Real Estate in Steamboat

DEAR BOB: When I purchased a new condominium last year, I was told it would be an owner-occupied building and investor-speculators would not be allowed. But I later learned friends, family and acquaintances of the builder were allowed to invest and buy all the best units at the lowest prices. Now my building is mostly renters rather than owner-occupied units. This hurts the value of my condo, which I must now sell due to job relocation. Do I have any legal recourse against the builder for misrepresentation or fraud since he lied to me? –Michele C.

DEAR MICHELE: You were very wise to inquire if any condos would be sold to non-resident investor-speculators. But unless you can prove the builder’s misrepresentation with a written statement to comply with the Statute of Frauds, you don’t have any legal recourse against that builder.

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If non-residents own a large percentage of units, the maintenance quality usually declines and problems develop. Many mortgage lenders refuse to lend — or charge higher interest rates — if the percentage of renters increases above 25 percent.

Your situation shows the importance for any house or condo buyer to obtain all representations by the builder, developer, or salespersons in writing just in case the statement was a lie, as in your situation. Without written documentation, you have no reliable proof. For full details, please consult a local real estate attorney.

HOW TO OBTAIN A RETROSPECTIVE APPRAISAL

DEAR BOB: In a recent article you advised a reader to obtain a retrospective appraisal for an inherited property. You gave the admonition to keep market value records for inherited real estate. What type of information should I keep? –Claudia B.

DEAR CLAUDIA: If you inherited real estate title from a deceased owner, you need to establish your “stepped-up basis” to market value on the date of the decedent’s death.

Your first stop should be the local property tax assessor’s office to learn the assessed value on the date of death. If this amount is acceptable to you, obtain written evidence and keep it to establish your new stepped-up basis as of the date of inheritance.

However, in many property tax jurisdictions, the assessed value is far below the fair market value. In that situation, you should hire a professional appraiser to establish your market value stepped-up basis as of the date of the decedent’s death. The appraisal expense will be very worthwhile when you eventually decide to sell the inherited property. For more details, please consult your tax adviser.

INCOME PROPERTY TAX-DEFERRED EXCHANGES

DEAR BOB: Name the Internal Revenue Service program that lets you exchange income property tax-free? –Chet S.

DEAR CHET: What prize do I win if I successfully answer your challenge? That’s too easy. Don’t you have a more difficult quiz question?

Internal Revenue Code 1031 allows you to make a tax-deferred exchange of your real estate held for investment or use in a trade or business for another such property. To qualify for tax deferral, you must trade equal or up in both market value and equity.

In other words, you can’t take out any cash or net mortgage relief. If you do, that’s “taxable boot.” For more details, please consult your tax adviser or read my special report, “How the New Tax-Deferred Real Estate Exchange Rules can Make You Very Wealthy,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2006 Inman News

The Church of the Palms discovered extensive mold damage in one of its buildings, which is insured under an all-risk policy with the Cincinnati Insurance Co.

According to the policy, “The Church is covered by an all-risk policy, which excludes losses caused by rust, corrosion, fungus, decay, deterioration, hidden or latent defect or any quality in property that causes itself to damage or destroy itself or for losses resulting from faulty, inadequate or defective design, specifications, workmanship, repair, and construction.”

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After discovering the mold, the church hired an expert who determined the building’s negligent construction and design most likely caused the mold infestation.

The insurance company denied the church’s mold damage claim, pointing to the policy exclusion for fungus damage. But the church’s attorney argued the policy does not specifically exclude coverage for damage caused by mold.

However, the insurer replied that mold is a form a fungus, an excluded coverage under the policy.

If you were the judge, would you require the insurance company to pay the church for the damage due to mold?

The judge said no!

Both parties to this lawsuit have accepted the expert’s findings that the likely reasons for the extensive mold damage are roof deficiencies, improper installation of flashing, mold contamination in the walls between the drywall and the insulation, mold/microbial contamination in the mechanical rooms, and within the air-conditioning duct work, the judge explained.

However, after the insured proves a loss to its property while the insurance policy is in force, the burden shifts to the insurer to prove the loss arose from an excluded risk, he continued.

Although the insurance policy omits the word “mold” in its exclusions, the insurer argues mold is a fungus, which is excluded from coverage, the judge emphasized. The church does not dispute that mold is a fungus, he noted.

Because mold is a fungus, and the church’s mold problems developed gradually and were not associated with a single insured fortuitous event, such as a rainstorm, the insurance policy fungus exclusion prevents coverage for the mold damage, the judge ruled.

Based on the U.S. District Court decision in Church of the Palms Presbyterian v. Cincinnati Insurance Co., 404 Fed.Supp.2d 1339.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2006 Inman News

Q: We have (whoops, had) beautiful high-end, outdoor teak furniture. Several years ago it had just reached that lovely patina-stage of aging and was very smooth to touch.

While we were away on vacation, a neighbor rented a power washer to clean his driveway. Looking over to our property he decided to do us a favor. You guessed it! He power-washed all our teak. When we came home we found pale furniture whose wood grain was striped and very rough.

Holding back my anger I asked what I should do next. He said to sand it and put on a finish of linseed oil and turpentine. Well, six years later, nothing is better. Our teak is dark gray–almost black. Can anything be done to get the color back to maybe something that resembles aged teak? I hope to use this furniture on our new flagstone patio. We now live a safe distance from any power washers.

A: Wow! A couple of cliches come to mind: “The road to hell is paved with good intentions,” and “With friends (or neighbors) like this, who needs enemies?”

Both linseed oil and turpentine tend to really darken wood. Boiled linseed oil tends to darken wood even more. Linseed oil is mixed with the turpentine to increase penetration of the finish into the wood. So much for the patina of aged teak.

We think your only hope is that the oil and turpentine did not penetrate so deeply that it can’t be sanded well enough to remove it. If you can get down to the raw wood there may be hope.

The pressure washer probably removed a good deal of the natural oil of the wood, along with the patina. You’ll need to replace it. We suggest you use a light coat of a neutral oil. We’ve had good luck with tung oil. Use a rag to apply the oil to avoid getting too much on at one time. Try a small section of one piece of furniture and see if the color and texture pass muster. If so, finish the rest of the piece.

Live with it awhile. Then, if it’s acceptable, do the rest of the furniture. You will want to give your teak a minimum of three, and perhaps as many as six, coats of this finish. With luck, in time the patina will return.

As an alternative to our suggestion, consult a furniture refinisher for his or her opinion. We suggest that you bring a piece of the furniture to show an example and be sure to explain where, when and how you are going to use the furniture. Good luck.

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Copyright 2006 Bill and Kevin Burnett

Defaulting on your mortgage is one thing, but ending up in foreclosure is an entirely different feeling of loss, hurt, frustration and embarrassment.

Most residential lenders will tell you that consumers will do everything in their power to keep from losing their homes (the only aberration would be calloused investors who walk away from mortgages when their would-be, short-term goldmines turn into a bust). The prime reasons for default typically are unexpected–loss of job, death, divorce–situations that never can be predicated by a credit report or a loan application.

A disturbing trend has begun to compound the emotional stress at the foreclosure sale. Some companies and private individuals are offering recently foreclosed former owners “to get a fresh start” by paying them a deeply discounted cash amount for an assignment of the owner’s rights to surplus funds.

“It’s a terrible thing for a person who probably needs all the funds they can get their hands on after they have been through a foreclosure,” said attorney Joshua Sundt, a member of a group of Bellevue, Wash.-based lawyers who comprise the Sound Legal Center. “Most of these people are not well organized and they don’t really know what to expect from the process.”

Typically, when a lender forecloses on a homeowner, the lender bids the amount owed, plus attorney’s costs and other fees, at the foreclosure sale. If no other bidder offers a higher price, the bank takes the house back at the price the bank is owed. However, escalating prices have brought higher bids at foreclosure sales, resulting in a difference between what the bank is owed and the actual foreclosure price.

For example, let’s say I fall behind on my $100,000 mortgage. I’m given notices of default and eventually a notice that my home is being foreclosed on by the Kelly Bank. The foreclosure date is set and the Kelly Bank bids $100,000 to $105,000 for the debt owed and $5,000 for taxes and attorney’s fees. However, other individual investors who have heard about the sale show up. The winning bid is $135,000. If no other liens are in place, I am entitled to the difference–$30,000.

Right after the sale is final, enter the surplus fund shark. He tells me that getting my money (since most owners do not attend the foreclosure sale, they are not aware of the total amount until later) will be a long and tedious process. He offers me a speedy resolution for 25 percent to 50 percent of “anything that’s left over.”

Some offerings have called for a flat fee while others a “sliding scale” depending upon the amount of the return. The total amount often includes subjective, open-ended middleman fees. For example, some assignment forms indicate the middleman would be entitled to “attorneys fees incurred, costs for filing, service, delivering, recording, downloading or obtain any documents, title examination documents and all other fees and costs incurred in obtaining and retrieving the surplus funds.”

“The truth is the former owner would have access to the funds just as fast as any middleman,” said attorney Patricia Armey of the Northwest law firm of Routh Crabtree Olsen, P.S. “In some cases, these people have told clients that getting the money could take from six months up to a year when it’s often available in 20 days, maybe sooner.

“The other piece of this is that we believe some of these players are bidding up the property at the sale–or have ‘straw’ bidders who are bidding up the properties–thereby netting them more money,” Armey said.

Although there is nothing inherently wrong with purchasing an assignment of rights, Sundt believes to do so in a foreclosure situation smacks of poor business practices at the very least.

“It’s clear that these people are approaching the unsophisticated consumer at a very difficult time,” Sundt said.

Tom Kelly’s new book, “Real Estate for Boomers and Beyond: Exploring the Costs, Choices and Changes for Your Next Move,” (Kaplan Publishing) is available in retail stores, on Amazon.com, and in local libraries. Tom can be reached at news@tomkelly.com.

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Copyright 2006 Tom Kelly

Q: In shopping online, I have run into something puzzling. All of the mortgage shopping sites you recommend show different combinations of interest rate and points, and in every case, the Annual Percentage Rate (APR) is lower on loans with lower rates. The APR makes low-rate/high-point mortgages look like bargains. Are they?

A: No, there are no bargains in this market. The APR is consistently lower on low-rate loans than on high-rate loans because it isn’t calculated properly. That isn’t the lenders’ fault; they must calculate the APR using government rules. But the rules don’t correspond to lender practice in pricing loans, or to borrower needs.

Lenders price loans with different rates so that their net return on investment will be about the same. Suppose they offer a 6.375 percent loan at a price of zero, meaning there are no upfront loan charges. This is called the “par mortgage.” Then on a 5.875 percent loan they are going to require an upfront payment that, combined with the 5.875 percent rate, will yield 6.375 percent. Similarly, on a 7 percent loan, they will offer a rebate that, combined with the 7 percent rate, will yield 6.375 percent.

In pricing loans that have different rates, lenders must make assumptions about when the loan will be repaid. The shorter the life of a loan with a rate below or above the par rate, the smaller the upfront payment or rebate required to generate the same yield as the par mortgage.

For example, to yield 6.375 percent, a 5.875 percent 30-year loan requires an upfront payment of 5.2 percent of the loan if the loan runs to term. But if the loan is paid off in six years, the required upfront payment is only 2.4 percent. Similarly, to yield 6.375 percent, a 7 percent 30-year mortgage requires a rebate of 6.9 percent if the loan runs to term, but only 3.1 percent if it is paid off in six years.

From lender rate/price quotes, it is possible to derive the implied assumptions about loan longevity. I did this for a 30-year fixed-rate mortgage on April 28, 2006, using data on www.Amerisave.com. The par mortgage had a rate of 6.375 percent, and I assumed that other rates were priced to yield 6.375 percent.

The 5.875 percent mortgage carried an upfront payment of 2.3 percent, which (to yield 6.375 percent) implied a life of 70 months. The 5.25 percent mortgage carried an upfront payment of 5.6 percent, which implied a life of 76 months. The 6.875 percent mortgage carried an upfront rebate of 1.8 percent, which implied a life of 49 months. The 7.5 percent mortgage carried an upfront payment of 3.3 percent, which implied a life of 39 months (note: The assumed length of life declines as the rate goes up because higher-rate mortgages are more likely to be refinanced).

The APR is a composite measure of the cost of credit to the borrower that takes account of all upfront lender charges or rebates, in addition to the rate. On the par mortgage, the APR is equal to the rate. If it used the same assumption about mortgage life as lenders, the APR for mortgages having different rates would be close to the par rate. But that is not the rule.

The rule is that the APR is calculated on the assumption that all mortgages run to term. This makes the APR lower than the par rate on all mortgages with rates below the par rate, and it makes the APR higher than the par rate on all mortgages with rates above the par rate. This pattern is wholly artificial and should be disregarded by borrowers. It is unfortunate that online lenders have to waste scarce screen space on it.

For the last 20 years I have been asking the Federal Reserve to drop the assumption used in calculating the APR, that all loans run to term. More than 90 percent of them don’t. The APR would become a useful measure if it was calculated using length-of-life assumptions that vary with the rate, as lenders do. It would be even more useful if it were calculated over the period each individual borrower expects to have the mortgage. With today’s technology, that is not difficult.

Meanwhile, if you have the money to pay points (referred to as “buying down the interest rate”), it is a good investment if you expect to have the mortgage at least four years. If you are cash-short, the rebate paid by a lender on high-rate loans can be used to defray settlement costs. However, it becomes extremely expensive if you don’t pay off the loan within three years.

The writer is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at http://www.mtgprofessor.com.

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Copyright 2006 Jack Guttentag

DEAR BOB: My husband and I have a home mortgage with our names on it, but the house title is in my husband’s name. We have no wills. What would I have to go through if he passed away? –Lana J.

DEAR LANA: Please consult a local attorney specializing in wills and living trusts. Without written wills, you are at the mercy of the local probate court.

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If either of you dies tomorrow, because you have no living trust or written wills, the deceased’s estate must be distributed by the dreaded local probate court to transfer title.

The state law of intestate succession then determines who will receive the deceased’s assets. Especially in second marriages, the title might not go where you desire.

To avoid probate court costs and delays, I suggest you and your husband consider placing the title to your home into a revocable living trust. Then, when one of you dies, the successor trustee (presumably the surviving spouse) can transfer title to the living-trust assets without probate proceedings, as specified in the living trust.

Another major living-trust advantage occurs if one of you becomes incapacitated, perhaps due to Alzheimer’s disease or a severe stroke. Then the successor trustee can manage the living-trust assets, even selling them if necessary. More details are in my special report, “24 Key Questions Answered: Living Trust Secrets Reveal How to Avoid Probate Costs and Delays,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

NO NEED TO HIRE AN APPRAISER WHEN SELLING YOUR HOME

DEAR BOB: I am thinking about selling my home for sale by owner (FSBO) Based on previous low appraisals for refinancing, I am concerned about my home appraising low although it is in excellent condition and in a great location. I am considering hiring a real estate attorney or realty agent to help “manipulate” an appraiser to get the best appraisal and to help fill out the sales contract and required disclosures when a sale is made. Does the home buyer or seller pay for the appraisal? –Robert F.

DEAR ROBERT: There is no need for a home seller to hire a professional appraiser unless there are unusual circumstances. After a sale occurs, the home buyer’s mortgage lender hires the professional appraiser whose fee is often paid by the buyer.

Before deciding to risk selling your home alone without a professional real estate agent, please interview at least three successful realty agents who sell homes in your vicinity. Even if you are thinking about selling FSBO, they won’t mind. The reason is they know most FSBOs list their homes for sale with a professional agent within 30 to 60 days.

Each agent you interview should provide you with a written comparative market analysis (CMA). To help determine your asking price, a CMA is far better than a professional appraisal. This is because successful realty agents know current up-to-date market values of homes like yours. But appraisers work from closed home sales information, which might not be up-to-date.

MUST HOME SELLER PAY CORRECTED MORTGAGE PAYOFF?

DEAR BOB: When we recently paid off our home mortgage, the lender supplied the wrong payoff amount to the title company. The unpaid amount was added to my credit report as unpaid after the closing. Am I obligated to pay the additional amount? –Sheila D.

DEAR SHEILA: Yes. If your mortgage lender made a mistake as to the exact payoff amount demand, you are responsible for paying the amount owed to the lender.

However, before you pay the disputed amount, I suggest you (1) demand a written explanation from the lender for the payoff amount difference, and (2) get a written statement signed by a responsible officer with the lender that when you pay the disputed amount, the lender will remove any negative comments from your three credit reports.

SALE OF ADJOINING LOT QUALIFIES FOR HOME SALE TAX BREAK

DEAR BOB: Several months ago, my wife and I sold a vacant lot adjoining our residence at a substantial profit. In April, we sold our residence at a large profit. A friend told us we can claim that $500,000 home sale tax exemption for both our home sale profit and the profit on the vacant lot sale. Is this true? –Chuck D.

DEAR CHUCK: Yes. Internal Revenue Code 121 provides for a principal residence sale tax exemption up to $250,000 (up to $500,000 for a married couple filing a joint tax return in the year of sale). To qualify, you must have owned and occupied your principal residence at least 24 of the 60 months before its sale.

In addition, Internal Revenue Code Regulation 1.121-1(b)(3) says this exemption also applies to the sale of adjacent vacant land owned and used as part of your principal residence. The adjoining vacant land must be sold within 24 months before or after the sale of your principal residence. For full details, please consult your tax adviser.

CAN HOME SELLER REQUIRE ARBITRATION OF SALES DISPUTES?

DEAR BOB: I made a purchase offer to buy a home. The sellers accepted on the condition that I agree to binding arbitration of any dispute that might arise after the sale closes. I seem to remember that you warned against binding arbitration. Can the seller force me to agree to arbitration? –Maria G.

DEAR MARIA: A home seller can require any sales contract provision the seller desires. If the seller insists on binding arbitration of any dispute that arises later, if you don’t agree to such a clause, the seller doesn’t have to accept your purchase offer.

However, the seller might not understand all the disadvantages of agreeing to binding arbitration at the time of signing a home sales contract. Perhaps the seller is not aware that agreeing to binding arbitration means both parties forfeit their legal rights to a jury trial, court rules of evidence, and the right to appeal an arbitrator’s decision.

My best advice is home buyers and sellers should not give up these important rights at the time of signing a home sales contract. If a dispute later arises, perhaps due to the seller’s failure to disclose a significant home defect, at that time the parties can agree to binding arbitration rather than a court trial.

HOW TO HANDLE AN INNOCENT PROPERTY MISREPRESENTATION

DEAR BOB: About five months ago, I sold what I thought was a legal two-family duplex building. However, my buyer’s attorney recently informed me that the property is only zoned as a one-family residence. The structure was built in the 1920s. I owned it for 14 years with no zoning problems. However, when the buyer went to apply for a city building permit to remodel one of the units, he was told this is only a one-family residence. The zoning is clearly single-family, but I thought since the building was constructed over 70 years ago, it was “grandfathered” as a zoning exception. There are several other two-family structures in the vicinity. What should I do? –Margaret H.

DEAR MARGARET: The situation you describe is known as an innocent or unintentional misrepresentation. If the property is worth significantly less than the two-family duplex the buyer thought he purchased, his legal remedy is to rescind the sale and get his money back from you.

You should consult a local real estate attorney to discuss your alternatives. It might be possible to get the property “grandfathered” as a legal two-unit building variance. That’s what I did years ago to “legalize” a three-unit building I owned in an area zoned for a maximum of two units per lot. Also, I had to get another variance because my property didn’t have adequate parking.

NO TAX DEDUCTION IF YOUR NAME IS NOT ON THE TITLE

DEAR BOB: Last year I started helping my mother pay the property taxes and mortgage payments on her house after my father died in July. This amount I paid totals about $14,000. But when I recently had my income taxes prepared, the tax preparer said I couldn’t deduct this amount. Please say this isn’t true. –Nancy Y.

DEAR NANCY: Unfortunately, your tax preparer is correct. The reason is because you have no legal obligation to make those payments if your name is not on the property title.

However, your problem can be easily corrected. Your mother can add you to her title as a co-owner. Then you will become obligated to make those payments and you can deduct the mortgage interest and property taxes you pay.

The new Robert Bruss special report, “How to Obtain the Best Appraisal of Your House or Condo,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2006 Inman News

No-cost mortgages are popular with home buyers who are trying to scrape together enough cash to buy a home. Now that the cost of mortgage money is rising, it makes sense to re-evaluate this financing strategy.

To say that a mortgage has no costs is a bit of a misnomer. The borrower pays few if any upfront fees to originate a no-cost mortgage. But the upfront fees, like points, are added to the cost of the mortgage. The cost is reflected in a higher interest rate.

“Points” is a term lenders use for the mortgage origination fee. One point is equal to 1 percent of the mortgage amount. So, if you pay one point to originate a mortgage for $500,000, you will pay $5,000 cash to the lender at closing.

There is an inverse relationship between points and the mortgage interest rate. The more points you pay, the lower the interest rate. One point is roughly equal to a quarter percent on the interest rate. If you were to pay one point, you’d buy the interest rate down 0.25 percent in relationship to a borrower who chooses to pay no points. For a no-point loan, your interest rate will be approximately 0.25 percent higher.

A no-cost mortgage was an attractive option when interest rates on fixed-rate financing were under 6 percent. Now that rates are moving higher, paying points may make more sense, particularly if you’re buying for the long-term.

For example, let’s say you’re trading up to a home that you plan to own 20 years or so until your children are in college. You’re financing the purchase with a $500,000 mortgage.

For one point, the interest rate will be 6 .25 percent with a monthly payment of $3,078.60. The zero-point option will cost 6 .5 percent with a monthly payment of $3,160.35–a difference of $81.75 per month, or $918 per year. If you opt to pay one point, you will need to keep paying on the mortgage for approximately five years and two months to break even when compared to the cost of the no-point mortgage.

HOUSE HUNTING TIP: To arrive at the break-even point when comparing a no-point loan to one with points, divide the points, or $5,000 in this example, by the annual difference in monthly payment, or $918. The result is the length of time in years that you need to keep the loan to make it worthwhile to pay points.

In the above example, there is an advantage to paying points for a lower interest rate if you keep the loan for over five years. The longer you keep the loan, the bigger the savings. In today’s market, buying for the long term is a good strategy.

Paying upfront points also can be advantageous to home buyers who will benefit from a tax deduction. Points paid on a purchase mortgage are tax-deductible in the year of purchase by homeowners who itemize deductions on their federal tax return. Talk to your tax advisor for advice on whether you’ll benefit tax-wise by paying points.

Keep in mind that paying points can be an unnecessary expense for buyers who purchase for the short term. You would also come out ahead with a no-point loan if interest rates were to decline over the next few years. In this case, you could refinance into a lower interest rate mortgage.

THE CLOSING: If you’re short of cash and there are a lot of homes for sale that aren’t moving quickly, you might ask the seller to pay points for you. This strategy will have less chance of success in a market where listings are selling quickly.

Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers,” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.

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Copyright 2006 Dian Hymer

Dear Barry,

A man from the gas company just checked my furnace and said the air ducts are made of asbestos. The house was built in the 1960s, and I’m afraid that the old ducts may now be against the law or in violation of the building code. Am I required to have them replaced? If not, are they hazardous to the health of my family? –Jackie

Dear Jackie,

There are no laws or building codes that require homeowners to remove asbestos-containing materials from their homes. As for the health risks to your family, that depends upon the type, location, and condition of the material.

From the mid 1950s through the early ’70s, sheet metal air ducts for forced-air heating systems were commonly insulated with a cardboard-like material that contained asbestos fibers. Similar in appearance were other ducts that were made entirely of this asbestos-containing material (ACM). In some cases, close examination is necessary to determine whether these old ducts are composed of asbestos or merely insulated with it.

The material itself is not regarded as a significant health hazard if it is undamaged, securely attached, and not exposed to routine contact. In such cases, the accepted advice is simply to leave it alone.

When metal ducts are wrapped with asbestos insulation, the ACM is on the outer surfaces, not exposed to the air stream within the ducts, providing little or no opportunity for contamination of the circulating air. If the material is intact, it should be left as is. If it becomes loose, detached, or physically damaged, patching or removal should be assigned to a licensed asbestos contractor.

 Ducts that consist of ACM are not common, but they do exist in some homes. The interior surfaces of these ducts are covered with metal foil, preventing direct contact of the air stream with the asbestos material. However, if the ducts become punctured or torn, asbestos fibers can be released into the air stream. In that case, repair or removal by a licensed asbestos contractor would be advisable.

For a comprehensive evaluation of your air ducts to determine their level of safety and functionality, it is recommended that you consult a certified asbestos inspector.

Dear Barry,

The hardwood floors in our home sustained damage during the recent hurricanes in Florida. What surprised us was the absence of flooding in the yard areas around our home, yet water seemed to seep up through the floorboards. We tried caulking the exterior of the building before the hurricanes hit, but during the storms, we literally saw puddles percolating up through the floors. How could leakage have occurred in this way? –Kim

Dear Kim,

It is difficult to give an accurate answer without actually inspecting your home. However, when one considers the high velocity winds brought by those hurricanes, it would seem that the elevated air pressures could have forced water intrusion in unexpected places and in ways that would not occur during normal levels of wind and rain. Under those extraordinary circumstances, no amount a weatherproofing could effectively prevent water penetration and resultant damage.

To write to Barry Stone, please visit him on the Web at www.housedetective.com.

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Copyright 2006 Barry Stone

When I began reading “Buyers are Liars and Sellers are too!” by longtime real estate broker Richard Courtney, I thought that at last home sellers, buyers and realty agents would discover the full story about the home sales business. Lest you think Courtney doesn’t have the credentials to write this book, he is the president-elect of his local association of Realtors.

Instead, I found a unique book filled with negative comments about home buyers, sellers and even real estate agents. I can’t recall one positive example in the entire book about a home buyer or seller.

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Yet the book is filled with lots of hopefully made-up examples of greedy home sellers and buyers. Worse, Courtney has nothing good to say about “for sale by owner” home sellers whom he calls “For Sale by Ogre.”

Having been a real estate broker for 39 years, I can relate to many of Courtney’s examples, which I hope are hypothetical. Many illustrations are downright humorous. However, the author emphasizes the negative, rather than the positive, aspects of home sales for real estate agents.

Courtney has no use for a home listing agent who also represents the home buyer (called a “dual agent”) in a home sale. He realistically emphasizes there is no way such an agent can fully look out for the best interests of both the seller and buyer in the same transaction.

The book’s worst chapter, called “Foreclosures: Fool’s Gold,” is remarkably inaccurate and incomplete. Courtney implies the only way to buy a foreclosure property is to purchase from the lender who foreclosed. He completely overlooks the buyer opportunities to purchase before the foreclosure action or at the lender’s foreclosure sale.

As a book reviewer, I was looking forward to enjoying this book, which, according to the book’s forward and preface written by qualified individuals, is funny and factual. Perhaps they didn’t read the same book I did.

Instead I found many inaccuracies and misleading statements, especially in the chapter about open houses where Courtney says buyers shouldn’t even ask important key questions such as, “Why are they selling?” “What did they pay for the house?” “How long has it been on the market?” and “How much do they owe?”

Courtney seems to have a chip on his shoulder; especially in the chapter about the buyer’s purchase offer that he subtitles, “The Greedledees Meet the Greedledums.” In an attempt to be funny, he puts down both home buyers and sellers.

Fortunately, from time to time there is a bit of levity to break up the negative comments. For example, in the chapter about mortgages the author says, “Be aware that although the institutions that share their money with you, the borrower, are called lenders, they can be divided into four subgroups: benders, menders, penders, and renders.” Then Courtney explains his views on each type of mortgage lender.

Perhaps I am a bit too harsh on what could have been a positive, upbeat book about the home sales procedure. Instead, the author’s negative comments about home sellers, buyers and even real estate agents overwhelm the reader.

Chapter topics include: “The Realtor: No Place for Barney Fife”; “The Listing: The Greatest Show on Earth”; “Street Appeal: The Grass is Always Greener on the Lawn of the House That Sells”; “Non-Agent Listings: For Sale by Ogre (I Mean, Owner)”; “Open Houses: Where Woodward and Bernstein Lurk, While Ida Dunn Offers Commentary”; “The Parent Trap: Ma and Pa Meddle”; “The Inspection: The Dealslayer”; “The Closing: It Ain’t Over Till It’s Over”; and “The Deal of a Lifetime.”

For experienced real estate sales agents who understand the home sales procedures, this is a “fun read,” although most agents will disagree with many of the author’s statements. But prospective home buyers and sellers should question the author’s often-harsh statements. On my scale of one to 10, this disappointing book rates only a seven.

“Buyers are Liars and Sellers are too!” by Richard Courtney (Simon and Schuster-Fireside, New York) 2006, $14.00; 159 pages; available in stock or by special order at local bookstores, public libraries, and www.Amazon.com.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News

Mortgage rates have held last week’s improvement near 6.625 percent, taken and held by the 10-year T-note’s retreat from 5.2 percent to 5.05 percent. The bond market is in a standoff, uncertain about everything except inflation at or over a dangerous edge, and waiting for next Friday’s job data.

A long weekend is a good time to sort the things we know from the things we don’t. The financial chattering class is fond of announcing theories and hopes as fact, and these wannabe thunderbolts are especially confusing in an on-the-cusp situation.

The first category for sorting: the housing market. As a national matter, the market is indeed slowing. The newest data were muddled by heavy revisions of prior periods, but it is clear that the slowdown is at a shallow slope. The “housing market” is an aggregation of zillions of micro-markets; some are in distress, some are booming, but in the aggregate it is a gentle cool-off.

Yet, all commentary (Fed and otherwise) says that a housing slowdown will be the key element in an economic slowdown. If housing slows enough, of course the economy will slow; but I don’t think that anyone can know the effect of the modest slowing underway — if any (except on the over-eager, the unlucky, and builders, Realtors and lenders).

The Fed and most private observers expect an economic slowdown close ahead or in progress, whether from housing, energy costs, credit exhaustion, or the cumulative effect of two years of Fed rate hikes. This widespread forecast collides with the current data — the actual real-time information — which describes an economy with superb business conditions, still accelerating at roughly a 3.5 percent annual pace, and plenty hot enough to push inflation over the edge.

Federal Reserve Chair Ben Bernanke has every chip in his dwindling honeymoon pile bet on this slowdown, and that inflation is really OK. He sent a letter to Congress this week, again asserting that “inflation is well contained”; it may be contained, but there is not a soul in the markets who thinks it is “well” contained. It’s not just his honeymoon that is diminished; each time he sits in a chair to speak, he looks smaller and grayer and more vague — less lord of the manor than butler. This poor guy needs a win; he needs an I-told-you-so even worse than Dubya does.

Commodities have broken from speculative peaks, but prices stiffened this week. Oil never broke at all. If oil were to drop to $45, life ahead would be easy; but, if you want to measure the degree of uncertainty out there, ask anyone who has worked near the oil patch, are we going to see $45 before $100? Then watch your victim stare upward for divine guidance, and scuff dust.

Another line of alarmism is the one that says the dollar will soon be wallpaper and American interest rates will soar because the world will dump our bonds. The reality: the dollar has fallen from 118 yen/dollar to 111, and $1.20/euro to $1.29, both apparently by concerted G-7 effort, and the decline could not have been more orderly. Economies in Europe and Japan already appear to be slowing, as their exports are not as competitive.

A parallel dollar-panic line is the threat of rate increases in Japan and Europe. There is no question that central banks are withdrawing liquidity, and that potential rate increases would put pressure on American rates, but nobody knows if those economies can withstand the stress — especially if the fabled slowdown arrives here, and we can’t buy their exports.

Stick with the basics. If the economy slows, we may have seen the rate top for the year. If it doesn’t, and inflation moves over the edge, then the Fed will have to hike until the economy does slow, or the bond market will do the lifting for the timid.

All roads lead to slowdown; some easy, some not, yet none at hand.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Lou Barnes