider:

When prices are going up, strategize.The urgency to jump into the market before real estate is financially out of reach, must be weighed against the reality that prices often reverse themselves at some stage. Decisions regarding this financial concern should include considerations like the following:

• The "what goes up, must come down" pattern is no longer true for all neighbourhoods, particularly choice urban and recreational locations.
• Factor in the cost of where you'll live while you wait, and how you'll stay ahead of inflation. Calculate how to realistically save more money toward the purchase.
• Create a Plan B in case prices do not come down when you want them to.

Set a budget that expands real estate choices.Making sure you "tick off" all the items on your wish list, but don't end up "house rich, cash poor" can be a challenge. Get tough, to get ahead: Before you view any houses or condominiums, put your financial ducks in a row, so nothing will get in the way of negotiating a deal when you find "it":

• Get your credit in order. You can check your credit rating with the main credit companies for free. Correct errors, and there will be errors, since no one cares about the accuracy of this record but you. You know about paying off credit cards and any debt you can to achieve top borrowing power, so do it.
• Search out a mortgage broker experienced at maximizing borrowing power while minimizing borrowing costs. Time spent here will save you thousands over the years ahead.
• Make sure you know why you "must have" the "must haves." Often fads and trends influence this list. Concentrate on buying what's going to be in and what can be inexpensively up-dated to follow new trends, rather than paying for renovations that are already fading from fashion. Pare the "must have" list down to "absolutely must haves" - a very short list which will probably include a specific location. With fewer limiting criteria, you'll have more possibilities to choose from. Then, create a "value" list of features and benefits that will add value through expanded use, income potential, cost reduction, or other factors of relevance to you. Keep track of these details when viewing, so comparisons can be accurate.
• Create a budget to cover all the costs of buying and expenses of ownership in the first year. A real estate professional will know how to crunch these numbers so you're clear on how much cash you'll need on closing to cover legal fees, adjusted costs like property taxes, and expenses heating, and utilities for the upcoming year. Provide your buying agent with a list of ownership costs you want to know for each property, so you can determine value and, eventually, use these figures to decide on an offer price.

Adapt to buyIf you walk into a house or condominium unit and feel you're home, put in an offer. If you don't have this immediate "dream home" reaction, you may still discover this is an ideal property for your needs, and a great investment.

• By totalling up "value" features and benefits, you will find real estate to love, and transform into a dream. Make enough profit on this real estate, and you can afford a true dream home on your next buy.
• Buy the best location you can afford. Ideally, the least house on the best street within your budget for the greatest appreciation in value over the shortest time. The same is true for condos, a lesser unit in the best condo, in the best location you can afford.
• Place the greatest weight on features and benefits that cannot be changed like location, including sun orientation, and things that are expensive to change like square footage. Look for bad decor and sloppy housekeeping since these can reduce the number of interested buyers and keep the price down. Be aware of superficial "staging" and its stripped down approach that makes rooms look larger and everythinglook newer.
• Buy the neighbourhood first. Decide on who you're going to live with and where you'll spend your time shopping. School and workplace issues are important. Find out what redevelopment is planned for the area. Many lovely neighbourhood shopping areas are threatened by "big box" development.

Discovering your dream home can be expensive. If you get emotionally attached to the real estate before you own it, you can lose your negotiating toughness and spend more than necessary. This can also lead to drastic overspending reactions if there are multiple offers.
Pay as little as possible, but remember that there are other cost factors to build into the offer including closing date, what is included in the price, and what the owner will pay for (survey, repairs, taxes, etc.). Make sure you have a thorough home inspection to reveal even deliberately-hidden problems with wiring, plumbing, and other expensive to repair elements.
Concentrate on the dream of home ownership, rather than the cosmetic "staged" appeal of a particular house or condominium, and you won't have your dream turn into an expensive nightmare.

Keller Williams Realty Ranked Highest in Customer Satisfaction Among Home Buyer and Seller Segments by J.D. Power and Associates

Provided By Keller Williams Realty


— According to the J.D. Power and Associates 2012 Home Buyer/Seller Satisfaction Study released yesterday, Keller Williams Realty, Inc. ranks highest in customer satisfaction in both the homebuyer and home seller segments. Keller Williams Realty, Inc. achieved the highest scores in all measured factors across both segments, receiving the highest JDPower.com Power Circle Rating among its competitors overall.

“We are so proud to have our associates be recognized once again for leading the industry with the
influence and reputations they have in their local communities. They continually demonstrate not only
their level of talent, but their commitment to serving our communities with the utmost integrity and
highest level of service,” Mark Willis, CEO of Keller Williams Realty, Inc., stated. “Congratulations to
all Keller Williams Realty associates. They have certainly earned this prestigious distinction.”

The fifth annual J.D. Power and Associates study measures customer satisfaction with the largest
national real estate companies within the home buyer and seller segments. Scores are determined by
examining three factors of the home-buying experience: agent/salesperson; office; and variety of
additional services. For the home-selling segment, agent/salesperson; marketing; office; and variety
of additional services are examined.

J.D. Power and Associates stated, “[The uncertain economic times] present a challenge for the real
estate companies to really work closely with the customers and really hold their hand through the
entire process to make them feel more comfortable in the decisions. Keller Williams has set itself apart by performing high in all the areas that are most important to customers specifically with the agent, the offices, and the services that they provide.” “Our agents go above and beyond to help their clients at one of the most personal times in their lives– when they are buying or selling a home. We are incredibly honored and humbled that our associates have been recognized yet again for their incredible levels of service,” says Mary Tennant, President of Keller Williams Realty, Inc.

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Disclaimer: Keller Williams received the highest numerical score among full service real estate firms for home
buyers and home sellers in the proprietary J.D. Power and Associates 2012 Home Buyer/Seller Study
SM.  Study based on 2,994 total evaluations measuring five firms and measures opinions of individuals who bought or sold a home between March 2011 and April 2012.  Proprietary study results are based on experiences and perceptions of consumers surveyed March-May 2012. Your experiences may vary. Visit jdpower.com

About Keller Williams Realty, Inc.:

Founded in 1983, Keller Williams Realty, Inc. is the second-largest real estate franchise operation in the United States, with 675 offices and almost 77,000 associates across the globe. The company, which began franchising in 1990, has an agent-centric culture that emphasizes access to leading-edge education and promotes an economic model that rewards associates as stakeholders and partners. The company also provides specialized agents in luxury homes and commercial real estate properties. For more information, or to search for homes for sale, visit Keller Williams Realty online at (www.kw.com). Information about Keller Williams Realty’s international expansion can be found at (www.kwworldwide.com).