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Chicagoland Home Buyer & Seller News & General Real Estate Information
What Are Points and When Should You Pay Them?
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What Are Points and When Should You Pay Them?
 Points are up-front fees paid to obtain a better interest rate on a loan. One point equals one percent of the loan amount. A lower interest rate may result in a lower monthly payment, but it is important to consider how long you intend to be in the loan, and to compare current rates to historical market trends.
If you take out a $300,000 mortgage and decide to pay one point, this translates into an up-front closing cost of $3,000. Paying a point up front saves $100 a month but it will take 30 months to recuperate the cost of that point. If you decide to refinance or sell the home before the 30-month mark, your money is lost. In this case, you would benefit financially by remaining in the home longer than the 30 months.
Rates run in cycles. When rates are at historical lows, it is sensible to pay points if you plan to live in the home for an extended period of time. It is unlikely that rates will go down; hence, there will be no need to refinance.
When rates are up, there is a strong likelihood that they will come down. This is no time to pay points. The chances of refinancing in the future are extremely high, and you will likely not be in the loan long enough to recuperate the cost of the points.
Interest Rates Change Daily
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Interest Rates Change Daily
 Interest rates change constantly, but it is important to know that rates are cyclical. If rates are currently at historical lows then we know there is a strong probability rates will go up again, and vice versa. Certain economic indicators such as unemployment data, consumer price index, retail sales data, and consumer confidence all have an effect on mortgage interest rates. But the key factor to watch is the relationship between stocks and bonds.
When the economy is slow and the stock market is "bearish," many investors move money out of stocks and into bonds and mortgage-backed securities. This causes mortgage interest rates to go down. When the economy is doing well, the stock market rallies and is considered "bullish." Investors then have a tendency to move their money out of that safe haven of bonds and mortgage-backed securities and back into stocks. As a result, mortgage interest rates go up.
PMI Is Now Deductible
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New tax law tweaks home-buying math
Bush signs legislation that makes PMI deductible for many homeowners.
By Les Christie, CNNMoney.com staff writer
December 20 2006: 12:42 PM EST
NEW YORK (CNNMoney.com) -- A $40 billion tax bill signed into law Wednesday by President Bush extends several popular tax breaks and introduces a new one - tax-deductibility of private mortgage insurance (PMI).
Only homeowners with adjusted gross income less than $110,000 and who itemize their deductions will be eligible to reap the benefit.
But for those buyers, it will change the math of buying a house with a low or no down payment.
"I love it," says mortgage broker Bob Moulton of Americana Mortgage Group, "Even though it's limited in who can qualify, it helps people get into a home."
Most lenders require buyers putting less than 20 percent down to purchase PMI because borrowers are more likely to walk away from a mortgage when they have less of their own money invested in the property. Lenders use PMI to protect themselves against that risk.
The alternative to PMI is an equity loan "piggybacked" on top of the first mortgage. According to Moulton, extremely low interest rates on home equity loans (HELs) and lines of credit (HELOCs) encouraged buyers to use piggybacks instead of PMI the past several years.
In addition, equity loan interest is tax deductible. With that advantage and the low rates, piggybacks became far cheaper than PMI.
That situation has reversed because equity loans are based on the prime rate, which has climbed from about 4 percent to 8.25 percent.
Today, according to Moulton, on a $225,000 home, the piggybacked portion of the loan would cost about $4,000 a year while the PMI payment would come to about $3,000 - or less - depending on the borrower's credit score.
The tax deduction on the equity loan would be about $1,600 for a borrower near the upper income limit. With the new law, the PMI tax break would be about $1,200.
That means choosing PMI would cost $1,800 compared with $2,400 for the piggyback loan, an $800 savings.
"It's tough to justify going for a piggyback now," says Moulton.
Why Rent? Advantages of Home Ownership
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Why Rent ? Advantages of Home Ownership
It's staggering when you think about the cost of living, especially if you're a renter and not a home owner. If you are currently paying $1,000 a month for rented housing, over the next three years your property management company will effectively have reaped $36,000 of your hard earned cash. In most cases, you know your rent will go up every year, even if you live in an area that has rent control regulations. You're paying the mortgage for the property owner, when you could be building equity in your own real estate investment.
The tax deductions available to homeowners vary, but there are solid rules the IRS lines out for us. Real estate taxes, mortgage interest, pre-paid interest, and interest on construction loans are all things to take into consideration as tax benefits.
If you or someone you know is currently renting, I urge you to call me to discuss the many low- and no-down payment loan programs that are currently available to prospective home buyers. My team and I work cohesively with the borrower's financial consultant to ensure the client's long-term goals are met.
Will I Have To Pay Capital Gains Tax if I Sell My Home?
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If I Sell My Home, Will I Have to Pay Capital Gains Tax?
 The IRS permits a maximum exclusion on capital gain of $250,000 for individuals and $500,000 for married couples filing a joint return who sell their home, but of course some conditions apply.
For the five-year timeframe prior to the date of the sale of your primary residence, you must meet the Ownership and Use Tests the IRS provides in Publication 523, Selling Your Home. These rules ensure you have owned the home for at least two years, and lived in the home for at least 24 months out of the last five years. Additionally, you may not have excluded a gain on your taxes from the sale of a different home within the last two years. Note that if you sell your property for less than your original purchase price, you cannot claim a capital loss.
A 'reduced maximum exclusion' can apply to those who must sell their home due to a change in their place of employment, health issues, or unforeseen circumstances that affect qualified individuals. In all cases, it is best to consult your tax professional or IRS guidelines if you have any questions about the taxes you may be responsible for if you sell your home.
What Constitutes Closing Costs?
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What Constitutes Closing Costs?
 Closing costs are expenses that cover fees associated with the transfer of property ownership, fees paid to state and local governments, and the costs of obtaining a mortgage loan. Some of these fees are negotiable, and could be paid by either the buyer or the seller. Some costs are one-time fees (non-recurring closing costs, such as title search, termite inspection, appraisal, etc.); while other fees such as homeowner's insurance or property taxes are things you will expect to continue to pay on a regular basis as a homeowner.
As part of the loan selection process, your mortgage consultant should be giving you some idea of how much money you should have in reserve to cover your end of these costs. The Real Estate Settlement Procedures Act (RESPA) requires the lender to provide you with a Good Faith Estimate within three days of the submission of your loan application.
RESPA also states that as a home buyer, you have the legal right to request a copy of the HUD-1 Settlement Statement 24 hours before your closing is scheduled. The HUD-1 clearly defines all closing costs, including those that are to be paid by the buyer and the seller. It's a good idea to have both of these forms before your closing so you can compare the estimated costs to the actual costs before you finalize your transaction.
15-Year fixed Rate Loans
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15-Year Fixed Rate Loans
 A 15-Year Fixed Rate loan works well for borrowers who are nearing retirement and want to be debt-free when they get there. Because payments in a 15-year scenario are amortized over half the length of a 30-Year Fixed Rate loan, the monthly payments will be significantly higher in comparison. This is an important factor to consider before committing to a 15-year loan. However, the interest rate on a 15-Year Fixed Rate loan will be lower for the same reason - financing for 15 years costs much less than financing for 30 years.
If a borrower is 50 years old and would like to be debt-free when retiring at age 65, then a 15-Year Fixed Rate loan will allow the borrower to meet that goal as far as their mortgage is concerned. However, if there is any question as to whether the borrower will be able to commit to the higher monthly payment, the alternative is to take a 30-Year Fixed Rate mortgage and make pre-payments with some consistency. If the borrower has the discipline to make those extra payments whenever possible, he or she can still attempt to meet the same goal.
I prefer to educate my borrowers so they can compare the benefits of each program and have the opportunity to review loan options with their financial advisors.
Intermediate Fixed Rate Loans
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Intermediate Fixed Rate Loans
 Intermediate Fixed Rate mortgages (sometimes referred to as Short-Term Fixed Rate mortgages, or Hybrids) come in numerous varieties; the 3, 5, 7 and 10-Year Fixed. These are all 30-year loans that carry a fixed rate for a set number of years, and then roll over to an Adjustable Rate Mortgage.
For example, in a 7-Year Fixed Rate scenario, the rate would be fixed the first seven years, and the loan becomes an Adjustable for the remaining 23 years. The main advantage of these hybrid programs over a traditional 30-Year Fixed loan is typically a slightly lower interest rate.
These types of loans often work well for people who do not plan on being in their home for an extended period of time, such as first time home buyers. The most important question to ask when going into an Intermediate Fixed Mortgage is how long will the borrower need the money?
If the borrower intends to sell the home in four to five years, then a 5-Year Fixed loan offers stability and a lower interest rate for the time that money is needed. However, in this example it would not be wise to pay points up front to obtain a lower interest rate, because the likelihood of recuperating the cost of those points would be diminished with the short tenure in the loan.
The borrower's financial planner and mortgage consultant should work hand-in-hand to provide guidance to the borrower in these matters.
Managing Your Tasks
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Managing Your Tasks
Simple Steps to Improve Your Productivity
Have you ever noticed that some of your most innovative thoughts have happened at the oddest times? The reason for this is that your brain wasn't occupied with your ongoing "to do" list, so it was finally free to explore new ideas.
If you want to do more creative thinking, then you need to establish a system for organizing your tasks. Begin by collecting them in an in box. What should you do with the items once you've accumulated them? According to David Allen, the best-selling author of Getting Things Done, the first step is to ask, what is it? Is it actionable? If you can't act on it, then put it into one of three categories: reference, such as a noteworthy article; someday–maybe, which is a task that you might do later; and trash. The filing principles we're discussing here work equally well with manila folders and a circular file, but in our example we'll be using Microsoft Outlook.
Many of us use Outlook's tasks function, but for some the list has degenerated into an "amorphous blob of undo-ability", according to Allen. He suggests organizing Outlook tasks using categories. For tasks that require no immediate action, but might happen eventually, produce a category called someday-maybe. Create each task in this category with a potential start date and a scheduled reminder. If there are items that should be referenced, you can file them in an appropriate folder on your hard drive or in a file cabinet. Remove trash as soon as you can.
If the item is actionable, you will have to decide on the next step. This step will either be to do it, delegate it, or defer it. If a task can be handled in 2 minutes or less, Allen says simply do it. It will take longer to file and retrieve it later.
If you can delegate a task, do so. Outlook gives you the option of assigning a task to somebody else, setting due dates and priority, and sending the task to a recipient in your contacts list. It will also notify you when the task is reported done. You can file this task in your new Outlook category, waiting for.
If you can't handle a task immediately, Allen suggests deferring it to a category where it can be done. Examples include: @phone, if you have to call a client; @home, if you need to mow the lawn; @office, if you need to prepare a presentation, etc. If a task has to be done at a specific time on a specific day, put it in the Outlook calendar. Don't forget to set reminders.
Of course you will have projects that can't be handled as simply. Any task that involves more than one step should be filed in the task manager under projects. David Allen suggests that on a weekly basis, you should review all tasks listed under projects and ask yourself, "What is the next action?" This will ensure that you continue to make forward progress.
Practical tips To Enhance Your Financial Freedom
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Practical Tips To Enhance Your Financial Freedom
Are You Tossing Out Tax Documents Too Soon?
The rule of thumb for individual tax filers has been to keep federal tax returns and all supporting documents for 3 full years. This is based on the principle that the IRS can audit your last 3 returns only if they believe that you made a good-faith error. However, be aware that the IRS can audit your returns for up to 6 years if they suspect that your income was misrepresented on any tax return by 25% or more. Therefore, to be completely safe, keep tax returns and supporting documents for 7 years before shredding them. In addition, it's a good idea to keep a permanent copy of your 1040 forms from each year's return.
The Pitfalls of Plastic
Credit cards are a great tool when it comes to building up a good credit history. However, according to a recent report, credit card debt in America reached nearly $800 billion in 2005. How can you obtain the benefits while avoiding the pitfalls? Here are some dos and don'ts:
- Monitor your balances: Credit card usage and management makes up 30% of your credit score. Keep each account balance below 50% of the available credit limit at all times to maintain your score, and below 30% to improve your score.
- Read everything: Credit card companies can change the terms of your account at any time with only a simple written notification. Carefully review monthly statements along with any correspondence received throughout the life of the account.
- Evaluate special rewards programs: Generally, "rewards" cards charge higher rates as well as annual fees. Unless you consistently pay off your balance in full, the programs aren't usually worth it.
- Watch for universal penalty fees: If you fall behind on one credit card payment, other companies can charge you their highest penalty rates as well, even if you're in good standing with them.
- Avoid special offers with introductory rates, delayed payments, or balance transfers combined with similar offers: These programs are tempting, but you will pay for it in the long run once temporary rates change and interest comes due.
The New Tax Bill & You
In May, the President signed a $69 billion tax bill which could positively impact your investment and savings strategies. The bill eliminates the modified adjusted gross income requirement for converting a traditional IRA or SEP IRA to a Roth IRA, so higher-income investors who were previously locked out will have access to this retirement vehicle beginning in 2010. There are certain restrictions and tax implications involved, but the benefits could be substantial.
In addition, the new tax bill expands the duration of the tax rate reduction for long-term capital gains and dividends for an additional two years, so now it won't expire until 2010. The bill also raised the Alternative Minimum Tax (AMT) income exemption levels for the 2006 tax year. This, in combination with other AMT modifications, will help to keep millions of taxpayers from having to pay more to Uncle Sam in April of next year.
Meet with your accountant or financial planner to learn more about this new legislation and how it could impact you.
College Savings Plans
Saving for your child's education just became a bit more complex as a result of the new tax bill passed in May. The Uniform Gifts to Minors Act (UGMA) is a popular program which allows minors to own stock in their name and, if they fall between the ages of 14-17, to pay taxes on the proceeds exceeding $1700 at their own lower tax rate. Under the new legislation, however, these proceeds will be taxed at the parents' higher rate, challenging the growth potential of this investment plan.
Other popular college savings plans include the 529 State College Savings Plan, the Prepaid 529, Coverdell ESA, and Financial Aid. The 529 and Prepaid 529 Plans offer special tax breaks to anyone (not just a relative) who opens an account on behalf of the future college student. Contributions are kept in a trust fund earmarked for a child's education.
Visit www.collegesavings.org and www.finaid.org for more details about the various savings plans available.
Urban Legends & Internet Scams
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Urban Legends & Internet Scams
Sorting Fact from Fiction
 Urban legends have been a part of popular culture for years. We've all heard suspicious stories that supposedly happened to a "friend of a friend" but which couldn't be verified. Remember the story about Mikey, the Life® cereal spokes child, whose stomach allegedly exploded from mixing Pop Rocks and soda?*
The Internet has added a new twist to the urban legend phenomenon by making these stories easy to spread to a large audience over a short amount of time. What's worse, these stories are often distributed in the form of a plea for help from an unfortunate victim who could be saved if you just contributed a few dollars.
After the tsunami disaster, several fraudulent emails were circulated, some of which contained links to phony charity websites. The same problem occurred after September 11th. Whether it's a plea for money, an email containing false links, or a virus alert that isn't true, these scams have made it difficult to trust anything you hear via email. Here are some resources that can assist you with discerning what's real and what's not!
Emails - The next time you receive a dire virus warning or a chain email promising great wealth, visit http://hoaxbusters.ciac.org. This website contains information about over a dozen different categories of hoaxes, ranging from virus warnings to scam chains. If you receive an email that looks suspect, chances are this site will have a listing about it.
Charity Websites - If you are unsure about whether to give to a particular charity, visit www.charitynavigator.org. This website examines over 4,300 charities and evaluates how well they are using your donations. It also contains tips to assist you in choosing where to give and how to document your donations for tax purposes. Once you've selected your charities, you can usually make your contributions online. Just be sure to visit the organization's official website, rather than using a link in an email. This will ensure that your contribution is going where it should rather than into a scammer's pocket.
Urban Legends - Is there an urban legend that you've been wondering about for years? Visit www.snopes.com and find out once and for all if it's true. They have urban legends categorized by subject matter and even provide a bibliography at the end of their listings to reflect their research! The Discovery Channel is also exploring urban legends through their television show, MythBusters. To learn more about the show and the myths they have pursued, visit the Discovery Channel website at www.dsc.discovery.com and click on MythBusters.
*Mikey was played by an actor named John Gilchrist. He is alive and well and is currently working as an advertising executive!
Home Seller Information on Showings & Open Houses
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Showings and Open Houses
Planned open house appointments will allow you to time to prepare. But oftentimes, the window of opportunity to expose your property to a motivated buyer can be small. So every time you leave your home, make sure it is ready for an unexpected showing.
General Preparation
When preparing your home, think about the techniques used to show builder’s model homes or what you might do to prepare for honored guests.
- Review pointers from “First Impressions” checklist, particularity regarding cleanliness, clutter, and repairs – interior and exterior.
- Create as light, cheerful and serene an environment as possible.
- Open drapes and light lamps including those in closets, basement or attic.
- Add a welcoming touch by filling candy dishes and putting out fresh flowers.
Bedrooms
- Make beds, put clothes and toys away, keep decorator pillows orderly.
- Turn blinds so slats are uniformly open. Put on light if room is dark.
Bathrooms
- Put out a clean hand towel, fresh soap and soap dish.
- Put commode lid down and ensure tissue supply is adequate.
- Potpourri dish can provide a nice sight and scent.
Kitchen
- Put away last minute dishes and conceal countertops articles.
- Simmer a few drops of vanilla on stove.
Dining Room
- Arrange inviting centerpiece.
- Consider setting the table with fine china and linen.
- Light chandelier.
Living Room/Family Room
- Straighten pictures on walls.
- Adjust couch cushions and throw pillows.
- Dispose of newspapers and drink containers, and polish tabletops.
- Light fireplace in winter.
Entryway
- When exiting just before buyers arrive, turn around at front door and see what the prospect’s first impression will be. What is the first thing you notice from that vantage point? Is it an asset?
Notify your neighbors of scheduled open house days, and assure them they’ll be welcome. Their eagerness to discover decorating ideas for their own homes may actually result in them turning up a buyer among their friends.
Reasons That Sellers Overprice
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REASONS THAT SELLERS OVERPRICE
A. Ego Involvement
Most sellers feel their home is unique. Their emotional feelings about the uniqueness of their home lead them to overprice it.
B. Others “Gave Theirs Away”
Most people feel that they can strike a better bargain than others did in selling their home. This feeling of superiority leads them to overprice their home.
C. Market Trends Have No Relavance
Sellers have the feeling that their house is unique, and think that it won't be affected by market trends. The seller might believe that the fact that similar other houses in the area sold for less is not relevant for their house.
D. Misinformation
Often sellers become the victims of misinformation and end up overpricing. The sources of such misinformation include friends, relatives, neighbors, other agents, and the Internet, etc.
E. Costs and Appreciation
Usually sellers overestimate the cost of additions and upgrades to their house and the appreciation in its value. They price their house to recover the total cost of additions and upgrades. Appreciation is relative to the marketplace and how their house fits into that market.
F. Recapture All The Improvement Costs
Sellers like to recover all the costs they incurred over time in house improvements. Usually they inflate these costs and end up overpricing.
G. Financial Needs Determine Value
Rather than realistically pricing the house based on facts, many sellers relate the price to their needs. Thus if their needs are high, they set a higher price for their house. If a seller were moving to an area where house prices are higher than the value of their existing house, the sellers may overprice the existing house.
e-PRO Real Estate Professional
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Why Choose a REALTOR® that is
e-PRO Certified?
The Internet has added a new dimension to the real estate world. Now you can be assured that the REALTOR® you choose will have the knowledge and skills to put the power of the Internet behind your real estate transaction.
All e-PRO Internet Professionals are REALTORS® who completed a rigorous certification program endorsed by the prestigious NATIONAL ASSOCIATION OF REALTORS® (NAR).
Real estate agents and brokers who have earned e-PRO Certification are Internet Professionals who have completed extensive training using the Web. e-PRO Certification means the real estate professional is prepared to employ the latest techniques and services for your benefit, just like you've grown to expect from a professional.
Life can be a little easier.
Save time and irritation. Work with an e-PRO Certified real estate professional who provides both buyers and sellers with high quality, timely information using the resources of the Internet.
e-PRO Internet Professionals maximize your ability to leverage the enormous power of the Internet when you are buying and selling property.
Working with the best pays off.
Save money. e-PRO Internet Professionals can help you take advantage of the latest Internet innovations resulting in considerable savings and speed whether you are a buyer or a seller of property.
Work with someone who is ready, willing, and very capable. Your e-PRO Certified real estate professional has already proven that he or she is prepared to respond to the new market place. e-PRO Internet Professionals are committed to being more responsive, understand that you are the boss, and will completely respect and guard your privacy.
Rest easy...
e-PRO Internet Professionals can offer you the peace of mind that comes from knowing you have chosen to work with a REALTOR® committed to using the Internet with skill, integrity, and professionalism.
Work with a professional who has made the extra commitment. Choose an e-PRO.
When is a Real Estate Professional a REALTOR®?
When they are a member of the NATIONAL ASSOCIATION OF REALTORS®. The Voice for Real Estate® -- the world's largest professional association.
The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics.
Founded in 1908, NAR has grown from its original nucleus of 120 to today's 750,000+ members. NAR is composed of REALTORS® who are involved in residential and commercial real estate as brokers, salespeople, property managers, appraisers, counselors and others engaged in all aspects of the real estate industry. Members belong to one or more of some 1,700 local associations/boards and 54 state and territory associations of REALTORS®. They can join one of our many institutes, societies and councils. Additionally, NAR offers members the opportunity to be active in our appraisal and international real estate specialty sections. REALTORS® are pledged to a strict Code of Ethics and Standards of Practice.
Working for America's property owners, the NAR provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system and the right to own real property.
Copyright© InternetCrusade® and NATIONAL ASSOCIATION OF REALTORS®.
All rights reserved.
CRS Specialist
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CRS Specialist
Why do I need a certified residential expert?
Buying or selling a home is one of the most crucial financial transactions of your life. In what can be a confusing and sometimes difficult process, it pays to leave as little to chance as you can. But with the help of a professional, you can navigate unknown territory with ease. To fill the specific residential needs of homebuyer and sellers, the Residential Sales Council of the National Association of Realtors® (NAR) instituted a class of expert real estate professional: the Certified Residential Specialist (CRS®).
How can a CRS help me?
Every CRS has undergone a rigorous, specialized course of detailed training aimed at making residential transactions as smooth and worry free as possible!
A CRS brings special qualifications to your needs:
Membership in a local Board, State Association, and the National Association of REALTORS® (NAR.). Every CRS is part of a much larger network of real estate professionals. Successful completion of the courses leading to the Certified Residential Specialist designation, one of the most successful residential real estate education programs in the country. Every CRS is a real estate professional equipped with special expertise, thanks to advanced study in listing, selling, investment, tax and more. A history of demonstrated sales performance through the documented execution of residential sales transactions. REALTORS® must conform to the NAR® code of ethics.
What this means is that when you work with a CRS, you're working with someone who is more knowledgeable, and experienced.
What if my needs are special?
If anything about your transaction is special, seek out a specialist. A Certified Residential Specialist designation, offered through NAR, denotes an agent who specializes in residential real estate. It's as simple as that. Only 3% of all REALTORS® and REALTOR ASSOCIATES® have earned the right to be called a CRS. Less than 5% have developed special residential sales skills and enhanced their residential sales knowledge through study, dedication and experience. A CRS can help you optimize your transaction by identifying better prospects, clarifying investment potential and helping you to understand the tax ramifications of your real estate transaction. It all adds up to one thing: better service.
What special qualifications does a CRS bring to my transaction?
Your trust in a CRS is well earned thanks to these distinctive credentials:
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A professional designation of residential specialty, the highest in the country.
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A higher level of education in residential sales.
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Affiliation with thousands of real estate professionals on the local and national levels.
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Up-to-the-minute industry information.
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Local market knowledge and special residential expertise unique to your area.
CRS® is a registered trademark of the National Association of REALTORS®
Portions of this page are from the CRS brochure published by the Residential Sales
Council of NAR
Mold Fears in the Home
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Mold Fears Overgrown Says Fed Study, Should We Test Buyers Instead Of Houses?
"Though the experts said mold and indoor dampness were associated with respiratory problems and symptoms of asthma in certain susceptible people, they found no evidence of a link between mold and conditions like brain or neurological damage, reproductive problems and cancer. They based their conclusions on a review of hundreds of scientific papers and reports but warned that the research was limited and that more studies were needed." "Panel Finds Mold in Buildings Is No Threat to Most People," The New York Times, May 26, 2004
The Chicken Littles of the world suffered a set-back last week when a lengthy study by the federal government showed that for most people household mold is about as dangerous as spoiled ketchup.
For several years, worries about mold -- the successor to overblown and unfounded asbestos and radon fears -- has been making its way through the media and legal circuits, producing both fees and trepidation along the way. Now buyers and sellers with common sense need merely turn to the Institute of Medicine, a part of the federal government which "strives to provide advice that is unbiased, based on evidence, and grounded in science."
The IOM tells us what we already know: Mold is everywhere and has been with us since humankind first moved indoors.
"Mold spores are regularly found in indoor air and on surfaces and materials -- no indoor space is free of them," says the IOM in a new report, Damp Indoor Spaces and Health.
Given that every cubic foot of indoor space has mold, it follows that all of us would be wildly sick if mold -- by itself -- was a general health hazard. This just isn't the case.
The better approach is to think of mold in the same way we regard bee stings and allergies to peanuts, serious medical threats to a few but worries of little if any consequence to the rest of us.
Mold plainly produces allergic reactions in some people, and some reactions can be severe. But most people, most of the time, have few if any difficulties.
Here's what the study found:
- There is "evidence of an association" between household mold and upper respiratory (nasal and throat) tract symptoms, cough, hypersensitivity pneumonitis in "susceptible persons," wheeze, and asthma symptoms in "sensitized persons."
- There is "limited or suggestive evidence" of an association with "lower respiratory illness in otherwise healthy children."
- There is "inadequate or insufficient evidence to determine whether an association exists" between household mold and dyspnea (shortness of breath), asthma development, airflow obstruction (in otherwise healthy persons), mucous membrane irritation syndrome, chronic obstructive pulmonary disease, inhalation fevers (nonoccupational exposures), lower respiratory illness in otherwise healthy adults, acute idiopathic pulmonary hemorrhage in infants, skin symptoms, gastrointestinal tract problems, fatigue, neuropsychiatric symptoms, cancer, reproductive effects, rheumatologic and other immune diseases.
What's interesting is this: The symptoms -- or lack of symptoms -- associated with a damp house and a damp house with mold are virtually identical.
From a real estate perspective, the federal study suggests that the time has come to seek a better balance between buyers and sellers.
Buyers routinely demand appraisals, title exams, surveys, and home inspections. Sellers want to know if purchasers have the cash and credit to buy the property.
But in addition, why shouldn't sellers seek to limit future mold claims?
Sellers might want to consider a new real estate contingency: Buyers and all prospective residents of a home should be required to obtain medical tests within 10 days of making a purchase offer showing they are free and clear of any significant adverse reactions to household mold, spores and fungi.
The failure to take such tests would automatically end any seller liability for such conditions. And, if the test results are positive, seller liability would again be terminated because the buyers have a previous condition, know about the condition prior to closing, and are on notice regarding the problem. If the afflicted buyers withdraw from the sale, fair enough -- they should get their deposit back in full. As a matter of full disclosure, of course, the results of their tests would have to be revealed in any future home purchase or lease.
"It is impossible," admits the Environmental Protection Agency, "to get rid of all mold and mold spores indoors; some mold spores will be found floating through the air and in house dust."
However, mold requires moisture, so one way to at least limit mold is to check for leaks, seepage and dampness and to make repairs and clean-up as required. Mold may not be a problem for most of us, but proper housekeeping can make it less of a potential concern for everyone.
Written by Peter G. Miller
Internet Savvy Home Buyers
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Demographics: Internet-savvy home buyers are more likely to use a real estate professional to complete transaction.
The Internet is a powerful tool for both home buyers and agents.
1. In 2004, 75 percent of home buyers used the Internet as an information source, primarily searching for listings.
2. Home buyers who searched for residential property on the Internet typically purchased homes that were 19 percent higher than other home buyers.
3. The Internet also helped facilitate action by home buyers. For example, nearly 70 percent of all Internet-using home buyers visited a home with a real estate agent as a result of their use of a real estate Web site.
4. More than three-quarters of Internet-friendly home buyers used a REALTOR® to complete the home search and close the transaction. This compares to 64 percent of other home buyers.
5. The most widely cited real estate Web site used by home buyers in the survey was REALTOR.com® at two-thirds of respondents. The second most popular site was the real estate company’s Web site with 41 percent of Internet home searchers visiting.
Source: The 2004 NATIONAL ASSOCIATION OF REALTORS® Profile of Home Buyers and Sellers
Seller Spruce Up Tips
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WHAT DOES YOUR HOME LOOK LIKE THROUGH
THE EYES OF A BUYER?
This is an important question to ask yourself when preparing to sell your home. The following checklist will give you an idea of what should be done to your home so that it looks its best.
Outside
Invest in landscaping where it can be seen at first sight. A well manicured lawn, neatly clipped shrubbery and cleanly swept walks create a good first impression. Cut back over-grown shrubbery that looks scraggly or keeps light out of the house. Keep lawn closely cut, edged and free of weeds. Paint your house if necessary. This can do more for sales appeal than any other factor. If you decide against painting, at least consider painting front shutters and window frames. In winter, walks should be free of snow and ice. Inspect roof and gutters. Any missing shingles to replace? Repaint/wash front door and garage door. Doorbells and porch/outside lights must be in working order.
Living Areas
Have all plaster in top shape. Fix cracks, nail pops and visible seams in drywall. Check ceilings for leak stains. Fix the cause of the damage, repair and repaint. If painting and decorating, stick to conventional white and easy to work with neutrals. If you have a fireplace, clean it out and lay some logs in it to make it look inviting. Wash windows and replace any cracked or broker glass; make sure all windows open/close. Replace burned out light bulbs. Be sure every light switch works. Straighten up the closets, get rid of excess, store out of season clothes; closets look larger. Use room deodorizers to eliminate musty odors. Lubricate sticking or squeaking doors.
Kitchen
Most Important room in the house.Make it bright and attractive. If dull, paint cabinets and put up new curtains. Remove any appliances that you keep on your counters (toaster, coffee maker, can opener), remove canister sets and all knick-knacks. Clean counters make the room look larger. Leave a luscious aroma in the kitchen, i.e., vanilla, cinnamon-apple tea, etc.
Bathroom
Repair any dripping faucets. Replace old caulking around tubs, showers. Provide fresh, colorful towels. Keep sinks and mirrors shining. Remove all personal items (make-up, medication, etc.) from counters and sink tops. Use special cleaning products to remove all stains from toilets, tubs and sinks. Use of potpourri, flowers and tasteful deodorizers enhance your bathrooms.
Basement, Attic, Garage
Clean out attic, basement and garage and dispose of everything you are not going to move. Package everything you won't need until you are settled in your new home. Make sure there is plenty of light on the stairs to the basement. If your basement is dark and gloomy, paint ceilings and walls a light color. Vacuum the garage floor and stack items against the walls to make it appear larger.
Home Showing Instructions
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WHEN YOUR HOUSE IS BEING SHOWN
• Keep draperies and shades open to let in light and make rooms appear
larger.
• Remove and/or replace items not included in sale, if possible (chandeliers)
• Tag items not included that cannot be removed (water softeners)
• Turn on all room lighting
• At night turn on porch light and outdoor lighting in front and back
• Neatness makes a room look bigger. Avoid clutter.
• Keeps all steps clear of hazards
• Wash dishes, put away clothes, straighten up newspapers, etc.
• Make up beds with attractive spreads.
• Keep pets out of the way when showing. One type of prospect is annoyed,
another's attention is diverted.
• Avoid having too many people present during inspections. The potential
buyer will feel like an intruder and will hurry through the house. Do not allow
children to tag along on the tour.
• Keep any toys in children's rooms.
• Keep the radio, stereo, TV turned down.
Remember to be a seller you have to look at
your home like a buyer
8 Mistakes Sellers Can Make
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8 Big Time Mistakes
That cost you money when selling your home
.
#1 Basing asking price on needs or emotion rather than market value. Many times sellers base their pricing on how much they paid for or invested in their home. This can be an expensive mistake. If your home is not priced competitively, buyers will reject it in favor of other larger homes for the same price. At the same time, the buyers who should be looking at your house will not see it because it is priced over their heads. The result is increased market time, and even when the price is eventually lowered, the buyers are wary because "nobody wants to buy a house that nobody else wants". The result is low offers and an unwillingness to negotiate. Every seller wants to realize as much money as possible from the sale, but a listing priced too high often eventually sells for less than market value.
#2 Failing to "Showcase" the home. A property that is not clean or well maintained is a red flag for the buyer. It is an indication that there may be hidden defects that will result in increased cost of ownership. Sellers who fail to make necessary repairs, who don't spruce up the house inside and out, and fail to keep it clean and neat, chase away buyers as fast as REALTORS® can bring them. Buyers are poor judges of the cost of repairs, and always build in a large margin for error when offering on such a property. Sellers are always better off doing the work themselves ahead of time.
#3 Over-improving the home prior to selling. Sellers often unwittingly spend thousands of dollars doing the wrong upgrades to their home prior to attempting to sell in the mistaken belief that they will recoup this cost. If you are upgrading your home for your personal enjoyment - fine. But if you are thinking of selling, you should be aware that only certain upgrades are cost effective. Always consult with your REALTOR® BEFORE committing to upgrading your home.
#4 Choosing the wrong REALTOR® or choosing for the wrong reasons. Many homeowners list with the agent who tells them the highest price. You need to choose an experienced agent with the best marketing plan to sell your home. In the real estate business, an agent with many successfully closed transactions usually costs the same as someone who is inexperienced. That experience could mean a higher price at the negotiating table, selling in less time, and with a minimum amount of hassles.
#5 Using the "Hard Sell" during showings. Buying a home is an emotional decision. Buyers like to "try on" a house and see if it is comfortable for them. It is difficult for them to do if you follow them around pointing out every improvement that you made. Good REALTORS® let the buyers discover the home on their own, pointing out only features they are sure are important to them. Many sales are lost by overselling. If buyers think they are paying for features that are not particularly important to them personally, they will reject the home in favor of a less expensive home without the features.
#6 Failing to take the first offer seriously. Often sellers believe that the first offer received will be one of many to come. There is a tendency to not take it seriously, and to hold out for a higher price. This is especially true if the offer comes in soon after the home is placed on the market. Experienced REALTORS® know that more often than not the first buyer ends up being the best buyer, and many, many sellers have had to accept far less money than the initial offer later in the selling process. The home is most saleable early in the marketing period, and the amount buyers are willing to pay diminishes with the length of time a property has been on the market. Many sellers would give anything to find that prospective buyer who made the first, and ONLY, offer.
#7 Not knowing your rights and obligations. The contract you sign to sell your property is a complex and legally binding document. An improperly written contract can allow the purchaser to void the sale, or cost you thousands of unnecessary dollars. Have an experienced REALTOR® who knows the "ins and outs" fully explain the contract you are about to sign to you, or have your lawyer review it before acceptance.
#8Failure to effectively market the property. Good marketing opens the door that exposes the property to the marketplace. It means distinguishing your home from hundreds of others on the market. It also means selling the benefits, as well as the features. The two most obvious marketing tools (open houses and print advertising) are only moderately effective. Just 1% of homes are sold at open houses, and advertising studies show that only 3% of people purchased their home because they called on a print ad! Agents use these tools to attract future prospects, not to sell the house. The right REALTOR® will employ a wide variety of marketing activities, emphasizing the ones believed to work best for your home.
Being aware of these Big Time mistakes will help ensure
you receive top dollar for your home when the time
comes to sell your home!
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