With the cold, winter weather comes the danger and inconvenience of frozen pipes.  According to State Farm Insurance, over a quarter of a million homes experience a frozen pipe each year, and that is only the homeowners who file a claim.  There are several things that  can be done to avoid unwanted water spilling across your floor. 

• Insulate your pipes.  This applies to pipes in any exterior walls.  Any hardware or home improvement store sells foam wraps for water pipes.  If you are in the process of building a home of redoing a room, take this opportunity to move water pipes from exterior walls. 
• Turn water off to exterior faucets.  If your home has a separate valve, turn the water off to any outside faucets and drain them.  If your home does not have separate valves, consider having a plumber install them or install anti-freeze exterior faucets.
• Let your faucet drip.  This has been a simple solution for years because it generally works.  It will waste water which doesn't fit into today's trend of conservation but if the pipe freezes and bursts, much more water will be wasted and damage to your home could occur.
• Open doors.  Many kitchen and bathroom cabinets that house water pipes and are located on an exterior wall or even above a cold garage, basement, or crawl space can trap cold air.  By opening the cabinet doors it allows the warm air in the house to circulate around the water pipes.

Hopefully these tips will help you avoid damage to your home this winter from unwanted and preventable water.

Tuesday, the Fed had an emergency meeting and dropped the rate 3/4 of a point!  That is a huge, unexpected drop in an effort to try to avoid an upcoming recession. 

Will it work?  It is hard to say at this point.  Some economists say it was the right thing to do but others disagree.  Only time will tell.

Well, only one day later, Wednesday, mortgage rates dropped to a new four year low.  According to Bloomberg News, the average rate for a 30-year fixed mortgage declined to 5.31 percent.  This drop could encourage the millions of homeowners across the country who are faced with high rate ARMs to refinance and save money on a monthly basis.  The money that these homeowners would be saving could be used on other items, encouraging consumer spending.  This monthly savings could also be squirreled away for a rainy day, reinvested in the property through improvements, or used to pay down their mortgage loan at a more rapid rate.

If you are thinking of refinancing, I work with several of the area's leading lenders and can offer referrals to banks and brokers who have a proven track record. 

There are many builders and real estate investors who are finding themselves in a difficult place.  The property that they were looking to make money on is in fact costing them money.  With higher than recent market times, some local builders and small time investors/flippers are choosing foreclosure as their best option.  The monthly carrying costs of a mortgage, interest, taxes, utilities, and maintenance are adding up and many are finding that even a break-even sale is going to be impossible.  Now their choices are to lose money or let the bank take over the property. 

Nobody wants to be foreclosed on, but for builders and investors it is a business decision and many are cutting their loses.  There is certainly an opportunity for home owners to strike a deal on these properties before foreclosure occurs.  They are difficult to locate but an experienced Realtor who knows the local market can certainly locate these gems.  The next hurdle is negotiating a price where the buyer gets a great deal and the builder or investor takes a minimal loss but is able to avoid foreclosure and keep a positive reputation.

Lenders are now starting to report a larger number of loans going into default from borrowers with high credit scores and even equity in their property.  The loans causing this new alarm are Option ARMs.  These are loans designed to give the borrower three different options with their monthly payments:

1. Borrower pays the full monthly amount due covering the interest expense with the remainder going to pay down the principal.
2. Borrower pays only the interest expense of the loan with the principal remaining unchanged.
3. Borrower pays only a portion of the interest owed with the principal increasing

After a predetermined time period these options end and a regular payment schedule is put in place. 

Option ARMs have been around for years, but just like the sub-prime lending, they have been used more prevalently for borrowers who could not qualify on any other terms.  Option ARMs are generally stated income/stated asset loans.  This means that in exchange for a slightly higher interest rate borrowers just have to tell the lender what their income & assets are and not necessarily provide proof.  The self employed or individuals with a complex financial situation are prime candidates for this type of loan.

For borrowers who were unable to qualify for a traditional mortgage, the Option ARM was given as an alternative.  The stated income could be slightly inflated in order to get the borrower into a higher priced home.  The borrower would then bank on the appreciation of their newly acquired asset and refinance before the payment schedule removed the payment options.  These borrowers are not seeing the appreciation they had hoped for and are now being forced to either sell or be foreclosed on.

With the growing foclosure rates across the country the market has certainly become flooded with listings in some areas.  With homeowners having trouble selling their current home many sellers are opting to rent outtheir homes in hopes of riding out the market's down turn.  Unfortunatly, this is not an original idea and with more sellers going down this road a new problem is occuring in the market; rental prices are falling!

It comes down to the simplicity of suppy and demand.  The more rental properties in the market, the lower the rental prices will be.  Fortunatly, the Chicagoland area is not being hit very hard.  It is not difficult to find foreclosures in our neighborhoods' but our area has not had the value losses of many other areas across the nation.

Most Sundays, I have every intention to sit down and read the paper, but rarely the follow through.  This past Sunday, because of the holiday weekend, I was able to at least take in the Real Estate section of the Chicago Tribune while I sipped my coffee.  Through Mary Umberger's weekly column, I learned of an association I was not familiar with; the National Association of Exclusive Buyer Agents (NAEBA).  The NAEBA does not seem to have any affiliation with the National Association of Realtors and I had trouble gaining information about them from their site.  It turns out, members of the NAEBA only work with buyers, they never represent sellers.  They had recently conducted a survey of it's members in regards to staged homes that I found interesting.

I recommend giving this study a read.  As a Realtor who has earned both the ABR (Accredited Buyer Representative) and the ASP (Accredited Staging Professional) I could make an argument to support either the positives or the negatives of staging.  The study by the NAEBA sites examples of how staging covers up flaws in the property and distracts from what should be the main focal point, the house.  As a buyer's agent, I have shown many staged homes and seen my clients become excited about the property.  I have never had a client become angry with me because I would point out issues with the house, because as I have instructed them, that is my job.  The study claims that that staggers intentionally arrange furniture and hang paintings to hide holes in walls and put up window treatments to hide broken windows. 

Overall the study was self serving for the NAEBA, as it continually urged buyers to use a member of their association when purchasing a home.  I'll take that advice a step further and recommend that home buyers use a Realtor to assist them with their new home purchase.  The study is not entirely wrong in it's intention.  The point of staging a home before putting it on the market is to cause the home to look it's very best and appeal to the broadest audience of buyers.  Sellers stage homes to get them sold.  A buyer should understand that they are buying the physical structure, not the contents, and the buyer's agent should be there to drive home this point.

Before I take a client out to view homes I have a buyer's consultation meeting.  It is at this time that I outline the various steps in the home buying process and I let them know what to expect in the upcoming days, weeks, and many times, months.  I remind my clients that for most people, their home is their largest investment and that they need to buy it smart.