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Thursday, June 23, 2011

#1 Cause For Homeowner Insurance Claims


If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Thursday, June 16, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray, FrontDoor.com


STEP 5 -- Close the Case

You've chosen your neighborhood. Now for the hard part: finding a house you love. Luckily, you've narrowed it down to a few streets. Now, make sure to:
•Find out how much house you can afford. The amount of money a lender offers you is often more than you can truly afford to pay. Use FrontDoor's handy mortgage calculator to add all your current debts and see how much you can afford. You don't want to be stuck eating ramen noodles for the next 15 to 30 years.
•Compare your loan options. Ask yourself these basic questions to find out what mortgage is right for you. Decide between fixed and adjustable rate mortgages with FrontDoor's comparison tool. Then, try another tool to see which loan term is best for you.
•Draw up your vision of home. It worked for your neighborhood -- now think about what you want in a home. Write your own vision of home and stick to it while you're house hunting. Don't know a Craftsman home from a contemporary one? Learn about 18 different home styles and find the right one for you.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Wednesday, June 15, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray, FrontDoor.com


STEP 4 -- Find the Clues

Once you've done the background research, visit neighborhoods that made the preliminary grade in person. There's no better way to paint a real picture of life in the neighborhood. Use your senses to get a complete picture of the prospective community.

Sights:
•Remember your first impression. What do you notice first about the neighborhood? Do the streets have curb appeal? Are the houses well-maintained? Do the shops and restaurants look hip and inviting? You'll want to feel good about where you call home, and impress buyers when you're ready to move on.
•Visualize yourself in the neighborhood. Think of your daily routine. If you can't live without a morning latte, is there a coffee shop nearby? Where will you walk your dog or go jogging? You'll enjoy the neighborhood more if it's easy to do what you like.
•Observe the neighborhood at different times of the day. Driving through will help you get a snapshot of life in the community -- good and bad. Do the roads turn into a parking lot after school or during rush hour? Are people using grills or decks in the evening? Are neighbors and kids socializing or do people keep to themselves? Are the streets well-lit at night? These visual clues can help you decide if you'll fit in.
•Make sure the local schools make the grade. Even if you don't have kids, pay a visit to the nearby schools. High ratings are great, but seeing the buildings is much more telling. It will be easier to sell your house later if the schools are nice.
•Look for warning signs. Be on the lookout for signs that the neighborhood is in trouble. Do you see abandoned buildings or vandalism? Are there a lot of "For Sale" signs or rentals? If the community goes downhill, so does your house's value.

Sounds:
•Stop and listen. Bird and nature sounds are generally pleasant, but what about noise from the highway, airport, hospital, train tracks or nearby clubs and bars? It's not very relaxing to listen to trains screech by during your morning coffee -- especially not every morning.
•Talk to your future neighbors. Ask how they like the area, and get the dirt on anything they don't like about the place. What do they want to change? What's their favorite place to hang out? If they're rude to you, they probably wouldn't be good neighbors anyway.
•Talk to more people. You'll get the best information from regular people who aren't trying to make a sale. (Read: not your real estate agent.) Hit up your waiter for information when you're checking out the local food, or ask a gas station attendant to spill what they know about your chosen neighborhood.

Smells:
•Specifically, are there any? You can't experience unpleasant smells on the Internet and they're not advertised in tourism brochures, but they can certainly affect your decision to live in an area. Take a big whiff of the air, and ask around if you smell any fishy (or just bad) odors.

Taste:
•No, I'm not asking you to lick your prospective home's mailbox. But ask yourself if the neighborhood matches your taste in a living environment -- and if it meets your criteria. Just because it's a nice neighborhood doesn't mean it's the one for you. If the neighborhood meets your list but still feels wrong, search out another area. Trust your gut feeling -- after all, you're the one who has to live there.

Stay tuned for step 5.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Tuesday, June 14, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray, FrontDoor.com


STEP 3 -- Get the Suspects

With your area of the city in mind, start digging up information. Find interesting neighborhoods online, ask local real estate agents for recommendations and compile all the background information you can, including:
•School information: Look into the local public and private elementary, junior and high schools, as well as daycare programs.
•Crime statistics: Most real estate sites have statistics that tell you how the zip code's crime rates measure up to the national average. If you want specifics, call the local police station.
•Parks and recreation: How far is it to the closest park or recreation center?
•Neighborhood associations: Does the community you're looking at have one, and, if so, are there lawn or construction restrictions? Is there a yearly fee?
•Tourist attractions: Get a guidebook or check out the convention and tourism bureau's Web site to see all the city has to offer.

Stay tuned for step 4.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Monday, June 13, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray, FrontDoor.com


STEP 2 -- Zero In on the Area

If you're moving within the same city, you may already know the various neighborhoods. Choose the ones that best match your list of wants. If you're moving to a new city, you'll have to do more research. Start by picking a part of town to search in. For instance, if your job is on the west side of town, start there. In a really large city, narrow it down to a few-block radius, say, SoHo in New York City. This will make your search more focused.

Stay tuned for step 3.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Sunday, June 12, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray, FrontDoor.com

If houses are like spouses, a neighborhood is like the extended family. But while you can have a good marriage and still dread holidays with the in-laws, you'll never love a house if you don't like your neighborhood.

How can you choose the right community? Become a neighborhood detective. Figure out what you're looking for, do research and find a neighborhood that fits your description. You don't even have to wear a trench coat -- but it probably wouldn't hurt.

STEP 1 -- Profile Your Perfect Neighborhood

Before you start scrutinizing neighborhoods, turn the magnifying glass back on yourself.

Think about what you're really looking for in a new neighborhood. Remember, you'll probably have to make compromises, so put the "must-haves" at the top and the "would- like-to-haves" at the bottom. Not sure what fits your lifestyle? Here's a list of 12 types of neighborhoods to get you started.

Here are some things to consider:
•Do you have children or are you planning to have children anytime soon? Parents know that the first thing to do when looking at a neighborhood is to research the school system. Even if you're single, living in an area with a much sought-after school system raises your property value. If you have kids, you'll also want to live close to parks and community centers.
•What type of home do you want? Are you interested in a single-family home or an apartment, townhouse or co-op? Read more about the different types of homes.
•How far are you willing to commute? Do you plan to drive, walk or take mass transit to work? Do you have a car or would you be willing to get one?
•Do you want to be in a historic neighborhood or a new development? Historic neighborhoods have tons of character, but often require lots of repair work and are governed by community associations with strict standards. Newer developments have more modern features, but are typically far from the city center. Read more about the different types of architecture styles.
•What is your current community lacking? If you're currently landlocked, but have always wanted to live on the waterfront, put that at the top of your list. If you're a coffee junkie, having a Starbucks down the street may be a dream come true.
•Do you want to be able to go places on foot? Would you like to be within walking distance of shops, restaurants and bars? Or would you be willing to drive to nearby businesses?
•Think about what you don't want in a neighborhood, too. If you can't stand late-night noise, you'll probably want to steer clear of the college area or an area with a lively bar scene.

Stay tuned for step 2.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Saturday, June 11, 2011

Owning a Home Essential to the American Dream, Survey Shows

Owning a Home Essential to the American Dream, Survey Shows

RISMedia, June 10, 2011—Despite the ups and downs of the housing market, home owners and non-owners alike consider owning a home essential to the American Dream.

That’s the key finding of a recent survey of people likely to vote in 2012 that was conducted on behalf of the National Association of Home Builders (NAHB) by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C.

“The survey results show that Americans see beyond the immediate housing market to the enduring value of homeownership,” says NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “An overwhelming 75 percent of the people who were polled said that owning a home is worth the risk of the fluctuations in the market, and 95 percent of the home owners said they are happy with their decision to own a home,” Nielsen says.

“Homeownership is worth the risk, pure and simple,” says Neil Newhouse, a partner and co-founder of Public Opinion Strategies. “Even though the market is weak, people who don’t own say they want to buy a house. Almost three-quarters of those who do not currently own a home, 73 percent, said owning a home is one of their goals. And among younger voters who are most likely to be in the market for a home in the next few years, the percentages are even higher,” Newhouse says.

One of the more striking aspects of the survey results is the intensity of sentiment among potential voters, according to Celinda Lake, president of Lake Research Partners. “People believe overwhelmingly that owning a home is an anchor to the American Dream,” she says. “It’s an anchor to your retirement, and it’s an anchor to your personal economic well-being.”

Among the other survey results:
• Homeownership and a retirement savings program are considered by voters to be their best investments.
• 80 percent of home owners would advise a close friend or family member just starting out to buy a home.
• Saving for a downpayment and closing costs is the biggest barrier to homeownership.
• Americans believe that owning their own home is as important as being successful at their job or being able to pay for a family member’s education.

“Owning a home isn’t just a policy to people,” says Lake. “It isn’t just a commodity to people. It is a core value.”

This national survey of 2,000 likely 2012 voters was conducted May 3-9, 2011 by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C. It has a margin of error of +2.19 percent.

Public Opinion Strategies is a national political and public affairs research firm based in Alexandria, Va. Founded in 1991, it has conducted more than 6 million interviews with voters and consumers in all 50 states and over two dozen foreign countries.

Lake Research Partners is a leading public opinion and political strategy research firm providing expert research-based strategy for campaigns, issue advocacy groups, foundations, unions and non-profit organizations.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Friday, June 10, 2011

40% of underwater borrowers took cash out of homes

40% of underwater borrowers took cash out of homes
CoreLogic: Owners with home equity loans more than twice as likely to be upside down

Homeowners with home equity loans are more than twice as likely to be "underwater" as those who didn't take cash out of their homes, according to statistics compiled by real estate and loan data aggregator CoreLogic.

CoreLogic estimates that at the end of March, 22.7 percent of homeowners with mortgages -- about 10.9 million borrowers -- owed more on their mortgage than their home was worth. That's down slightly from an estimated 11.1 million underwater borrowers at the end of December.

Falling home prices can put borrowers who have little equity in their homes underwater. By allowing homeowners to convert equity they have in their homes into cash, home equity loans reduce the cushion borrowers have against price declines.

CoreLogic said that 38 percent of borrowers with home equity loans were underwater at the end of March, compared with 18 percent of homeowners who had no home equity loan. More than 40 percent of all underwater homeowners (4.5 million) have home equity loans, CoreLogic said.

As might be expected, CoreLogic found that the presence of a home equity loan also increased the amount of negative equity. Underwater homeowners who had taken out home equity loans owed $83,000 more than their home was worth, on average, compared with $52,000 for those who hadn't taken cash out of their home.

Past studies have shown that the higher a borrower's combined loan-to-value ratio (CLTV), the more likely they are to stop making payments on their loan. In many cases, borrowers will opt for a "strategic default" -- not because they can't afford the monthly payments, but because they don't believe their home will regain its value anytime soon.

CoreLogic found that borrowers with home equity loans were slightly more likely to default at "moderate" levels of negative equity, up to 115 percent CLTV. Beyond that point, the relationship reverses, and default rates were slightly higher among homeowners without home equity loans.

Among all underwater borrowers nationwide, the average amount of negative equity was $65,000. In states with higher-cost housing, the average was considerably higher. In New York, underwater borrowers had an average of $129,000 in negative equity, followed by Massachusetts ($120,000), Connecticut ($111,000), Hawaii ($98,000), and California ($93,000).

At the other end of the scale, underwater borrowers in Ohio had the lowest negative equity -- $31,000, on average -- followed by Indiana ($34,000), and Minnesota ($38,000).

Nevada led all states in the proportion of underwater borrowers -- 63 percent of Silver State homeowners with mortgages owed more than their home was worth -- followed by Arizona (50 percent), Florida (46 percent), Michigan (36 percent), and California (31 percent).

At the metro level, Las Vegas led the nation, with 66 percent of mortgaged properties underwater, followed by Stockton (56 percent), Phoenix and Modesto (55 percent), and Reno (54 percent).

Metropolitan markets located outside of the five states with the highest negative equity shares include Greeley, Colo. (38 percent); Boise (36 percent); and Atlanta (35 percent).

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Thursday, June 9, 2011

Pros and cons of gifting real estate

Pros and cons of gifting real estate
Tax implications often thwart best of intentions
By Benny Kass

DEAR BENNY: I am retired and helping my son buy his first home. My credit is good, but his is not, so the mortgage is in my name. We found a fixer-upper for $80,000. I put $40,000 down and financed $40,000 for 10 years at 3.75 percent, and paid one and half points. My son will live in the house and make the payments of $500 per month.

The deed will be in my name as explained to me, but after it is recorded can I add my son's name to the deed? After he pays the mortgage in full, I want to sell or transfer the house to him and have my name removed. What is the best way to accomplish this? --Anessa

DEAR ANESSA: I get this question many, many times, and there is no easy answer. Generally speaking, I do not believe it makes good financial sense for anyone to put a relative (or anyone else for that matter) on title. The law treats this as a gift, and the tax basis of the giver (giftor) becomes the tax basis of the giftee.

What does this mean? Your tax basis is $80,000 (i.e., what you paid for it). Let's ignore any improvements you may have made. If you put your son on title for half of the property, his basis would be $40,000.

We all hope that property values will increase over the years. So if he were lucky down the road and decided to sell for, say, $180,000 (while you are still alive), you both would have made a profit of $100,000. You would have to pay capital gains tax on $50,000. Your son, if he has owned and lived in the property for two out of the three years before the sale, can exclude up to $250,000 of his gain.

But let's say that he moved out. When the property is sold, he (and you) would have to pay capital gains tax, which today is 15 percent federal, plus any applicable state or local tax.

I have two alternative solutions: (1) let him slowly buy you out. The purchase price would be his tax basis. However, you would have to pay capital gains tax; (2) prepare a will and let him inherit the house. He would get the stepped-up value of the house on the date of your death, and should he sell it -- even if he has moved out -- his profit would be based on the difference between the sales price and his stepped-up basis.

However, if he remains in the house and can take advantage of the exclusion of gain discussed above, then there may be merit to gifting him the house now.

But, I can provide only general information. As always, readers should consult their own tax and legal advisers for specific answers to their questions.

DEAR BENNY: About two years ago I got a reverse mortgage on my house. After all upfront expenses, I got a lump sum payout of $98,000, which I used to pay off a loan on another property. Since then, my house has lost value. According to Zillow, my house is now valued at $93,000. In the meantime, the mortgage balance owed to the lender is $105,000.

As I understand, if I die tomorrow, my heirs have two choices. If they want to keep the house, they will have to pay the mortgage balance of $105,000, or they can sell the house and give the proceeds to the lender. The proceeds would likely be less than $93,000. Am I correct?

Another option: What if I decide I want to continue to live in the house and just send the lender $93,000? --Jim

DEAR JIM: Yes, you are correct as to the two alternatives that your heirs have. Although I still maintain that a reverse mortgage is not for everyone, one of the advantages is that the lender takes the risk that the house may go down in value.

But nice try on the second option! Why should your lender accept $93,000 and let you live in the house? The lender gave you $98,000, and clearly expects you to honor the terms and conditions of the mortgage documents.

Let me ask you a question: If the house increased in value over and above what the outstanding mortgage was, would you give the lender the higher amount? I doubt it.

DEAR BENNY: After my dad died last year, my mom sold their house. During the title search, however, she was surprised to learn that she didn't even own the house! Apparently my dad had been convinced by a lawyer many years ago to change the title of the house, putting us three kids on it, and taking himself and mom off of it, but with the "right" to stay there indefinitely.

She obviously would have had to sign that as well, but had no idea what she was signing. So, at closing, each of us kids had to sign off on the sale, which I assume means that we will get some tax statement at the end of this year showing a third of the proceeds coming to each of us. As part of the sale, we also all signed statements that we were turning over the proceeds directly to Mom.

Questions:

How was it even possible for a lawyer and my dad to put our names on the title without our knowledge or consent? Can you legally just put anyone you want on the title of your house?

What tax consequences might this incur for us kids -- that we received money from the sale and that we turned it over to mom? The house sold for only about $10,000 over the purchase price of 15 years ago, plus they had recently put on a new roof, siding and windows, so there would have been very little if any real profit. --Doug

DEAR DOUG: The answer to your first question really depends on the laws in your state. For example, in Washington, D.C., where I practice law, both grantor and grantee must sign a transfer and recordation tax form. Thus, in D.C., you and your siblings would have to sign something before the deed putting you on title could be recorded.

But in Maryland (where I also practice) there is no requirement that both parties sign, so your father -- in Maryland -- could have put you all on title without your knowledge.

As for the second question regarding any tax consequences, you really should consult an accountant for specific answers. Generally speaking, however, you have to determine the tax basis of the property on the date that your mother died. Furthermore, her basis would have been increased when your dad died.

This is because of a tax provision called the "stepped-up" basis. Oversimplified, the basis for tax purposes is the value of the property on the date of a property owner's death.

Basis is important. To determine whether there is any profit, you take the basis, then add any major improvement to get the "adjusted basis." Then you take the sales price and deduct such items as real estate commissions and closing costs to get the adjusted sales price. The difference between the adjusted basis and the adjusted sales price is your gain (or loss).

If the house sold for only $10,000 over the original sales price, I seriously doubt that there will be any profit, but your tax accountant must give you this answer.

However, there is yet another tax issue: You and your siblings gave the proceeds to your mother. That is a gift. You have no tax consequences if the gift does not exceed $13,000 (to any one person) in any one year. NOTE: You can gift $13,000 to many people in one year with no tax implications.

But if the gift is more than $13,000, you will have to file a gift tax return, which your accountant can do.

Since your mother presumably had a life estate in the property (that has to be formally determined), it could be argued that you did not give her a gift, but rather paid her for her share of her life estate.

These are complicated tax questions that must be answered by your own professional tax and financial advisers, especially if the amount in question is large. I can provide only some basic guidance.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Wednesday, June 8, 2011

Tuesday, June 7, 2011

Monday, June 6, 2011

3 Absolute Musts for Buying a Home - Without the Stress!

3 Absolute Musts for Buying a Home - Without the Stress!

Major money transactions are stressful. Moving is stressful. Big life commitments are stressful. Put 'em all together, and what do you have? The home buying process (and the potential for one of the most stressful life experiences you'll ever have)!

But even in this volatile market where distressed properties - and people! - are commonplace, it is possible to maintain your sanity in the midst of a real estate deal - I promise.

Here are 3 money, mindset and calendar management strategies for buying a home, without stressing entirely out.

1. Work the Boy Scout program: be prepared. Scrambling for money and documents that the lender, unexpectedly, “requires” to close has got to rank up there in the top couple of stressors that buyers experience. Once you get into contract and, especially, once you’ve removed contingencies and put your deposit money on the line, every request that your lender makes seems like a ransom demand for your home - and your life, as you’d planned it.

Avoid this scrambling by being prepared. If you are planning to buy a home down the road, consult a mortgage broker and real estate pro early on in your planning process, so you can know what kind of cash you'll realistically need to close the deal - before you start the buying process. You might keep hearing about 3.5% down FHA loans, but your local pros can reality check you that it might cost an addition 5 or 6% of the purchase price just to close such a loan, in your area and price range!

If they give you a range, err on the high side - penny-scraping buyers are generally the most stressed of them all, as they are the ones whose deals are most likely to be entirely derailed if there’s an uptick in interest rates, say, during the time they are house hunting or in escrow, or if the homeowners’ insurance costs a bit more than they planned.

And have all your documents ready, too - things like divorce decrees, tax returns, updated check stubs, documentation of bills that you’ve recently paid down or off , even driver’s licenses (you wouldn’t believe the number of people who can’t produce ID when the notary needs it at the closing table!), keep all these items at the ready in case your lender requires them. By the same universal law that renders my dogs smarter and faster the wetter they get, it seems like lenders require the most documentation of the folks who have no idea where their most important papers are.

Last, but not least, there’s also an education element of preparedness. Educate yourself about the standard practices and timelines for a real estate transaction in your local market (your agent will surely be able to brief you on this, and you can also peruse Trulia Voices Community to sample the experiences of other folks buying right now in your area.) If you’re buying a bank-owned property or a short-sale, educate yourself about what this will entail - spend some time reading up on the rollercoaster of Wild Westiness (a mixed metaphor, I know, but still appropriate) that some distressed property sales can be, from the buyer’s point of view.

When it comes to buying a home, realistic expectations will set you free. Stress-free, that is.

2. Keep your timelines as flexible as possible, as long as possible. Rarely does the sun set in America without some homebuyer (or 5) near you lying awake in bed wondering how long they’ll have to:
a) keep bunking with their in-laws,
b) keep paying the nightly rate for the all-suite hotel down the street from the place they’re buying,
c) keep paying the daily fee for the moving truck which is parked outside,
containing everything they own,
d) keep begging their landlord to please, please, please give them another 24 hours
- and they swearing they’ll be out after that (even though they said that
yesterday!),
e) keep pushing back the vacation days they took off work for the move that seems like it will never happen, or
f) some combination or all of the above,

all because their escrow is not closing on the timeline they expected it to.

There are as many reasons for late escrow closings as there are insomniac homebuyers facing this issue: buyer’s loan underwriting is taking too long, seller’s short sale application is still being processed, appraisal is glitchy, bank-owned property asset manager is slow to produce the necessary signatures, and the list goes on.

More important than knowing the causes, though, is having the awareness that escrow closing dates are not set in stone until the end is very, very near - and that the problem of delayed closing comes up with ever-increasing frequency these days. Buyers who are trying to time their closing so that they move out of their apartment on the exact day they plan to close are likely to be disappointed - and temporarily homeless - in the current market climate.

Best practice is to plan on some overlapping days, weeks or even a month between the time you should be able to move into your next home, and the time you must be out of your current home, if you can afford it. Keep your moving plans flexible as long as possible - I’ve know a number of buyers who didn’t realize their move would be delayed until they were signing their closing docs!

Also, it’s sanity-making to try to keep some flexibility about your daily calendar while you are in escrow, lest you need to show up at the property and get some additional inspections, unexpectedly, which were recommended by your inspector. If you only have a couple of days before you must remove your inspection contingency, you might have to drop everything and stop in at the place for an hour here or there. You might also need to stop in at the bank - in person - to wire cash when it’s time to increase your deposit or pay your down payment or closing costs into escrow. This cannot usually be done over the phone or outside of banker’s hours, so if you can be a bit flexible for these outings, calendar-wise, you’ll be in good shape.

3. Pre-approve the folks across the bargaining table from you. There’s nothing worse than doing every thing you’re supposed to do, then having the deal fall apart at the last minute, through no fault of your own. I’ve known scores of buyers whose short sales failed to get approved by the seller’s bank and fell out of escrow as a result. I’ve also seen and heard from buyers whose deals died when their intended properties failed to meet the buyer’s mortgage guidelines because of condition problems like incomplete kitchen remodel jobs, mold or electrical problems and high-cost pest report items that neither the buyer nor the seller can afford to repair.

These ailing transactions can be prevented by early diagnosis: vet the other party’s qualifications and ability to close the deal, before you get into contract. For buyers, this can mean having your agent collect as much information as possible about the seller’s equity position, how underwater the home is, which banks are involved and how successful the listing agent is at closing short sale transactions - all of these things can give your agent and yourself a big old clue as to whether a short sale is likely to close. Similarly, if you’re getting an FHA loan, before you make an offer, walk through the property with your agent and troubleshoot it for condition problems that might come up during the appraisal.

With this information you can make an informed decision whether to move forward and try to buy the place; if you get into contract knowing it’s a crap shoot, at least you’ll have realistic expectations - the sort that are very difficult to disappoint.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

Sunday, June 5, 2011

5 Need-to-Knows Before You Move Into the Neighborhood

5 Need-to-Knows Before You Move Into the Neighborhood

By Tara-Nicholle Nelson | Broker in San Francisco, CA

Buying a home can feel like the most intense research project ever- to make a smart buy, you’ve got to get educated about mortgages, learn how to read a contract, do a deep dive into property condition issues or homeowner’s associations and pay attention to what’s going on in the economic news and the real estate market. But there’s at least one more area wise buyers don’t neglect: neighborhood research.

We know, at a gut level, what kind of neighborhoods we like - tree-lined streets, convenient shops, etc. and so forth. But what specific details should you investigate before you buy or move into an area? Here are 5 items you definitely need-to-know before you move into a neighborhood:

1. Details on Shady Dealings. Most of us think we know which sides of the railroad tracks, so to speak, have high crime rates and which are supposedly safe. But before you buy a home or move into a neighborhood, it behooves you to actually do the research and see whether or not your beliefs are accurate. Check out the Megan’s Law databases to see where registered sex offenders may live, especially if you have young children or other reasons to be particularly worried. Google your address, which might pop up details such as whether your intended home has ever been a meth lab, among other things.

And, whatever you do, don’t forget to tap into Trulia’s new Crime Maps – in a number of metro areas (which will be constantly expanding), you can view uber-detailed (and sometimes surprising!) crime data that is uber-relevant to you. If you’re trying to decide between two homes in different parts of town, you can even toggle back and forth between the neighborhoods to compare them! For example, some neighborhoods have a spike in car break-ins after people leave for work. Or maybe one side of your street-to-be has a significantly higher rate of violent crimes than the other.


That’s the kind of thing you should find out before you move in, don’tcha think?

2. How Recession-Resistant it is. Let’s face facts: some neighborhoods, cities and states have fared better than others over the course of the recession. An area’s proximity to job opportunities, saturation with troubled subprime loans and the amount of housing supply (vs. demand) all have something to do with whether prices plummeted or have held up over the last few years.

Sometimes, a neighborhood’s recession-proofness (or -proneness) is obvious: if the street on which you’re house hunting is riddled with ‘For Sale’ signs (and foreclosure riders on top of them), or you know for a fact that the home you’re buying is a short sale for which the sellers paid double your price just 5 years ago, you might be in an area that has been hard hit. Also, if your neighborhood has a sky-high rate of price reductions or it is much less expensive to buy than to rent a home in your area, these are other indicators that the recession might have hit your district pretty hard.

The fact of the matter is, some of the hardest hit neighborhoods are where the best deals are to be found, so I’m not necessarily suggesting that you shy away from buying in such an area. But do know that the harder hit areas might take longer to see an uptick in home values, too, so the harder hit your neighborhood was by the real estate recession, the longer you should plan on staying put before you buy, to make sure you don’t end up needing to sell and stuck in an upside-down home. While a 5 to 7 year plan might make sense in an area where the real estate market has been pretty robust over the last few years, you might want to be okay with planning to hold your home upwards of 10 years before buying in a foreclosure-riddled area (and you might also want to make absolutely sure you’re very happy with the deal you’re getting).

On the flip side, the more recession-resistant your area has been, the more likely you are to encounter sellers with less flexibility on pricing or even, gasp!, multiple offers!

3. The Neighborhood’s Flavor. Is the area you’re considering a hot spot for outdoor adventures and family events at the park, or chi chi restaurants and wine tastings at the museum? Find out by pulling up some listings on Trulia and scrolling down the see how others who have lived in the area have rated and reviewed it.

Also, take a look at NabeWise- it’s only available for about 10 large cities right now, but it’s got a super useful function where you can search by city and what’s important to you (like being in a trendy neighborhood, or one that’s got ample public transportation) and it’ll surface neighborhoods which might be a good fit for your values.Neighborhoods are even ranked based on prestige and how beautiful residents are (the latter of which I find fascinating - but more as a measure of where the raters’ heads are at than of anything you must include in your neighborhood fit equation!).

4. Where are the hot spots? Before you buy or move into an area, equip yourself with a knowledge of where all the stores, farmer’s markets, parks, restaurants and other hot spots your family will want to use are located vis-a-vis your home-to-be. (Hint: your local real estate agent is a fabulous source for this kind of information - they are especially gifted at knowing where the good food and shopping is!) Your Trulia Mobile App will alert you to nearby haunts that have Yelp! reviews; also, your neighbors-to-be can be a great source of this sort of information - knock on doors and ask for their recommendations.

It also makes sense to search the web for the various sorts of things your family is into, and your new neighborhood’s name. An internet search for running trails in my neighborhood is how I found out my house was just a couple of blocks away from a largely hidden lake we now visit regularly. Then, drive around and see what you can see - or find someone to drive for you. Once, when I moved to a new town, I marched myself onto a city bus, sat behind the driver, told them I was new in town and asked them to point out things they thought I needed to know. I got an hour long tour through three neighboring towns - for $1.25!

5. What the neighborhood looks and feels like at different times of day/different days of the week. Have you ever visited a Sunday afternoon open house when the sun was shining, birds were singing, and charming neighborhood rugrats were rolling their hoops up the street? (Okay - that was a century or two ago, but you get the gist.) Then, you come back a couple of weeks later for your inspections at dusk and find those same rugrats (or their parents!) spraying graffiti all over “your” garage, the neighbors’ underpants flapping on the line in the front yard and the other neighbors’ music blaring? File that under disappointing.

The nature of a neighborhoods changes - sometimes dramatically - before and after the sun goes down. Also, if you visit a home during the week or when it’s cold and rainy out, the street will undoubtedly be busier and noisier - more reflective of the extremes you should be aware of - on the weekend or when the weather is grand. So, before you buy, go see the place in sunlight and after dark, during the week and on the weekend. And, again, there’s nothing wrong with knocking on the neighbors’ doors, telling them you’re thinking of buying, and seeing what kind of insider information you can glean from them!

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com

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