March, 2010

If you are using the internet to shop for real estate, you need to be careful to protect yourself against scam artists posing as homeowners. The FBI says, in many cases, the homes that have been posted online are, in fact, actually for sale, but the scammer has re-posted the ad, using a fake e-mail address. When unwitting victims send an e-mail to the bogus address, they receive a response that claims the home’s owner is an overseas missionary, and that the home is available for rent. The scammer then asks the would-be buyer to send a deposit check…and yes, after it’s cashed, the scam artist disappears into cyberspace.

The FBI warns that you need to verify who you’re doing business with. Do not wire money to people you don’t know. And don’t be rushed. Scam artists like to work quickly to avoid detection. But the best way to protect yourself, is to always see a property in person, with a REALTOR(r), before you put any money down. REALTORS(r) will never solicit money for properties that are sight unseen. So if you’re ever asked to write a check for a place you haven’t set foot in, run the other way!

We all have friends who like to brag about their high credit scores, but even people whose scores rise above 800 are not immune to failure on their mortgages. In fact, a report prepared by the credit score company FICO shows that borrowers with good credit are nearly three times MORE likely to default on their homes as they are on their credit cards, because they will use their plastic to continue to pay for expenses. The report, which was detailed in the New York Times, does concede that the mortgage default rate among good credit-holders – one-third of one percent – is still just a blip compared to the 4 and a half percent default rate for all borrowers. But it’s still a concern, because this is a new trend. Housing counselors speculate that the mortgage default rate is climbing because more consumers – even those with really good credit – are walking away from mortgages that are hopelessly underwater.

Amid all of the scary stories we’ve heard about foreclosures recently, there is this small ray of hope – The number of foreclosure filings last month rose 6 percent compared to the previous February – the smallest increase in four years. Of course, the Wall Street Journal reports that part of the reason for that in some places, is that banks were unable to seize houses because of severe winter weather, and Realty Trac, which compiled the numbers, notes that this doesn’t necessarily mean there are fewer homeowners in distress.

Between processing delays, local laws and government programs designed to keep families in their homes, foreclosure activity is pretty much being capped on a month-to-month basis. Nevada saw its year-to-year rate drop 30 percent in February, but it still leads the nation in foreclosures, with nearly one out of every hundred homes receiving notices.

Since that point, we seem to have reached a plateau of sorts. The January home sales report did show some year-to-year growth, but that was to be expected, when you recall just how dark the start of 2009 was. Compared to the previous month, January sales dropped more than 7 percent. Some of that was no doubt caused by the holidays, but the February numbers could really start to tell us whether the housing market is really trending up or down.

But even the February report could be a challenge, thanks to the unbelievably bad weather that essentially shut down much of the east coast at various points during the month. At one time or another, all of the major population centers from Atlanta north to New England were hampered by snow or ice, including parts of the Mid-Atlantic that set new records for snowfall. We’ve already seen in parts of the DC area, for example, sales figures for last month that were cut in half compared to last February.

Two other major factors could come into play as we consider home sales over the next several months. The first one is the likelihood that we’ll be seeing a second major wave of foreclosures across the country. After flooding the market with repossessed homes in 2008, lenders held back somewhat last year, in an effort to keep prices from falling further, but most economists expect the pace of foreclosures to pick up again this year, and that will certainly have a huge impact on sales. The second big factor – at least through the spring – will be the federal homebuyer tax credit, which has been extended to the end of April and expanded to include long-time homeowners who move up to other homes.

The original credit program really did appear to draw many first-time homebuyers into the market last fall, but the efforts to use the credit to draw more existing homebuyers into the market have produced mixed results, at least anecdotally. Many Realtors say the promise of a tax credit is not really enough to move customers who were not already looking to move up, in many cases because the 65-hundred dollar credit would not come close to covering the current loss in equity that an owner would have to take by selling his or her existing home.

Now If you are in the market for a home, here’s a quick reminder of what you need to know to take advantage of those credits. You need to sign a contract by April 30th, and settle on the home by the end of June. Some income restrictions do apply, and there is an 800-thousand dollar limit on the price of the home you are buying. If you have any questions about whether you are eligible for the tax credit program, your REALTOR® can help you answer those.

But the good news is that HouseLogic offers homeowners a lot of help when it comes to keeping their homes in top shape – including home maintenance guides for every season and for every region of the country.

Since some parts of the country get a lot of rain in the spring, now is a perfect time to check your house for, and prevent moisture damage. Moisture can lead to all kinds of problems: rotting wood, mold, bad bugs moving in — termites, carpenter ants, and powderpost beetles thrive in moist areas. And in the spring, you can take advantage of all the rain to be a detective around your house. Check for visible leaks, water stains, discolored insulation, and rotting or moldy joists and roof decking.
If you find this stuff, call a handyman or roofing contractor for an estimate for repairs. If you have areas of rot or mold exceeding ten square feet, call an indoor air quality inspector or mold remediation company for advice. Also, check your attic fan to make sure it’s running properly to keep air circulating. And, check that the protective screen hasn’t been blocked by bird nests or debris.

Good drainage is a very important part of keeping moisture away from your house, too. For proper drainage, make sure soil slopes away from your foundation at least 6 vertical inches in the first 10 feet on all sides of the house.
If you have properly sloped foundation drainage but still have areas of standing water, consider a landscaping solution, such as:

• swales (contoured drainage depressions),
• berms (raised banks of earth),
• or French drains (a shallow, gravel-filled trench that diverts water away from the house) which aren’t actually from France, by the way

Refer to the maintenance guides at HouseLogic for some good weekend projects you can do this spring around your house. You’ll find a list of things to do each spring, including scheduling maintenance on your HVAC system (a tune up is $50-$100) to ensure your AC runs well this summer, checking your gutters for debris or winter damage, and getting your chimney cleaned.

A great project for a warm, spring day? Clean your siding! You can clean vinyl, brick, stucco, or wood siding yourself with mild soap and water, a brush, and a garden hose with a spray nozzle. Divide your house into 20-foot sections, and clean each from top to bottom, and rinse. Many experts say, though, to leave the powerwashing to the professional — otherwise, you might end up blowing water up under the siding and into the walls and insulation, which leads to mold. And, with brick exteriors you can damage the grout. If you choose to have your siding professionally cleaned, expect to pay $300–$500.

The change of season is a great time to remember to check and maintain stuff for safety reasons, too. People are accustomed to testing their smoke alarms when the time changes, but they can also check their ground fault circuit interrupter of GFCIs. GFCIs protect you from electrical shocks by shutting off the power even for a minimal disturbance in current. They’re the electrical outlets with two buttons in the middle (“test” and “reset”) that should be present anywhere water and electricity can mix: kitchens, bathrooms, basements, garages, and the exterior of the house.

To test a GFCI, plug a radio (or other small appliance) into each of your GFCIs. Press the test button, which should click and shut off the radio. In addition, the reset button should pop out; when you press reset, the radio should come back on. If the radio doesn’t go off or the reset button doesn’t pop out, you probably need to replace the GFCI. Call an electrician! Don’t play around with electrical equipment yourself.

Visit www.HouseLogic.com for all your home maintenance tips!

Homeowners in strong communities enjoy much lower crime rates, have better schools and more educational opportunities for their children, and even enjoy better health than people who are not invested in where they live.

Take the Joint Center for Housing Studies at Harvard, for instance. They report that “Children of homeowners have better home environments, high cognitive test scores, and fewer behavioural problems than do children of renters.” Another study, this one done by the Federal Reserve, found that homeowners have, on average, a net worth that is 46 times that…of average renters.

And it’s not just a one way street, in which buying a house makes your life more stable. The reverse is true, too. Buying a home can help make the community you’re moving in to more stable too, because putting down roots, getting involved, and maintaining your property all help any neighborhood grow stronger.

Is there any wonder then, that the notion of owning a home is known as “the American Dream”? The government certainly recognizes the social benefits of community investment, and that’s why our public policies encourage us all to become homeowners, through a long list of tax breaks and other incentives designed to get consumers to enjoy the benefits and accept the responsibilities of becoming home owners.

We should point out there are also are more “social“ social benefits to owning a home. Often, you will find many of your fellow homeowners to be facing lots in life that are surprisingly similar to yours – you’ll have similar incomes, and often, similar careers. Your children may be close in age, and, especially for young homebuyers, you might even find you don’t have a lot of disposable cash for going out on the town.

You’ll be sitting next to each other at the neighborhood pool, if you have one, and collecting each others’ mail when you go away on vacation. Maybe you’ll start, or join a neighborhood watch. You may soon find yourself babysitting each others’ kids, going to their soccer matches and school plays, and someday, going to their weddings, too.

And even if you do move away, don’t be surprised when you find that you’re leaving behind neighbors that will be friends for life – all because you happened to buy homes in the same neighborhood.

The bottom line here is, buying a home is about more than the bottom line. It’s about your life. And how you choose to live it.

So for all of you who are planning to buy or sell, in the Spring Market 2010…all of us here at Real Estate Today wish you…the very best.