Jan. 29, 2007 - Why buy in a HOA if you live in the Houston area!

On a regular basis I have people asking me to find them a home that is not in a homeowner's association.   I am going to tell you why I don't think that is a good idea living in the Northwest Houston area.    I have lived in Kansas, Colorado and North Carolina and did not live in subdivisons that had HOA's.  It was not a big deal because all three of the areas that I lived in had zoning in affect.   The problem with not buying in a subdivision in the Houston area is that we do not have zoning in affect.  It is a free for all; people can build whatever they want wherever they want it.  That is why it is not uncommon to see cows in the middle of the city or suburb.

I will never forget when I found out that the Houston area did not have zoning.  We moved to the area in 1996 and I was taking the classes to get my real estate license.  One of the instructors’s nonchalantly said "well you know we don't have zoning in the Houston area".  I almost fell off my chair; I though every area was zoned.  At the time I wasn't sure if I wanted someone telling me what I could and couldn't do.  The longer I have lived here however the more I appreciate HOA's for maintaining our property values.  To give you an example a few years ago my husband worked with someone who bought out in the country in a non-restricted area.  The guy loved it until the house next door was sold and the new owner decided to make it in to a salvage yard.  When that junk yard opened up his property values went down the tube.

The good news is that there is just about something for everyone as far as homeowner's associations go.  There are associations with all kinds of restrictions such as in planned communities and there are HOA's that allow you to have mobile homes.   Most country subdivisions will allow you to have horses. Typically it is 1 acre per horse but again that varies by subdivision.  The HOA's fees also vary greatly.  I have seen fees as low as $10 a year and as high as $1500.  There are even a few subdivisions that have deed restrictions but no fees.  Most of the suburb HOA's have similar restrictions.  If there is something in particular you are interested in doing it is a good idea to look the deed restrictions over before you ever put an offer on a house.  It is a fairly easy process to get the deed restrictions; usually you can get them from a local title company. It is important to decide what kind of restrictions you are looking for and find your home in a HOA that meets your needs. 

Jan. 28, 2007 - Email forwarding

Do you really know how to forward e-mails? 50% of us do; 50% do NOT. Do you wonder why you get viruses or junk mail? Do you hate it? Every time you forward an e-mail there is information left over from the people who got the message before you, namely their e-mail addresses & names. As the messages get forwarded along, the list of addresses builds, and builds, and builds, and all it takes is for some poor sap to get a virus, and his or her computer can send that virus to every E-mail address that has come across his computer. Or, someone can take all of those addresses and sell them or send junk mail to them in the hopes that you will go to the site and he will make five cents for each hit. That's right, all of that inconvenience over a nickel! How do you stop it? Well, there are two easy steps: 
 
(1) When you forward an e-mail, DELETE all of the other addresses that appear in the body of the message. That's right, DELETE them. Highlight them and delete them, backspace them, cut them, whatever it is you know how to do. It only takes a second. You MUST click the "Forward" button first and then you will have full editing capabilities against the body and headers of the message.
 
If you don't click on "Forward" first, you won't be able to edit the message at all.
 
(2) Whenever you send an e-mail to more than one person, do NOT use the To: or Cc: columns for adding e-mail address. 
 
Always use the BCC: (blind carbon copy) column for listing the e-mail addresses. This is the way that people you send to only see their own e-mail address. If you don't see your BCC: option click on where it says To: and your address list will appear. Highlight the address and choose BCC: and that's it, it's that easy. When you send to BCC: your message will automatically say "Undisclosed Recipients" in the "TO:" field of the people who receive it. 
 
Have you ever gotten an email that is a petition? It states a position and asks you to add your name and address and to forward it to 10 or 15 people or your entire address book. The email can be forwarded on and on and can collect thousands of names and email addresses. A FACT: The completed petition is actually worth a couple of bucks to a professional spammer because of the wealth of valid names and email addresses contained therein. If you want to support the petition, send it as your own personal letter to the intended recipient. Your position may carry more weight as a personal letter than a laundry listname and email address on a petition.

Jan. 21, 2007 - Preparing your house to put it on the market - A tale of Two homes!

When you are putting your house up for sale there are certain things you can't change.  You are going to have to live with your location, the size of  your yard, your floor plan, what other homes in your neighborhood are selling for.  There are however certain things that you can do to stage your home to get top dollar. 

Several years ago I had an incident that really made me aware of how much difference clutter and odors can make in the sale of a home.   I had two homes with the same floor plan on the market at the same time.  The homes were not in the same neighborhood but were both built by the same builder and were identical floor plans.  One of the homes was in an neighborhood with a mixture of old and new homes; parts of the neighborhood being a little more run down..  The second home was in a newer neighborhood.  When I ran comparatives I found that this floor plan typically sold for about $10,00 more in the newer neighborhood. 

My client whose home was in the older neighborhood had taken immaculate care of their home.  The clutter was picked up and it was sparkling clean.  They did everything I told them to do to stage their home to show and sell.  She did this to my amazment with two smal children.  My client whose home was in the newer neighborhood was a single Dad and had his hands full so the house was not in very good shape.  It was not clean and had an odor.   

I ended up getting offers on both homes about the same time.  My immaculate clean clients, in the older neighborhood, ended up getting top dollar for their house.  My client whose home was in the newer neighborhood but not in the best condition ended up way under what the market prices were.  In theory the home in the newer neighborhood should have sold for more than the home in the older neighborhood.  In this case what ended up happening was the home in the older neighborhood sold for more than the home in the newer neighborhood.

The moral of this story is declutter and take care of any offensive odors.  You are planning on moving anyway so go ahead and start packing.  Rent a storage unit and move part of the clutter out of your home.  Take care of any offensive odors, the biggest culprit of odors are usually your pets.

Visit my website for a more complete list of things you can do to prepare your house to put it on the market.

Jan. 19, 2007 - Three funerals to dwell upon

Jan. 17, 2007 - Reading a "Title Committment"

After your contract has been fully executed ( signed) by both the buyer and seller), it will be receipted by a title company.  Once this happens the title company will open title and start to examine the property in order to be able to issue title insurance.  Within about  a week after title is opened, you will receive a title commitment in the mail or by email.  All parties involved with the transaction will receive a copy of the commitment, the buyer, the seller, the buyer's agent, the listing agent and the lender. 

Just what is the title commitment and what do you need to look for.  The title commitment is a commitment to issue title insurance.

After your contract has been signed by both parties, it will be receipted by a title company. Once this happens, the title company will start examining the property in order to be able to issue title insurance. Within a week or so after being receipted, you will receive a title commitment in the mail or by email. So will Buying Agent, the Listing Agent and your lender.

Please keep in mind when reading through this that this applies to a title commitment in Texas. I don't have experience with what a title commitment looks like in other states. My feeling is that they will be similar, but some states may do things a bit differently. (I've checked and it's similar in Nevada)

Just what is the title commitment and what do you need to look for? The title commitment is a commitment to issue title insurance. The title commitment is broken down into four parts or schedules. They are Schedules A, B, C & D.

Schedule A - "A" is for "Actual Facts." This is where you will find the who, what, where and how much information. The most important information here will be the name of the person who holds the existing title, the legal description of the land and the name of the proposed insured (buyer), the sales price and the name of the lender. What we want to make sure of is that all of the information is accurate when it is compared to the sales contract.
Schedule B - "B" is for "Buyer Notification." This is the section of the title commitment that address where other parties have any interest or control of the use of the property. Examples of this are utility easements and building setbacks. A utility easement is a common thing to find here. This would be a part of the land that a utility company has the right to use. A setback prevents the owner from building a certain distance from the front property line. Schedule B is also the area in which exceptions will be noted. Exceptions in this case are anything that will not be covered by title insurance.
Schedule C - "C" is for "Clear to Close." This is the area in which any issues must be resolved before the buyer can close on the property. Common issues here are an existing mortgage that needs to be paid off, a marital status issue, unpaid taxes and liens on the property.  Typically if there is a problem we will receive a call from the title company but it is a good idea to check this section out closely when we receive the commitment.
Schedule D - "D" is for "Disclosure." This final section outlines all parties who will collect any part of the insurance premium including underwriters, title agents and attorneys. It will also show the amounts being paid for the owner's title insurance policy, the mortgage company's amount and any endorsements.
The most particular entity looking at the title commitment will most likely be the lender if one is involved. Lenders generally do not like to see any defects in Schedule C that can not be cleared.

The title commitment can look a little scary if you have never seen one before. A good closing officer will review the title commitment and will bring to the Buyer's Agent anything of concern.

Jan. 16, 2007 - What is an Escrow Account?

• An escrow account is a neutral depository set up by your lender to collect (as a part of your monthly payment) for your homeowners insurance and real estate taxes, which are due annually. 
• You will pay one-twelfth of the annual amount of these bills each month with your regular mortgage payment.
• At the end of the year these bills will be paid on your behalf by the lender.
• With a 20% down payment you may not be required to have an escrow account. You will need to set aside funds to pay taxes and insurance when they are due.
• In Texas, interest is not paid on escrow accounts.
• Texas law prohibits lenders from holding excess money in escrow accounts.

Setting up the escrow account.

• At closing, about 3 months of taxes and insurance will be collected in advance to place in this account.
• This will cover the first month after closing, since you do not make a payment for this month, and the lender needs a couple of extra months in the account so that bills can be paid on time.
• At the end of each year, the escrow account is re-evaluated, reflecting any changes in your taxes and insurance. The monthly payment is reset for the following year. Any overage in the account will be refunded

Jan. 14, 2007 - What to bring to your real estate closing!

At this point you will have a clear title commitment and will have completed any inspections etc. you wish to have on the property.

You will be required to pay all fees and closing cost in the form of "guaranteed funds" such as a Cashier's Check.  Your agent or escrow officer will notify you of the exact amount.   You will receive a closing document required by HUD that outlines the settlement cost. The title company prepares this document.   For additional information on HUD statements go here.  In a perfect real estate world you would receive this the day before closing so you would have time to go over it before closing.  Unfortunately real estate is not perfect I can't tell you how many times we get this from the title company at the closing table.  Should that happen you can bring a check using the figures your lender have come up with from your good faith statement.  Should you not bring enough money you can write a personal check to the title company for up to $1500.  On the flip side if you bring too much money the title company will cut you a check for the overage.

The other item you will need to bring is a picture ID such as your driver's license.  A number of years ago I had a client who was moving to another state.  He came back to Texas for the closing and to get his furniture.  A few days before closing I found out that he had turned in his driver's license to the other state and only had a piece of paper for a drivers license.  He did not have another picture ID.  Back then I talked the title company in to letting us get a membership at Sam's Club and using it as a picture ID.  As I told you this was quite a few years ago I'm not sure if that would fly today.  Long story short I highly recommend not turning in your driver's license if you are planning on buying a house unless you have another type of picture ID like a passport.

Jan. 13, 2007 - What is Title Insurance?

Title insurance provides protection against title defects that were unknown to you at the time you purchased the policy.

Before writing a policy, a title company will check for defects in your title by examining public records, including deed, mortgages, wills, divorces, court judgements, tax records, liens, and encumbrances.  The company will then defend in court any claims to the property that are covered by your policy, subject to certain limitations.  If the company loses, it will pay you for covered losses up the the amount of your policy.

In Texas, the two most common types of title policies are "mortgagee policies," which protect lenders, and "owner policies," which protect buyers.

Most lending institutions won't loan you money to buy a house or other property unless you purchase a mortagee policty.  This policy will repay the balance of the mortgage if a claim against your property voids your title.  Mortgagee policies remain in effect until the loan is repaid.  Most lenders will require you to buy a new motgagee title policy if you refinance your home. 

Owner policies insure property owners against the specific kinds of claims listed in the policy.  Any owner policy remains in effect as long as you or your heirs own the property or are liable for any title warranties made when you sell the property.  You should keep your owner policy, even if you transfer your title or sell the property.

In Texas our title policy forms are standarized.  This mean the policy languae is the same, regardless of the company. Pay special attention to "Schedule B" of the policy which explains any limitations, exclusions, exceptions and special conditions.  You many want to discuss these exceptions with an attorney before you close on a real estate deal.

The premium for a title policy is paid only once, at the closing of the sale.  The buyer and seller may negotiate who pays the premium.

Title insurance premium rates are set by the Texas Department of Insurance and are based on the property's sale value using a sliding scale.

Jan. 10, 2007 - Our son getting ready to come home from Iraq!

Our son has been over in Hit Iraq since this time last year.  He is an Intelligence Analyst with the Army.  We are not sure exactly what he does as he is not able to tell us.  He has been able to tell us that his intelligence has been directly responsible for some bad guys being killed and just recently his intelligence was responsible for some good guys getting away from their captors.  Read this article for more information.  His tour of duty in Iraq is drawing to a close.  He can’t tell us when he is leaving but it is getting close.  He told us that the replacement group will be getting there soon and then they will spend some time showing them the ropes.   We think it will be around the middle of February, but we are not sure.  We do know that he gets to come home for a 2 week leave March 8^th.

He was able to come home for a two week leave this last June.  He arrived here the day after his 21st birthday.  This picture is with our dog Abby shortly after he got home in June.

He has found out that he will be assigned to a group in Fort Hood May 29^th.  Until that time he will be going back to the base in Friedberg, Germany.  We are just hopeful that he doesn't get assigned to a group at Fort Hood that is heading straight back to Iraq.  You would think the Army wouldn't do that but unfortunately they do.  We really won't know that until he gets to Fort Hood.  His attitude is great and if he has to head straight back to Iraq he is prepared to do that. 

Jan. 10, 2007 - What is a Real Estate "Closing"?

A 'real estate closing" is the meeting of the buyer, seller, and their agents (optional), and representatives from the lending institution and Title Company wherein the actual transfer of title to the property occurs.  The purchase agreement or contract that has been signed describes the property, states the purchase price and terms, sets forth the method of payment, and usually names the date and place where the closing or actual transfer of the property title and keys will occur.  Here in Texas we typically do that in one room all together.  I have lived in several states and can tell you that each state is different.  Occasionally it doesn't work for the buyer and seller to be there at the same time and they will sign the papers at different times.  If the buyer or seller is in another state the title company can do a mail out where they sign the papers in front of a notary republic.  Regardless of how it is done all parties must sign in front of a notary.

The title company transferring ownership of the property will prepare a new deed.  The lender will require the new buyer to sign a promissory note.  In Texas we use a "Deed of Trust' instead of a traditional mortgage.  A deed of trust is not a deed it is a mortgage.  The buyer sings the deed of trust as security to the lender for the loan.  The mortgage or deed of trust gives the lender the right to sell the property if the buyer fails to make the payments.  Basically no pay, no stay.  Before you exchange the papers the property may be surveyed, appraised, inspected and the ownership of title checked in county and court records.

Jan. 9, 2007 - Appraisal difficulties

     My client's existing house was in a neighborhood that had houses built in the 1970’s and early 1980’ with newer houses built in the late 1990’s.  They were in one of the homes built in the late 1990’s and there were not a lot of comparables. When the appraisal came in, it came in much lower than the selling price we had agreed upon.  In the type of market we were experiencing we were all amazed.   We were asking a fair price for their house and tried to work it out with the original buyers but the appraiser was not from our area and would not budge.

     We were in a no win situation. I suggested we go back to the second offer.  The second buyer was thrilled to be considered for the house.  The new buyer started the loan process this time using a local appraiser.  With the new buyers using a local appraiser who was familiar with this subdivision we were able to close within two weeks

Jan. 8, 2007 - Questions to ask your home inspector!

Most people only think of one or two questions to ask a home inspector.  The most common being "How much is your fee" and "When you can inspect the home".  Below I am including a list of additional questions you might ask.

• The State of Texas does require testing and licensing of inspectors.  Ask them about their tarining and what kind of license they have.  
• Ask them how long they have been licensed in the state of Texas. 
• Make sure they are a full time home inspector.  I have found there are a lot of inspectors who dabble and you want someone who is making home inspections their career.   There are lots of codes they need to stay current on.
• Ask them if they also perform repairs? (If the answer is yes this may be a conflict of interest). 
• What will the inspection include?  (It should include heating, A/C systems, electrical, interior plumbing, visible insulation, visual roof, walls, ceilings, floors, windows, doors, foundation and the visible structure of the home.
• Ask them if they charge extra based on the size of the home.  I have found that most inspectors have different price breaks according to the square footage of the home.
• Find out how much they will charge if you ask for a reinspection after the repairs are completed.
• Be sure you can attend the inspection.  This is your time to learn about your new home and ask questions.  If the inspector does not want you following him around I would suggest finding a different inspector.
• Be sure that they don't mind you calling with additional questions after the inspection. 
• Ask for references.  Get names and phone numbers of people they have recently inspected homes for.
• Make sure you are getting a written report in a timely manner. They may give you the report at the inspection or they may want to email it to you the following morning.   Either method is acceptable.  Just remember that time is of the essence.
• If you have a particular concern about the property, be sure to ask if it will be covered in the inspection.

The inspector may not inspect swimming pools, wells, septic tanks, wood destroying insects or other environmental test.  you will likely need to arrange for those inspections separately.

The primary purpose of the inspection is to educate you so you can make an informed purchasing decision. The inspector should allow and even encourage you to attend the home inspection.

Jan. 7, 2007 - The Houston Real Estate Market – looking back at 2006

 I have talked to many friends and family members scattered throughout the rest of the country and they have talked about a difficult market in the last year with home sale prices depreciating and homes staying on the market for long periods of time.  I have to say that several years ago talking to those same friends and family members their market was booming with incredible growth while our market was just showing moderate growth.  Having lived in some of those states that showed incredible growth living here the last 10 years I have felt a little bit of envy because our growth has always been moderate; maybe 3% to 6% per year.  To me it brings to mind the story of the tortoise and the hare.  The Houston market has plodded along year after year showing moderate gains.  I have to say I no longer feel that envy I am glad to be living in Houston and plodding along like a tortoise.