NATURAL DISASTERS

1. Clean debris and leaves from your roof, gutters, yard and street drainages. Nail and seal loose shingles and caulk all windows, doors and siding to prevent flooding and water penetration. Remember that your homeowners insurance policy does not cover flood damages (did you remember to buy flood insurance?)
2. Trim all bushes and trees that are close to your house to prevent damage from abrasion. Look carefully at all your trees, cut dry-loose limbs. If a tree doesn’t look healthy it is best to cut it down (remember you may need a permit from the city/county to cut a tree of a certain size)
3. Bring inside all objects that could move with strong winds: Planters, bicycles, chairs, tables, BBQ, trampolines, etc. Park your car in the garage.
4. Prepare for the possibility of a heavy tropical storm or a mandatory evacuation. Prepare all your important documents and store them in a waterproof container, including your insurance policies for your home. Take some cash out of the bank in case ATMs are out of service. Buy enough non-perishable food and water to last 3 or 4 days. Have enough flashlights, batteries gas stoves and a radio to be able to survive without electricity.
5. Have an emergency plan in case of a mandatory evacuation. Where are you going? Which way are you taking? Try to avoid leaving at the last minute, together with 90% of the city.

New Fed rules miss one key lending abuse

Mortgage brokers often receive kickbacks from lenders in return for steering consumers into more expensive loans - a problem that the Federal Reserve failed to address.

THE "DUE DILIGENCE" PROCESS FOR BUYING A HOME

Many people believe that once you sign a contract to buy a home, all business everything is pretty much done. The truth is that many deals are derailed before the closing, mostly due to factors that surface during the due diligence process the buyer (or the bank) perform.

This process includes:

• Home Inspection - this can reveal structural deficiencies, defects in the air conditioning/heating system, leaks, problems with the electrical or plumbing systems, etc. Unless the home is being offered "as is", generally the seller will have to provide a home that is free of leaks, structurally sound and without safety problems with the electrical or plumbing systems. All repairs are then negotiated with the seller after the inspections are complete. Note: The home inspector may recommend that you hire more specialized inspectors to look at specific issues such as mold, radon gas, structural integrity or electrical issues, as needed.
• Termite, Pest and Moisture Inspection - in most cases it is required that the home be free of active termites and that all termite or moisture damages be repaired and a "clear" CL-100 certificate be issued prior to closing. Traditionally the seller pays for this inspection, however, I recommend that my buyer clients hire and pay for this inspection to have their choice of inspector and make sure they are looking after their interests. If the inspector determines that repairs are needed, he may recommend using a qualified, specialized contractor to do the required repairs, treat the home and provide a termite bond to guarantee a clear CL-100.
• Title Search - the closing attorney will perform a title search using public records to make sure that the seller on the contract actually owns the house and is able to sell it, and to determine if there are any mortgages, liens or judgments against the property or the seller.
• Survey - the buyer can also request the closing attorney to order a survey showing the property boundaries, that the structures are within those boundaries and that there are no encroachments. It also will show any right-of-way and utility easements on the property. If requested, the surveyor will also shoot the elevation and the flood zone of the property, which will be used for purchasing flood insurance.
• Mortgage Balance - The closing attorney will contact the existing mortgagees to get a "payoff balance" figure as of the date of closing, so he can discharge these mortgages before transferring title.
• Other Due Diligence - the buyer has the right and the responsibility to perform all the due diligence to verify all the information about the home. Other common due diligence steps may include:
  • Find out taxes owing
  • Verifying which public schools are assigned to the area
  • Verifying zoning and permitted uses for the home
  • Reading the Community Covenants and Restrictions
  • Verifying HOA transfer fees, if applicable

It is important to point out that these investigations must be done before purchasing the home, you do not want to have nasty surprises afterward! Your REALTOR® can help you in most instances.

INSURANCE AND ITS ROLE IN HOME OWNERSHIP
By Alan Donald

Buying insurance makes gives you mixed feelings - one hopes to never have to use it, but will be very glad when you have to! Insurance policies protect the user against different kinds of risk inherent to home ownership.

Here are some types of insurance and their differences:

• Homeoners (or Hazard) Insurance. This is the most common type of insurance, which protects homeowners against partial or total loss in case of events such as fire, earthquake, hurricane, theft, liability and loss of personal property. This policy generally covers only the replacement value for the structure of the home (given that land is not insurable), plus the cost of replacing the lost contents. It is important to update the replacement cost for the structure from time to time, especially if construction costs rise. This policy is purchased annually - generally the bank pays for it at the beginning of the year and charges the owner 1/12 of its estimated cost as part of the escrow funds charged with the mortgage payment.
• Wind & Hail Insurance: Supplements the homeowners policy in case that it does not cover wind and hail. This coverage must be purchased separately (the bank will require it) if the home is in the designated "wind pool" areas. It is purchased annually and it does not cover damages by flooding.
• Flood Insurance: Covers damage by floods, tidal waves, etc. It is supplied by the federal government through FEMA and covers the first $250,000 of value of the home. Supplemental flood insurance can be purchased separately. It is purchased annually and it is required by lenders if the home is in a "flood zone".
• Title Insurance: It is purchased once (at closing) and covers the homeowners against claims against the title of the property or boundary defects, liens or judgments that were not discovered by the title search or were not properly recorded at the time of closing.
• Home Warranty: This is an optional policy that protects the homeowners against failure of the mechanical systems of the home: Heating and air conditioning, stove, oven, microwave, washer, dryer, dishwasher, ceiling fans, etc. It is purchased annually.

1. Clarify mutual expectations from the beginning. Ask your clients what they expect from your service, as well as letting them know what you expect from them. This way everyone will know what to expect, and you can EXCEED your clients' expectations.
2. Educate your clients. Explain the whole process from A to Z and identify the most common potential problems, so that they don't get surprised if they happen.
3. Keep in constant communication. The worst you can do when there is a problem is to avoid communicating with your clients, thinking the problem may just go away, or that you may be able to solve it without their involvement. It is much better to let them know what the problem is, why it is happening, and how you are working to resolve it.
4. Assume responsibility. If there is an unforeseen event that affects the process, assume responsibility (even if it is someone else's fault) and try to provide proactive solutions.
5. Be honest. Your clients will appreciate your honesty, even if the news that you bring are not favorable to them.
6. Show genuine interest for your clients. Give them personalized attention and be sensitive to their personal situation. This will set you apart from other service providers and will provide the "personal touch" that will remain in your clients' memories looking forward.

I received this very interesting article from a friend of mine at Bank of New York:

Wall Street Throws A Tantrum

In these turbulent times, traders are the tykes screaming and yelling and writhing on the floor until they get what they want.

By Daniel Gross

NEWSWEEK

Updated: 12:29 PM ET Feb 2, 2008

Monetary policy, the management of global companies and the workings of Wall Street are indisputably the realms of the mature: one searches the gallery of Federal Reserve chairman portraits in vain for a full head of hair. At the World Economic Forum in Davos, I realized I hadn't seen so much silver hair since the 5 p.m. early-bird special dinner at Le Rivage in Boca Raton, Fla. The presence of all these wizened professionals should instill a good deal of confidence. When you're trying to bring a massive tanker to port amid stormy seas, the last thing you want to see is a 12-year-old apprentice steering the tugboat.

Yet in these turbulent times, Wall Street traders are the infants and toddlers. They're the tykes who stage public tantrums, screaming and yelling and writhing on the floor until they get what they want. Since the markets began to buckle last summer, what traders want is interest-rate cuts and other government measures to bail out banks from reckless and disastrous lending and investment decisions. In response, Federal Reserve chairman Ben Bernanke has done what any exhausted parent does when a child screams for three hours

straight: he gives in. In the past two weeks, the Fed cut interest rates sharply twice, taking the Federal Funds rate down from 4.25 percent to 3 percent.

Of course, "giving in to a tantruming child just reinforces the demand," says Dr. Wendy Mogel, a clinical psychologist in Los Angeles and author of the wildly popular parenting tome "The Blessing of a Skinned Knee." And each time you cave to a screaming child, it buys you less quiet. The Federal Reserve's latest attempt to calm the market's tantrums—the half-point interest-rate cut on Wednesday—bought about 90 minutes of market silence. Within hours, as poor economic news continued to materialize, the clamor for further rate cuts began to rise. Mogel puts it in starkly financial terms: "Indulge tantrums and you get short-term gains and long-term loss."

If traders are the toddlers, investment bankers—and the CEOs they report to—are the tweens of the system, plagued by attention-deficit disorder. As we speak, your typical Wall Street managing director is glancing at CNBC in his office, intermittently checking six computer screens, thumbing out e-mails on his BlackBerry, barking out orders to a personal assistant—all the while furiously working out on the elliptical machine. Merrill Lynch, Morgan Stanley and Bear, Stearns take great pains to distinguish themselves from one another. But they all lurch together from hot financial trend to hot financial trend the way tweens ditch yesterday's pop stars for today's (goodbye, Britney; hello, Hannah Montana).

Like proto-teens, bankers are incapable of exercising independent judgment. Which is why every bank—from the staid Swiss to the sharp trading houses on Wall Street—got caught up in the subprime debacle. Alan Hilfer, a child psychologist at Maimonides Medical Center in Brooklyn, N.Y., notes that investment bankers behave like kids in a candy store. "The candy is money. And when they see an opportunity to get more of what they want, they go after it without considering the consequences." The financial system has an upset stomach today precisely because every large financial institution gorged on subprime candy.

If Park Avenue bank headquarters are like middle school, Davos, which attracts truly senior bankers and financial statesmen, is like high school. It' got the jocks (the heads of state and CEOs), the cheerleaders (journalists), the cool guy in the garage band whom all the girls love (Bono) and a lot of math and science geeks (Bill Gates, economists, technology evangelists). As in high school, the culmination of the year is the big dance (the Google party). Two weeks have passed, but I still can't shake the vision of talking head David Gergen's getting down—it's available on YouTube if you dare.

There's a final, telling way in which the markets exhibit childlike behavior. Children typically display an unwillingness to reckon with the fallout of their own actions. They look to parents to pick them up when they fall, and spare them from the consequences of their own behavior. And parents will go to great lengths to insulate their offspring from the jolts the world can deliver.

The same might be said about Washington's current economic ministrations. The nation is now nursing a seriously skinned knee because of reckless behavior in housing and credit. But rather than force consumers, borrowers and bankers to face the consequences of their own actions, Washington is functioning as a helicopter parent. Harvard economist Ricardo Hausmann, who characterized America as "whiner of first resort,"

believes the rush to stimulus is being led more by a concern for Wall Street than a concern for Main Street. Rather than take their lumps after several years of exceptional returns, the banks are furiously lobbying for help. They're getting it.

Instead of looking to the Federal Reserve or Congress to bail them out, the people who dominate the global economy should engage in some introspection—to evaluate what they did wrong and how they could avoid screwing up in the future. As Wendy Mogel puts it:

"Good judgment comes from experience and experience comes from bad judgment."

URL: http://www.newsweek.com/id/107571

© Newsweek Mag

The Post & Courier reported today that the median home price for the Charleston Metro Area declined by 2.3% in November to $200,000, and sales volume was 19% lower than November 2006.

This is not surprising given the high inventory levels that we have in most areas. Sellers still had 2005 price levels in mind for the last 12 months, and were "holding off" on price reduction, hoping to sell during the Summer season. These sellers are now convinced that they need to adjust their prices to the current market reality.

It is interesting to note that different areas of the city behave differently: On Daniel Island there is about 2 years' worth of available inventory, while in Goose Creek there is only 4-5 months' inventory. And it follows that price decreases are directly related to the amount of inventory and the absorption of each area. Daniel Island and other high-priced areas have seen the largest price declines in the last 12 months. However, one has to keep in mind that these same areas were the ones that experienced the largest price increases in the preceding boom market!

It is hard to give timing advice to buyers who are waiting for the market to settle. Similarly to picking the bottom of the stock market, it is hard to predict the bottom of the propety market. I tell my clients that, as long as they have a long horizon in mind, real estate is still a safe investment, with the added benefits of getting the use and the tax deductions.

Speculation and flipping are better left to professionals who do that for a living (many of them got burned in the last year)...in the end this market correction will make housing more affordable for first-home buyers, which are the foundation of the buying chain.

I read this article published in Realtor Magazine that has some interesting turnoffs for buyers:

Daily Real Estate News | December 4, 2007

Homes Features That Are Big Buyer Turnoffs
Old homes can be quaint, but there's a difference between old and outdated. Unless home owners periodically invest in upgrades, their homes will fall so far below the standards of current buyers that they become obsolete and hard to sell.

What's obsolete? Here's a list of relics, many of them courtesy of Nick Kuhn, an associate with McEnearney Associates in Washington DC.

• A house with only one full bathroom. Even a house with one full bath and a toilet/sink powder room is going to turn buyers off.
• A house without air conditioning.
• Electrical systems protected by a fuse box instead of a circuit breaker.
• Spiral staircases. They're relatively rare, and for good reason - they're often unsafe.
• Basements with only an outside entrance. Home owners expect convenient access to that valuable space.
• Ceilings that look like they've been stuccoed, dropped ceilings with fluorescent lights, and dark beams cutting across the ceiling.
• The split-level floor plan. Want to go from kitchen to family room? Go down half a flight of stairs. From living room to bedroom? Up half a flight. Most folks would rather not.

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In addition to these, I can add a few, based on my own experience:

• Blown ceilings (at least in Charleston every buyer wants smooth ceilings)
• Dark wood paneling
• Shag carpet
• Garden gnomes
• Small windows (that are usually painted shut)

Don't get me wrong, there are REAL BARGAINS out there (just recently a 2,600 sq. ft. brand new home in Summerville was being offered for $72 per square foot - you probably could not BUILD it for that price, without even counting the cost of the land!