Must-Ask Neighborhood questions

We all are susceptible to the romance of a home; everything looks real rosy at first, especially if you decide this home is "the one". However, crime is a reality in even the best of neighborhoods. Once in a very hot gated community where I lived a resident was involved with organized crime to support his lifestyle. He ran afoul of them and ended up the victim of a mob hit. This crime was unusual , yes, because it was committed by professionals who had to negotiate very high security measures in place. But they still got him. I mention this because there's a certain percentage of the population that would refuse to live in that home, no matter how good a deal it was, or how hot the community is. I wonder if the current residents even know about that home's sordid past. I doubt it. So make sure to take it upon yourself to find out about crime in the neighborhood where your dream home is located.

From Trulia's Tara Nelson :The list of question every buyer asks about the various properties during a house hunt is relatively predictable. How many bedrooms does it have? Baths? Square footage? What are the HOA dues? What’s the school district?

Then, we get more specific, personalizing the questions based on our own vision, aesthetics and lifestyle needs: Can that wall be moved? Is there space for Grandma’s dining room table? Is there a shady spot for an orchid house in the backyard?

When it comes to crime, most of us simply don’t ask any questions at all, as (a) agents might be prohibited from doing much beyond pointing us to law enforcement sources, and (b) we tend to assume most neighborhoods are either ‘good’ or ‘bad,’ low-crime or not. The truth is never so black and white. Fortunately, technology has made it easy-peasy for us to get a deeper, more nuanced, and more usable understanding of the crime that takes place in our neighborhood-to-be, which in turn allows us to make smarter decisions about which home we buy and how we live in it, once we buy it, than we could have even ten years ago.

The key to tapping into this nuanced crime information is asking the right questions. Here’s a short list of the right questions to ask about crime before you buy a home.

1. Do any offenders live nearby? In most states, Megan’s Law and similar provisions mandate that certain individuals with histories of criminal convictions must register their home addresses with local authorities, who in turn are required to make this information available to the public. Google “your city, your state Megan’s Law registry" to find sites where you can type in an address (like the address of the home you’re considering buying) and find a list of registered sex offenders in the area. Many of these sites will also offer you a map showing your address and the relative locations of the homes of the registered offenders.

The reality is that every neighborhood - even very upscale areas - has someone living in it who has committed a crime in the past, so don’t completely freak out if you happen to find someone in your neighborhood-to-be with a history of sex offenses. The utility of this information is that it empowers you and your children to recognize these dangers and to take care to avoid hazardous situations. That said, if you happen to have young children and notice that the Megan’s Law map has a halfway house with a dozen registered sex offenders living right next door to your target home, that information might change your decision about whether that property is the right one for you.

There is also power in following the path of the information you are given on these registry sites. Many will surface information like what the registrants’ crimes were, when they happened, the registrants’ photos and more useful intelligence. This information can help you evaluate the degree to which you should be concerned before you buy.

2. Was the home a drug lab? You think your home’s former owner’s food or pet smells are toxic? That’s nothing compared to the truly unpleasant and health-impairing effects some have experienced after buying a home that turned out to have been a methamphetamine lab in a former life. If the sellers know this about a home, they should certainly disclose it. Unfortunately, many of these homes end up sold by banks as foreclosures, or by estates, trusts, landlords or other corporate owners who don’t know the home’s past - or don’t have a legal obligation to disclose it.

Get the answer to this question to the best of your ability via this two-step process: (a) talk with the neighbors - they often will reveal whether the house had a shady past, then (b) search the federal Drug Enforcement Association’s Clandestine Laboratory Registry, here: http://www.justice.gov/dea/clan-lab/clan-lab.shtml.

3. What sorts of crimes happen in the area. Where and when do they happen? Crime happens virtually everywhere. But the details of crime patterns vary widely in various neighborhoods. One side of town might be plagued with an overall low crime rate, but the crime that does happen tends to be violent crime after dark. While another neighborhood across town might have lots of car break-ins during the day while people are at work, but not much going on after residents get back home - and not much violent crime at all.

This sort of information can be highly useful to a buyer-to-be, as it can help you make decisions not just about whether or not to buy, but also about whether to park your car outside (or not), whether to get an alarm and where in a given neighborhood you might prefer your home to be (e.g., interior cul-de-sac vs. thoroughfare in the same area).

Trulia Crime Maps offer precisely this sort of nuanced information, allowing you to view your town and neighborhood’s crime rate in heat map format showing the relative violent and non-violent crimes that have taken place recently in different parts of town. It also provides information on crime trends, in terms of the frequency of criminal activity taking place at various hours of the day, and the most dangerous intersections in your town or area. SpotCrime.com offers another angle on nuanced crime data, breaking down crime types with easy-to-scan icons and providing data for communities all over the country.

4. What anti-crime features does - or can - the home have? Review your disclosures and talk with the sellers (through your agent, of course) about what anti-crime features the home currently has. This will allow you to prepare for any upgrades, downgrades or changes you’ll want to make. For example, if a home has security bars that were installed 3 decades ago, you might want to have them brought up to code with a fire release bar, or removed altogether. Or, perhaps the sellers currently have the home wired for an alarm that can be armed, disarmed and video monitored remotely - if you want to continue that service, you’ll need to get that information and make the account change when you take over the other utilities and home services.

On the other hand, the home might not have any anti-crime features. So, if there is a particular alarm or monitoring system you like, it is smart to check in with that provider before close of escrow to find out whether they can provide services to the new address and, if so, what it will cost and take to equip the home and start service up at closing.

5. What does the neighborhood do to fight crime - and how can I help? Neighborhoods across the country fight and prevent crime the grassroots way, by maintaining strong connections between the home owners and neighbors who all have in common the desire to live and raise their families in a safe, secure, thriving place. Don’t hesitate to ask your home’s seller and/or any neighbors you talk to about whether there are any neighborhood associations, neighborhood watch groups, email lists, social networks, regular meetings, block parties or other community connections in which you can actively participate.

ALL CASH BUYER INVESTORS ARE BUYING UP HOMES

CNBC Takes note of the REITs ( Real Estate Investment Trusts) currently buying up all the single family homes available,spiking prices via demand: By: Diana Olick CNBC Real Estate Reporter Three years ago Aaron Edelheit was working out of his living room, buying foreclosed properties, and putting them up for rent. Today he is CEO of The American Home Real Estate Investment Trust, one of the first REITs investing only in single family rental homes.

"We think the foreclosure crisis has allowed a couple of firms such as ours to get size and scale to start institutionalizing a very large market," said Edelheit.

The single family rental market was large even before the housing crash, with sixteen million homes designated as rentals in 2010, according to the U.S. Census. Add to that at least five million foreclosures, many of which will become investor-owned rentals, and the enormous scale is apparent. "By some accounts, $6-9 billion has been raised or committed, suggesting potential acquisitions of 40,000-90,000 properties," according to Jade Rahmani, an analyst at KBW, who pointed out that this amounts to around 15 percent of unsold bank-owned, so-called REO (real estate owned), homes. "We expect the REO-to-rental market to experience robust growth over the next 12-24 months, potentially emerging as an institutional asset class." To see that growth, look no further than Edelheit's brand new Atlanta office space, where he now employs 150 workers full-time and hundreds more part-time. His REIT owns close to 2000 properties in Georgia, North Carolina and Florida, and they are buying more every day.

"We outgrew the last space as soon as we had moved in," said Edelheit as he weaves through a maze of desks, followed by his panting dog Frankie, to get to his office. There he shows off his stand-up computer work station that he fabricated out of a small shelf from Ikea. Many of his mostly-young employees stand as well, as they search for homes to buy, rent, market, and manage. The energy is palpable. "In terms of risk and reward, I feel that this is a generational opportunity," Edelheit noted. Two similar REITs, Silver Bay Realty Trust and Altisource Residential just went public in December 2012. Analysts at KBW estimate cash returns on investments in REOs are in the 5-7 percent range, while total returns could reach 15-20 percent. ----------------------------------------------------------------------------------------------------------- What this means to you as a homebuyer: Yes the landscape has changed again. Your competition is an all cash buyer without emotion. You need to make yourself as strong a profile as possible,and be prepared for overbidding. This is not a bubble. It's what happens when big dollars chase too few assets.

I'm Underwater

I think in this day many homeowners are like me, and bear in mind I'm a professional. I'm underwater on my home. I'm sure many feel a sense of betrayal because we bought in to the bank's presentation of the time. The idea was that things would continue to go up. Not up at a crazy rate of speed like the 2005-2007 period, but moderately, always up. I knew that my experience with real estate cycles indicated that there would be periods of downward valuations. So I was prudent. I always left a 30% cushion. Except this time, that didn't help. While I knew that the economy guided home prices, I never imagined the once prudent world of banking would go so nuts that it would crater our national economy in a perfect storm of failed bets, exported jobs, and outright thievery that came from "Free Market deregulation". But they did. Greed is a powerful motivator, and often we do things we know are crazy because of it. I know what to do, and what YOU should do: keep making your payments . If we can hold on another year or two, things will even out. They always do. But at the moment most Baby Boomers feel betrayed by the banks. Their main savings vehicle has been looted. Same with their parents. The estates of Boomers parents are often in the same situation. Parents pass away and leave a home underwater. Now what?
Steve McLinden of Bankrate.com offers up a few answers:

Must heirs repay father's underwater loan?

By Steve McLinden • Bankrate.com

Q: Dear Real Estate Adviser,
My father passed away with a conventional mortgage loan on his home -- a home worth far less than what he owed. The estate won't have enough to pay the difference. What should we do to get the house out from under the estate? Would the family become liable for this debt?
-- Diane M.


A: Dear Diane M., So sorry to hear about your father. It's always an enormous challenge juggling estate matters during a time of bereavement, and my heart goes out to you.
Unfortunately, you can't extricate the house from the estate at this point. However, the good news is you and any other heirs will have no liability for it, unless a family member or members co-signed the mortgage, which would oblige them to pay the original creditor. But as you correctly pointed out, your father's creditors would likely then pursue satisfaction of the note from the estate.
I am curious if you're still paying the mortgage loan. If so, there's probably no reason to do so, unless a family member wants to assume the loan. Not all lenders allow assumptions by family members following the death of original mortgagors, but many do, especially in this still-soft resale market in which tons of foreclosure inventory still sits on the books. If the mortgage is assumed, make sure the proper paperwork is filed immediately, and the death notice is presented to the lender.
Unless other arrangements are made, the lender will foreclose on the house if loan payments stop. As noted earlier, heirs have no legal obligation to pay off a house left to them in a will. Hence, the house would then become the lender's problem. The bank would then sell the house, probably at a loss, in which case the lender may enter a deficiency judgment against your father's estate -- a judgment that would, as you surmised, eat up any remaining estate assets and render the estate insolvent.
Your other option, and I don't think it's a very good one if the house is upside-down, is to try to sell it. If you do go that route for whatever reason, lenders typically give heirs a three-month period to sell the house, a period that's renewable for three months at a time, up to a year. During this span, lenders would want to see evidence that the house is being marketed. By the way, if a family member does want to keep the place, the loan could be refinanced by that party to settle your father's mortgage.
You'd best check with your father's lender to determine its policies and your options. You might want to at least consult with an estate or probate attorney, especially if additional challenges or complications arise.
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On Staying Still

So, I’m going over a couple of new listings, and I’m struck by something; these listings are all, according to the listing agents, “hidden gems”. I don’t know what it is about this term, but it just bugs me. I’ve written before about code words in real estate (i.e. “needs TLC” = bring your bulldozer) and some brokers are just basically not very inspiring when it comes to ad copy. If I see the term “casual elegance” one more time I’m going to scream. What does that even mean? It was shopworn in 1993. Surely someone can come up with better copy here in the 21st century. “Legal Steal”? OK, now you’re working my last nerve. But the ultimate one that ticks me off is.........(drum roll)...“Priced To Sell”!!! Really? How else do you price your listings? “Priced to age on the market? “Priced to never get an offer”? “Priced to scare you away?” While we’re on the topic of pricing let me tell this right now. My apologies in advance to those of you who belong to or list with a company that might use it. I HATE “Value Range Pricing”. It seems so antithetical. It’s gimmicky Sellers market stuff. The last sellers market (2005-2008½) was without a doubt the most obnoxious I have had the displeasure to participate in. List price is supposed to be a median of the market range, not an auction opening bid. Suggestions that the sellers enjoy Puerto Vallarta or that “bids under 20% over list price will not be considered” have no place in the MLS agent notes. Now I hate to be the bearer of bad tidings folks, but the halcyon days of the buyers market have also made an appearance in the rear view mirror. Good Riddance. I’ve lost count of the number of offers I’ve had to present that were 40% off the list price. This thinking is left over from the dark days of the Resolution Trust Corp, because of the sheer numbers of assets. Then, crazy offers were sometimes accepted just to break up the logjam. During this time, because I had experience with commercial development, my esteemed Broker asked for my guidance on a 750,000 sq. ft. Retail Shopping Mall he was bidding on. 10% occupancy. Note was over 3 million. His winning bid? $285,000.00, because you couldn’t GIVE away retail at that juncture in 1990. I think the sand used to make the concrete in the walls cost more than that. In fact, THAT was a “legal steal” if ever there were one. In case you’re wondering, you might be able to afford $285,000 but the common area maintenance, taxes, insurance, repairs, utilities, advertising, and janitorial on the that building surely came to half again as much per year, so you still needed deep pockets to play. The good news is today that center is fully occupied and worth close to forty million if you use a CAP rate of 8%. Don’t worry about what a CAP Rate is. I can explain it to you briefly by saying it’s an arbitrary figure used to compare different investment sectors and the return on investment. The point of the story is to strike when the iron is hot. In real estate, you can often look around and realize values are at a low ebb. That’s when it’s the best time to buy. Always, without fail. If you were around in the early 70s this was true. Same with the late eighties. Again in the 2009-2011 market. What you learn as an investor is that sentiment gets really bad. Things are never going to recover, and if they do it will take fifteen years to get rid of excess inventory. Things are always going to be this bad like it is today. This happened every time at the low point in the cycle. These lessons are helpful if you’re looking for a home. It’s not just retail centers that end up in the trash bin. Residential values do as well. We are currently at one of these crossroads. In some parts of the country, there well may be another down leg to property values. In my area, the west coast and the Sun Belt, things have begun to turn around. If you’re waiting for home values to go down, just take a look around. They already have! Back to the buyer’s market. Here in Southern California, a lot of formerly smug buyers are suddenly faced with the very real possibility that the fantastic environment they have enjoyed for four years is coming to an abrupt end. If this cycle is like the rest, the pace of sales will suddenly pick up much faster than was thought possible and we’ll all be off to the races again. So take heed, buyers. Have your ducks in a row when your go out to look at property. Be ready to “pull the trigger”. Season your down payment if it’s coming from relatives. This means get it in the bank now, or add your name to their bank account, which eliminates a lot of hassle. Know your credit file; work with your mortgage broker to clean up any issues that may cost you a quarter point in your rate. That’s tens of thousands of dollars over the life of the loan. Be aware of your price range. You don’t want to fall in love with something only to find out you don’t qualify. And PLEASE stay perfectly still! What do I mean by this? Do not put a nickel on your cards for the next 90 days that you don’t pay off the same month. Do not buy a new car, appliance, riding mower, or motorcycle until you close escrow. Not even a fancy Barbecue. Just don’t move. Stay perfectly still. Or you might not move, if you get my point. You can thank me later.

HOUSING CRISIS TO END THIS YEAR

There's a lot of these articles popping up all of a sudden. A sure sign we have bottomed out in the cycle. From past experience, I would say we're in a period comparable to the 1992-95 window. How long this period will last is anyones guess. My take is banks HATE to leave money on the table and will gradually loosen credit again. Couple that with the largest population bulge in history(Bigger than the Baby Boomers)reaching the beginnnings of household formation age and scarcity of product since all the builders stopped building for five years, and you've got the formula for another strong up cycle for property values.

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit. The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago. Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters. However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability. Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.” In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV. While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan. Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

5 Smart Upgrades for Underwater Homes

From perennial favorite Tara Nicolle Nelson: In Staying Put: Remodel Your House to Get the Home You Want, architect Duo Dickinson gives new meaning to the term ‘housebound.’ He uses the term to refer to homeowners who have decided to stay put instead of moving up to a larger home, including those who made that decision because they are upside down on their mortgages: they owe more than the place is worth.

The premise of Dickinson’s book is something I’ve long believed myself: that staying in even an underwater home can be a smart move - and it doesn’t have to involve making do with a home that no longer works for your needs. Blinging out an upside down home with every gadget and doodad known to man can constitute throwing good money after bad, but there are a handful of upgrades that might make sense for homeowners facing negative equity.

For the most part, sensible upgrades to upside-down homes can all be described as things that either:
•make life in the place much more comfortable for the long term - alleviating the want or need to move
•boost the home’s sagging value or saleability for a relatively small investment, and/or
•begin saving the homeowners money - or even earn tax credits - immediately.

Here are five upgrades that might have upside for your lifestyle or bottom line, if you own an underwater home:

1. Cosmetics that boost curb appeal. When your home is mired in negative equity, chances are good that you might have been investing your dollars and cents into keeping your head above water and the property in sound functioning condition - not necessarily keeping the exterior at its most pristine. But if you are looking to boost your home’s value to hit an appraisal mark for refinancing, or even just trying to lure in a buyer to purchase the place as a short sale, primping your home’s exterior cosmetics can be a smart investment. Keep costs down by doing it yourself, or even hiring a reputable handyman to tackle small, but impactful tasks like:
•painting the shutters, eaves, doors and other trims - if you can paint the whole house, great - but if you can’t afford all that, painting the trims and accents can make a massive visual difference in the look and feel of your home, very inexpensively;

•adding fresh, new hardware like a mailbox, house numbers, and a front door or door knockers and kick plates; and

•landscaping - planting lush or fragrant flowers or trees, trimming up overgrown shrubs and even installing low maintenance ground cover can also transform the entire look of your home from the curb.

And while curb appeal is priority number one if you are trying to get your home sold, interior design projects of a similarly small scale can also create massive benefits for your emotions and comfort level for the buck if you’re planning to stay put for the long haul. It’s amazing what a basic paint job in your bedroom, opening (or ditching) your window coverings or installing lighting or shelves can do to make your family happier at home!

2. Economical expansion. If you crave more space and your home can be expanded within its existing footprint, consider an economical expansion - having a professional convert your garage or basement into a rental or mother-in-law type unit can be an especially good investment if you can house more family members or bring in some income within the new living space. In a similar vein, consider adding a prefab unit in your large backyard or even building on additional square footage, if you can afford it and truly need the space. Before you do, though, make sure you get permits and check in with your local real estate pro to be sure that you’re not just overimproving the place vis-a-vis the neighborhood, digging your negative equity hole beyond your financial or emotional tolerance level or even an extended timeline you might have in mind for selling the place.

3. Greening it up. Upgrades that improve your home’s energy efficiency have inherent value in terms of scoring you points as a good citizen of the planet. But they can also improve your day-to-day living comfort - and decrease your utility bills. Buying solar panels can eliminate your electric bill entirely with an upfront investment; leasing the panels can cost you nothing upfront and keep your energy bills fixed for as long as 20 years! And on my own personal home improvement wish list is a tankless water heater - they eliminate the need to pay to keep that big old tank of water hot, and they produce endless hot water - no matter how many showers you take. Endless hot water! (As a side benefit, if you happen to live in earthquake country like I do, you don’t have to worry about strapping the tank or checking to make sure it’s still secure after every tremor or aftershock.) In many states, green home improvements like these and dual-paned windows, adding insulation or installing efficient heating and cooling appliances might qualify you for tax credits; check with a local tax pro to see what tax advantages you might earn by going green at home.

4. Combining quarters. A home improvement show would be nothing without someone pointing out how gloriously spacious the kitchen/dining room, master bedroom or even two smallest bedrooms could be if they could just (say it with me, folks): “knock out this wall.” If you’ve uttered those very words about your own home, consult with a contractor - many interior walls are relatively easy and inexpensive to remove, even if you might need to leave in and finish off a support beam if the wall does turn out to be load bearing.

I know it’s anathema to some agents to even think about combining two bedrooms into one; for resale purposes the rule of thumb is the more bedrooms, the better. But, here’s the deal:
(a) two teeny-tiny, unusable bedrooms are not better than one, in the eyes of most homebuyers, and
(b) most walls that are easily taken down can be equally easily put back up when it’s time to sell.

If you’ve decided to stay put in your underwater home for the next 10, 20 or even 30 years, there’s no reason resale considerations should stop you from taking down a wall that is preventing you from fully enjoying your home.

5. Built-ins that make things work. Built-in work and storage spaces in your office, garage, craft rooms, kitchen and even otherwise unusable nooks and crannies are uber-useful and can give you the feel of a highly customized luxury home without moving - and without spending much cash. (And window seats? Don't get me started - who doesn’t love a window seat?!) Similarly, functional furniture like loft beds, Murphy beds, pot racks, pantries and armoires can create a highly customized feel and convenient lifestyle, but you can move them around the house - or even take them with you whenever you do decide to move! Investing to improve a home that is upside down should be done very carefully, and only once you have your personal endgame firmly in mind. The budget you set to spruce up a home you need to divest of via a short sell might be vastly different from the investment you’re willing to make to enlarge a home you plan to house your family in for the next 20 years. So be intentional: get clear on your finances and your future plans for your family and career before you start spending on home improvements in this market climate.

Then, you’ll be in a position to create a regret-free home improvement plan. Homeowners and agents: What home improvements do you think make the most dollars or lifestyle sense for those who have decided to stay put in their upside down homes? For more info or to get an opinion of what your home is worth in today's market, give me a call or text-----Michael

Reminder: place your cellphone on the Do Not Call List!

Block Your # From The Soon To Be Released Public Listing REMEMBER: Cell Phone Numbers Go Public this month. REMINDER..... all cell phone numbers are being released to telemarketing companies and you will start to receive sales calls. YOU WILL BE CHARGED FOR THESE CALLS To prevent this, call the following number from your cell phone: 888-382-1222. It is the National DO NOT CALL list It will only take a minute of your time.. It blocks your number for five (5) years. You must call from the cell phone number you want to have blocked. You cannot call from a different phone number.