Real Estate in Steamboat

DEAR BOB: What is the best way to hold title to my residence to avoid probate and also to get the step-up in cost basis? –Steve L.

DEAR STEVE: I presume you mean you want your heir to receive the stepped-up basis to market value after you die.

Purchase Bob Bruss reports online.

The best way to hold title to real estate is usually in a revocable living trust. While you are alive you can buy, sell, refinance and manage your living-trust assets because you are the trustor, trustee and beneficiary.

However, if you become incapacitated, such as with Alzheimer’s disease or a severe stroke, or after you pass on, your successor trustee takes over and manages or distributes your living-trust assets as instructed in your living trust.

After you die, your living-trust assets are distributed without probate costs or delays, according to your living-trust instructions. Your heirs then receive a new stepped-up basis to market value on the date of your death. 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 delivery at www.BobBruss.com.

WILL HOLDING TITLE IN AN LLC AVOID CAPITAL GAINS?

DEAR BOB: How can I avoid capital gain tax on the sale of my property? Will forming an LLC (limited liability company) do that? –Daniel J.

DEAR DANIEL: No. The purpose of holding real estate title in an LLC is not to avoid capital gain tax. The purpose is to avoid personal liability if someone is injured on your property.

If the property is your principal residence, you can avoid capital gain tax upon sale by use of the Internal Revenue Code 121 tax exemption up to $250,000 (up to $500,000 for a married couple filing a joint tax return). To qualify, you must have owned and occupied your principal residence at least 24 of the last 60 months before its sale.

If the property is held for investment or for use in your trade or business, the only way to avoid capital gain tax is to make an Internal Revenue Code 1031 tax-deferred exchange for another “like kind” property of equal or greater cost and equity. For details, please consult your tax adviser.

HOW CAN EX-ROOMMATE GET SECURITY DEPOSIT REFUND?

DEAR BOB: How can I get my half of the rental security deposit returned after I moved out but my ex-roommate chose to continue renting past the one-year lease expiration? –Douglas R.

DEAR DOUGLAS: Your ex-roommate, not the landlord, owes you the security deposit amount you originally paid when you moved in. Because he remains in the rental property, he is using your 50 percent share of the security deposit, plus his own 50 percent.

If he refuses to pay you the 50 percent to which you are entitled, take him to the local Small Claims Court to get a judgment for the security deposit he owes you.

The new Robert Bruss special report. “How to Buy Fixer-Upper Houses with Little or No Cash for Fun and Fortune.” 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 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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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News

Dear Barry,

When people write to you regarding negligent home inspectors, you always seem to advise against suing the inspectors. This was the case in one of your recent columns and in others I’ve read. Whenever the question involves suing an inspector, the answer always seems to be “no.” Could you please explain this? –Jock

Dear Jock,

A large number of e-mails I receive involve dissatisfaction with various home inspectors. When asked whether these inspectors should be held accountable for alleged acts of negligence, the answer is sometimes yes and sometimes no, depending upon the circumstances. If you’ve read only columns where the answer was no, you’ve gotten the wrong impression.

A common saying in the home inspection business holds that there are two kinds of home inspectors: those who have been sued and those who will be. The fact is, most home inspectors will be sued at some time in their careers. There are, however, specific circumstances that determine whether a home inspector is truly liable.

When property defects are overlooked by a home inspector, liability ensues if the defect is: (1) within the scope of the inspection; and (2) visible and accessible at the time of the inspection. For example, a leaking drain below a sink would be within the scope, and in most cases would be visible and accessible. A deteriorated roof would also be within the scope and, with rare exceptions, would also be visible and accessible. An inspector who fails to report such defects could be subject to a lawsuit. However, if the bathroom was filled with storage, barring access below the sink, or if weather conditions prevented the inspector from walking on the roof, the inspector would not be liable, if — and this is critical — the inspection report clearly stated that these areas were not inspected and that further inspection was recommended prior to close of escrow.

Conditions not within the scope of a home inspection are typically itemized in the inspector’s contract and in the report. These include portions of the property that are concealed within the construction, buried in the ground, or hidden behind personal property. Other exclusions include structural and geological engineering deficiencies, infestation by wood-destroying organisms (such as termites), low-voltage electrical systems (such as intercoms), septic systems, water wells, and more.

Home inspection contracts typically include language that limits the likelihood of being sued. These include requirements to mediate or arbitrate disputes, rather than filing suit, but these clauses are not enforceable in all states. Additionally, contracts may include specific monetary limits on liability, but these also are not enforceable in all states.

One of the ways that home buyers can undermine a good case against a home inspector is to have a defect repaired before notifying the home inspector about the problem. Inspectors should be given the opportunity to view defects and to discuss whether they are within the scope and were accessible at the time of inspection. If the inspector is liable, he should have the opportunity to repair the defect or pay for repairs. If repairs are completed before the inspector can take a second look, the validity of the claim is subject to argument and uncertainty.

If a home inspector is given fair notice of the problem but fails to respond, he should be held liable, even if that means being sued. This has been my recommendation in many past columns and will continue to be my advice to home buyers whose inspectors are professionally negligent.

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

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Copyright 2006 Barry Stone

DEAR BOB: We just refinanced our condo, receiving part of our equity in cash. Is the money we received taxable? –Sheila D.

DEAR SHEILA: No. When you refinance your mortgage and take out all or part of your home equity in cash (called a “cash-out refinance”) you owe zero tax on that cash. It is tax-free for you to spend as you wish.

Purchase Bob Bruss reports online.

There is a very good reason. Borrowed money must eventually be repaid, whether you repay it over the life of the mortgage, such as 20 or 30 years, or when you sell the condo and payoff mortgage balance in full.

If your new refinanced mortgage exceeds your home’s adjusted cost basis (as it probably does), such as a $200,000 mortgage on a condo for which you paid $150,000 to purchase several years ago, that is a “mortgage in excess of basis.” There is no tax on such an “excess mortgage” at the time of refinancing.

However, when you sell your condo, remember you have an excess mortgage when that $50,000 cash-out money becomes part of your resale profit (but you already received that $50,000 in this example when you refinanced).

Of course, when you sell and if your principal residence capital gain sale profit is less than $250,000 (less than $500,000 for a qualified married couple filing a joint tax return in the year of home sale), thanks to Internal Revenue Code 121 you owe no capital gain tax if you owned and occupied the home at least 24 of the last 60 months before its sale.

That exemption includes any excess mortgage “cash out” amount. For full details, please consult your tax adviser.

NO DEFENSE TO A PARTITION LAWSUIT

DEAR BOB: Is there any defense for a partition lawsuit where one co-owner wants to force a property sale but the other co-owner doesn’t want to sell? –Madison T.

DEAR MADISON: It is up to the trial court judge to grant or deny a real estate partition lawsuit where one co-owner seeks a forced sale of the property but the other co-owner(s) doesn’t want to sell.

My experience has been 95 percent of all partition lawsuits are granted by the court to force the sale of the property, with the sale proceeds divided among the co-owners. For details on your situation, please consult a local real estate attorney.

NO TITLE DEFECT PROTECTION UNLESS YOU HAVE OWNER’S TITLE INSURANCE

DEAR BOB: I bought a vacant lot that was supposed to be 5,000 square feet. But the title insurance company didn’t report an easement for about 1,600 square feet. As a result, I can’t build the house I want unless the house size is reduced. Can I get payment from the title insurance company for my problems and losses? –Sergio D.

DEAR SERGIO: If you purchased an owner’s title insurance policy, the title insurer must either pay to get the undisclosed recorded easement removed, or pay you the diminished market value of your property with the recorded easement, which the negligent title insurer failed to disclose to you.

Of course, if you didn’t buy an owner’s title insurance policy, even if you paid for a mortgage lender’s title policy, you have no claim against the title insurer (although the mortgage lender has a valid claim under the lender’s title policy).

However, if the easement was not properly recorded or obvious from a visual inspection, such as a power line easement, then it is not a valid easement and the title insurer has no liability. Consultation with a local real estate attorney is advised to determine your legal rights against the title insurer.

JOINT VENTURE REQUIRES CAREFUL LEGAL DOCUMENTATION

DEAR BOB: I am considering buying a property in my neighborhood that needs rehab. The seller wants to sell for around $200,000. But I want to pay only about $100,000. I know the ARV will be well over $700,000. Can I ask the seller to add me to the title so I can obtain financing to pay the rehab costs, and then split the profits? –Lisa M.

DEAR LISA: I presume by ARV you mean “after renovation value,” or something like that.

If the owner agrees to add you to the title so you can obtain financing for renovations, you need to consult a real estate attorney to prepare a joint venture or a partnership agreement.

Few owners would be willing to do that, as the legal complications could be endless, especially if you try to establish a very low $100,000 basis. You would probably be better off acquiring the title and then obtaining an improvement loan to pay for the rehabilitation.

GET TAX ADVICE BEFORE ADDING NAME TO MOM’S HOME TITLE

DEAR BOB: I would like to put my name on the title of the home I share with my mother. We are about to sell it. I want to know what I need to do to make that happen. I share in the upkeep and the payments. I was told having my name on the title is the best way to assure funds when the sale is completed. Is this true? –Alicia H.

DEAR ALICIA: If your name was not on the title when you paid the mortgage interest and property tax payments, you are not entitled to claim any itemized tax deductions for those expenses.

If your mother gifts you a partial interest in her house, perhaps 50 percent, that makes you obligated for 50 percent of the capital gains tax. The reason is when you receive a property gift, you take over the donor’s (presumably low) adjusted cost basis for that gift.

Even if the house has been your principal residence at least 24 of the last 60 months before its sale, you can’t yet qualify for the $250,000 principal residence tax exemption of Internal Revenue Code 121. The reason is your name was not yet on the title at least 24 months before the home sale.

Your mother’s gift to you of part of the house could be a major mistake for both of you. Before she gives you a quitclaim deed for any interest in her house, you should both consult your tax adviser to discuss all the details, especially the disadvantages.

WHAT TO DO ABOUT NEIGHBOR’S TREE BREAKING UP A WALL

DEAR BOB: A tree that belongs to my neighbor is next to our common wall. The roots are breaking up the wall. The tree owner refuses to take any action. What can I do? –Steve W.

DEAR STEVE: By “common wall” I presume you mean a concrete wall, not just a wood fence.

Legally, you can cut the tree roots back to the property line. However, be very careful not to kill the neighbor’s tree. If you do so, you can be held liable to the neighbor for the market value of the tree you killed.

Another approach would be to sue your neighbor for a private nuisance abatement. You could ask the local court for an order to force the neighbor to cut the tree roots back to the property boundary. Please consult a local real estate attorney to discuss your legal choices.

WHAT RECOURSE FOR AN UNDISCLOSED “MAINTENANCE” ESCROW?

DEAR BOB: I own a property on which the maintenance is paid from escrow by my bank. They charged some type of “assessment” of an additional fee in September 2005. Neither my bank nor I was notified of the $190 original fee. Now they have imposed late charges and I received notice from an attorney saying I must pay over $1,600. They put a lien on my property title. Is this legal to notify me over a year later? –Lourdes B.

DEAR LOURDES: Who are “they”? I have never heard of an escrow for “maintenance.” The two most common types of mortgage escrows are for property tax and fire insurance payments when they come due.

Please consult a local real estate attorney to review the escrow agreement. If the $190 charge was for some type of tax, such as a civic special assessment for street paving, the escrow holder should have been notified and should have paid the additional charge from your escrow account.

Perhaps your lender is trying to get you to pay the extra fees for the lender’s negligence failing to pay a special assessment tax. Lenders do this all too frequently, hoping you won’t notice the extra late charges due to the lender’s negligence.

The new Robert Bruss special report, “How to Buy Fixer-Upper Houses with Little or No Cash for Fun and Fortune,” 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 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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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News

Sellers who aren’t happy with the first offer they receive are often inclined to refuse it and wait to see if something better comes along. However, some sellers are finding out the hard way that the first offer was their best offer.

A Piedmont, Calif., homeowner listed his home for sale this summer at a price that he’d hoped would generate multiple offers and a higher price. Not long after the house went on the market, a buyer made an offer for over the list price. However, although it was a good price, the seller wanted even more. So, he issued a counteroffer for an even higher price. The buyer rejected the counteroffer and bought a different property.

The seller then increased his list price to a price he would be willing to accept. The property sat on the market for weeks with no offers. Finally, the seller lowered the price to his original asking price. This action did generate two offers, both for less than the asking price. He accepted the better of the two offers. However, he ended up selling for far less than the amount of his first offer.

A year ago, many sellers listed for an under-market price that resulted in a successful sale for more money. There was a limited inventory of homes for sale and a lot of buyers who were anxious to buy.

Now, buyers have more to choose from and can afford to be discerning. Sellers, on the other hand, need to carefully consider every offer even if they think the price is low.

It’s difficult for most sellers to accept an offer for less than they want if the offer is made soon after the listing is marketed. The natural inclination is to think that more exposure will bring buyers who will pay more. This is always possible.

However, serious buyers who’ve searched for a considerable time usually come forward with an offer as soon as the right property comes along. These buyers tend to know local market values well. They are motivated to buy and will often make their best offer — or close to it — initially.

HOME SELLER TIP: Make sure you carefully evaluate the merits of an offer that is presented soon after your home hits the market. Ask your listing agent to give you feedback about your list price and the local market conditions. How many homes like yours are currently on the market? Have any sold within the last few weeks? How do the list prices of these properties compare to yours? Is there serious interest from any other buyers?

In the above example, the seller’s mistake was to expect too much for his house. This is a common mistake sellers make in today’s market. Unfortunately, misreading the market costs time and money.

In order to be a successful seller, particularly in the current market, you need to divorce yourself emotionally from your home and look at it objectively. Ask yourself if you would pay the price you’re asking a buyer to pay. Try to put yourself in the buyer’s shoes.

Another Piedmont homeowner put his home on the market at the end of July. Several similar listings came on the market the same week. The listing agent planned to hold two open houses before the seller listened to offers.

However, several days after the first open house, an offer was written. The buyers were the very first people to look at the house. The seller had been hoping for multiple offers and a higher price. But, he accepted the buyers’ asking-price offer. The deal closed in 30 days.

THE CLOSING: The other listings that came on the market at the same time in the above example sold one to two months later only after price reductions.

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

“I noticed an online petition to require all mortgage lenders to provide borrowers with monthly statements of their account. Is this a good cause?”

Yes, because borrowers don’t choose the firm that services their mortgage, they can’t fire the firm for cause, and their existing legal protections are weak.

A law requiring servicers to provide monthly statements that update the account and explain all changes in it will not eliminate servicing abuses, but it will help alert borrowers protect themselves. It won’t help borrowers who sleep at the switch; they need other legal protections, which will be the subject of another column.

Here are a few things that can happen to borrowers, which, in the absence of monthly statements, they might not find out about in time to prevent irreparable financial damage:

1. The servicer doesn’t pay taxes or insurance on time, which results in a lien being placed on the property or insurance being cancelled.

2. Because the borrower does not make the full escrow payment, the servicer places the entire payment in a suspense account, reports the borrower as delinquent, and charges a late fee.

3. The servicer deliberately delays the posting of the payment, resulting in a late fee, which is then deducted from the following month’s payment, which makes that payment late.

Note: In scenarios 2 and 3 above, the borrower can make the mortgage payment every month after the first month, yet be marked late and delinquent month after month without becoming aware of it.

4. On the pretext that the borrower’s insurance isn’t adequate, the servicer purchases a hazard insurance policy on the borrower’s home from an affiliated firm, at a price three times as high as the competitive price. The servicer then adds the cost to the borrower’s balance, recalculates the payment based on the new balance, and places the payment in a suspense account when it does not include the increased amount (see item 2).

5. The borrower makes extra payments to principal but they are not credited until the end of the year. Until then, the servicer enjoys the interest.

6. The borrower falls two or more payments behind and finds his account transferred to collections, at which point the servicer begins piling on the costs: property inspection fees, broker price opinions, attorney fees, collection notice fees, and more.

Monthly statements must include everything the borrower needs to know. This includes notice that taxes and insurance premiums were paid, and when. If a borrower does not make the full escrow payment and the lender raids his mortgage payment, this should appear on the statement. If the borrower is charged for a late payment, the statement should show when the payment was credited (the borrower knows when it was paid). If the lender purchases insurance for a borrower who already has insurance, the premium should appear on the statement, as should any other fees billed to the borrower. If the borrower makes an extra principal payment sometime during the month, the statement should disclose when exactly it was credited to his balance. If the borrower’s account goes to collections, all the related fees should appear on the statement.

I believe monthly statements should be mandated by law, but government should not prescribe the exact content. That would be a mistake, because the list of items that are relevant is different for different types of mortgages, and it changes over time. We know from the sad experience of disclosure rules in the loan origination side of this business that government does a poor job of keeping abreast of changing markets.

Rather, the government should simply require that the monthly statements show anything that transpired during the month that affected the borrower’s account, including (but not limited to) balance changes, payments, disbursements, and costs. There should also be a requirement that statements meet a minimum standard of readability.

It is essential that the disclosure requirements explicitly cover borrowers who have filed for bankruptcy. In auditing the accounts of borrowers in bankruptcy, Massachusetts-based mortgage finance analyst Marie McDonnell has found that servicers who issue monthly mortgage statements terminate the statements when a borrower files for bankruptcy. This leaves the borrower extremely vulnerable to overcharges, which McDonnell says she invariably finds in her audits.

Since government moves slowly, I plan to identify firms who now provide complete monthly statements, and firms who don’t. If your firm does provide statements, please send me a copy. If it doesn’t, please write me with the firm’s full name.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

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Copyright 2006 Jack Guttentag

The 10-year Treasury failed again to break below the 4.53 percent bottom, a level tested again and again since September, so mortgages are stuck just above 6 percent.

This week’s test and failure was different from the prior ones: the other rallies were broken by surprisingly strong economic data, especially the last two monthly payroll reports. This week the bond market got exactly the bad news it was hoping for: huge drops in wholesale and consumer prices, an off-the-table report on new-home construction, and minimal up-ticks in retail sales and industrial output.

Background items offset some of the benefit of bad news: the Fed’s October minutes contained not a syllable about a rate cut, and instead unanimous concern for inflation. Also, some housing numbers hint that the worst is over, and the slowdown isn’t hurting the economy much, anyway. Purchase loan applications bottomed in late summer, un-sold inventories of homes are no longer rising, rapid household formation will support demand, and a retreat by builders is good news, not bad.

Greenspan’s Conundrum remains: if the economy is OK, and the Fed not about to cut its rate, why are long bonds trading .75 percent below the Fed? This “inverted yield curve” should predict recession and Fed rate cuts, but every day passing it seems less a predictor than a result of these four things: new wealth chasing long-term return; pension and insurance need for long-term assets to cover liabilities from an aging world; a shortage of long-dated high-quality collateral to back up new-age derivatives; and a gross underestimation of future risk, inflation and otherwise.

Those forces exert considerable buying pressure, which is protecting bonds and mortgages from what would otherwise be a bad upward pounding after three months of failed rallies. The next shot at lower won’t appear until Dec. 8, when we get November payrolls. Everyone in the bond market will, of course, hope that a couple of million people have been thrown out of work just in time for the holidays.

OK: now tie the inverted yield curve to mortgages and housing….

Every one of the catastrophic Housing Bubble stories has the pending reset of ARM rates as a centerpiece, and they are wrong. We might have a recession, it might be led by housing, and something awful might happen to housing prices, but the reset of rates on ordinary ARMs won’t be the cause.

ARM rates are resetting, as all indices sooner or later follow the Fed upward. The quick-movers, LIBOR and T-bills, have been above 5 percent for months; now even the slow-movers, COFI and MTA, are up to 4.32 percent and 5.03 percent, respectively, COFI still with a ways to go. Add typical margins of 2.25 percent to 2.75 percent, and there’s a trillion or two worth of these poor ideas headed to 7.5 percent in the next three years.

At the ARM low from ’02-’04, consumers elbowed at the teaser-rate trough for 5-year hybrid ARMs near 4 percent, so the coming reset will be an average 3.5 percent rate increase — depending on caps, in two successive adjustments, or all in one whack.

Three-point-five percent is a big whack, but a disaster only for the handful who thought that 4 percent was a lifetime contract. A 3.5 percent rise in rate translates to about a 25 percent increase in p&i payment, tax deductible, t&i unchanged — merely annoying to most borrowers, who knew the initial deal was artificial. Note also that average mortgage balances have not risen remotely as fast as home prices; payments will rise, but wealth rose faster.

Missing in the Bubble Apocalypse: nobody has to suffer the 3.5 percent reset! Because of the negative curve, anybody can refinance today to a rate close to 6 percent without loan fees. That’s only a two-point reset, a 15 percent rise in p&i cost. As a recessionary drag on the economy … peanuts.

If fixed mortgage rates were today where they were in the ’90s, up at 8 percent when the Fed was at 5.25 percent, then this generation might learn the real hazards of ARMs. Not this time, and the borrowers don’t even know how lucky they’ve been.

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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Copyright 2006 Lou Barnes

When the cold winds blow, the last thing you want to do is invite them inside to join you for the evening. One of the best ways to keep those uninvited guests outside is to make sure the weatherstripping on your exterior doors is working effectively, so take a little time this weekend to check their condition and replace them if necessary.

There are actually several kinds of weatherstripping used on doors, and while just about any one will work on the majority of doors, some are definitely better than others. 

Integrated Foam Strip:  This is the type of weatherstripping found on most new doors, and is both simple and effective. It consists of a semi-rigid foam strip — often encased in a tough, flexible outer sheath that helps protect the foam from damage — that fits between the door and the stop. The foam is attached to a wood, metal, or plastic strip that in turn slips into a slot cut into the doorstop. If your door currently has this type of weatherstripping and it is worn out or damaged, replace it with the same material, available through some home centers and most door shops. You can also retrofit this type of weatherstripping to an existing door, but it requires cutting a slot in the doorstop – something that’s easy to do if the stop is removable, but a little tricky if it’s not.

Magnetic:  This is only used with metal doors, and is a very effective weatherstripping. It consists of a flexible vinyl and foam strip, with a magnetic strip inside at the face. When the door is closed, the magnetic strip attaches itself to the face of the door, forming a very tight seal. This is ideal for metal doors that do not currently have weatherstripping, or as a replacement for existing magnetic weatherstripping that is damaged. It is usually only available through door shops.

Bulb-Type:  This is one of the better retrofit weatherstrippings available. It is inexpensive, relatively easy to apply, and works with virtually any type of door. The weatherstripping is a vinyl or rubber tube that is hollow inside, attached to an aluminum strip that is slotted for installation. The weatherstripping is applied to the side of the doorstop so that the hollow tube compresses against the door to form a seal. One kit includes two long strips for the sides and one short strip for the top, plus nails or screws for installation. Complete instructions are included; just take your time with the installation to ensure a tight, effective fit.

Felt Strips:  These are somewhat similar to the bulb weatherstripping, but not as effective. It consists of a long strip of felt that is bonded to a metal strip, and is installed by nailing the metal to the face of the doorstop so that the felt presses against the door. It’s probably a little easier to install then the bulb-type, but because the felt is not flexible like the hollow bulb is, the continuity of the seal against the door is not as good.

Folded Vinyl:  This is simply a long vinyl strip that is folded lengthwise into a V-shape. It is self-adhesive and sticks to the inside of the doorstop. When the door is closed, the V compresses to press the vinyl against the face of the door. Relatively effective, easy to apply, but easily damaged and doesn’t hold up well in extreme cold.

Self-Stick Foam:  This is an inexpensive, easy-to-apply weatherstripping that is somewhat effective. It consists of a length of foam on a roll, with a self-adhesive backing. Cut the foam to the desired length, peel off the protective tape to expose the adhesive, and apply it to the inside of the doorstop. Foam tapes come in different thicknesses to conform to the thickness of the gap between the door and the stop. Be forewarned that this type of weatherstripping typically doesn’t last more than a couple of winters, and can be hard to strip off when it comes time to replace it.

Interlocking:  This is an older form of weatherstripping that is not often done anymore, but it pays to know what it is if your door is equipped with it. Interlocking weatherstripping consists of two bent metal strips — one in the doorstop and one in the edge of the door. When the door is closed, the two strips interlock with one another to form a seal. It’s actually a pretty effective weatherstripping, but it’s difficult to install and prone to damage. If your door currently has it and it’s working okay, leave it alone. Otherwise, retrofit with one of the new bulb-type weatherstripping materials.

Garage Door:  Don’t forget that other big door in the front of your house. Garage door weatherstripping is typically a wood or rigid vinyl strip with a flexible vinyl flap attached. The strip is simply nailed to the exterior frame around the garage door, so that the vinyl flat presses against the garage door and forms a seal. Most home centers carry garage door weatherstripping, or you can get it from any garage door retailer.

Remodeling and repair questions? E-mail Paul at paul2887@hughes.net.

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Copyright 2006 Inman News

Can you glean useful information from books that have no direct relation to your new home project?

I would have to say yes. After reading several recently published books that included a survey of American homes built between 1775 and 1840, a monograph on modern houses in a small Connecticut town, family houses in a part of the country where I don’t live, and elegant colonial furnishings from a part of the Caribbean that I have never visited and probably never will, I concluded that a broad brush, “liberal arts” approach to planning a new house can be invaluable.

Looking at houses and furnishings that are not even close to what you intend will actually get you closer to the house you want because you will have a broader base from which to develop and refine your ideas.

What did I learn while pursuing the seemingly irrelevant?

With “The Harvard Five in New Canaan,” (Norton), William D. Earls presents 36 houses designed by 16 distinguished architects, five of whom taught or studied at Harvard. The houses were built between 1947 and 1966 in a style generally called “modern” with flat roofs, large expanses of floor to ceiling glass in most rooms, and a lack of detail both inside and out. 

When the houses were built, they differed radically from conventional notions of what a house should be. But a homeowner who looks at them today will end up asking, “What exactly is ‘modern?’” While 99 percent of the American buying public has eschewed the stark aesthetic of these houses, most have embraced their open plans with cooking, dining and living in one space and the use of a few strategically placed walls to define entire areas of the house. Every homeowner wants spaces that are flooded with natural light, another hallmark of these houses.

The buying public’s objections to these houses — and indeed some of them have been demolished — would seem to be more a matter of their livability, not their looks. By current standards, the storage is minimal and the bedroom closets are small (a master walk-in was the exception). The bathrooms are small and there aren’t enough (the earliest ones had only one bath for a four-bedroom, two-story house). The kitchens are not well designed (kitchen design had not yet evolved into its own specialty when most of these were built). The houses also present maintenance headaches — flat roofs in a Connecticut climate with lots of rain and snow can be problematic, and the heating bills would be enormous without a lot of costly retrofitting of insulation and energy efficient windows.

On the other hand, some of the houses are wonderfully over the top, inviting readers who are planning a new house to imagine the impossible and hold out for the affordably unusual. In his 1953 Willey house, Phillip Johnson placed the kitchen, dining and living functions in a large, 15-foot high glass cube that sits at a 90-degree angle on the bedrooms and playroom below. As shown, the furnishings of the large master bedroom included a grand piano.

Did these unusual looking houses make for an interesting family life? The photographs, floor plans and brief text tells a reader what the houses looked like, not what the households experienced while living in them. 

In contrast, Jack Larkin describes American home life in the period from 1774 to 1840 perhaps too well. “Where We Lived: Discovering the Places We Once Called Home,” (Taunton) begins with a vivid description of a prosperous farm family in Sturbridge, Massachusetts in 1775. It will make every reader thankful that he or she lives in the 21st century and not the 18th. The farmer’s modest, four-room, 700-square-foot house was occupied by 12 people — seven family members and five household servants and laborers. Not only was it crowded. Grime was everywhere and each room had an unmistakable chamber pot odor. Bed bugs and lice were a fact of life, and mosquitoes made the summers unbearable. During the cold winters, wind blew through the walls, and the only source of heat was the fireplace. In January, 1810 a Salem, Massachusetts preacher noted that the temperature on the far side of his Chamber, opposite the fireplace, was 16 degrees below freezing.

Life today is definitely more comfortable, but some homeowner concerns are clearly timeless. The desire to impress neighbors and visitors seems to have been imprinted on our national psyche almost from day one. The center hall plan, still with us, was an instant hit because the simple insertion of a hall than ran from front to back created a larger and more imposing entry as well as the illusion of a larger house. A room that was only used for special occasions, even in houses as small as the Sturbridge farmer’s, was common.

A historian, Larkin has drawn from a broad range of sources, including personal diaries and letters, historical building surveys, and tax and census data.

The subject of Michael Connor’s “French Island Elegance” is frankly obscure — French West Indian antique furniture made for the fabulously wealthy French plantation owners who made quick fortunes raising sugar cane. The planters started accumulating their wealth in 1750; their furnishings reached a level of surprising sophistication around 1800.

The furniture is not what you might choose for your house, but it’s fabulous, if you have a weak spot for rich, red mahogany pieces that are highly crafted and beautifully proportioned. In its accommodation to the climate, the furniture offers some pointers worth considering when choosing pieces for yourself. To make life bearable in the hot and humid tropics, the empire styling was modified. To maximize the cooling effect of any passing breeze, woven cane was used for the backs and seats of sofas and chairs. In many cases, the caned chairs were rockers, which allowed a sitter to stay cool by creating his own small breeze. The rockers also had ergonomic advantages. The original users knew only that the rockers were comfortable, but now we know that they are also good for you. As any ergonomist will point out, a rocker provides excellent lumbar support while taking the weight off the base of your spine and when you pump a bit, the slight movement helps move blood from your legs back to your torso.

Connor’s text includes interesting furniture facts-who knew that the rocker originated in France?-and startling political ones. The sugar trade of Guadeloupe alone was so profitable the English seriously considered taking it and leaving the vast, cold and largely unknown Canadian territories to the French at the end of the French and Indian War in 1763.

Just as these books show that you shouldn’t limit your new home idea search to the present century, Eliza Cross Castaneda’s “Family Home of the New West” (Northland) shows that you shouldn’t set geographic limits either. This book is full of details that could be adapted to any region of the country. It also offers sound advice. A round table where everyone can see each other is the friendliest arrangement for family dining, Castaneda says. Another gem: The powder room is the smallest room in the house and the one area where “creative design can reign over daily practicalities.” A wonderfully eccentric example of this notion is the way one family chose to remember a European trip. They installed a red telephone booth from London in their powder room, added shelving, and now they use it as a linen closet.

Castaneda also shows how a single detail can have a wonderfully playful effect. As most homeowners know, flooring changes are an easy way to define functional areas. You can have tile for the kitchen floor and hardwood for the adjacent dining area. But when you add a wavy, 12-inch wide swath of small, highly polished river stone between the tile and the hardwood, you inject a remarkable degree of positive energy.  

In alphabetical order:

“Family Home of The New West,” by Eliza Cross Castaneda, Northland Publishing, 2006.

“French Island Elegance,” by Michael Connors, Photographs by Bruce Buck, Abrams, 2006

“The Harvard Five in New Canaan,” by William D. Earls, AIA, W.W. Norton & Company, 2006.

“Where We Lived: Discovering the Places We Once Called Home,” Jack Larkin, The Taunton Press, 2006.

Questions or queries? Katherine Salant can be contacted at http://www.katherinesalant.com/.

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

Copyright 2006 Katherine Salant

During the slow home sales holiday season between Thanksgiving and New Year’s Day, even extending through Super Bowl Sunday in many communities, few people think of buying a house or condominium. However, if you want to purchase a home and can drag yourself away from holiday festivities, this is the absolute best time of the entire year to be a home buyer.

Why is that, you ask? The answer has two parts: (a) only serious motivated sellers have their houses and condominiums listed for sale during this slowest season of the year for home sales, and (b) competition from other prospective home buyers is at its lowest now so your purchase offer will be extremely welcome and seriously considered by a motivated home seller.

Purchase Bob Bruss reports online.

There is an additional reason 2006 year-end is an especially good time to be a home buyer. That reason is it is a “buyer’s market” in most cities, meaning there are more homes listed for sale today than there are qualified buyers in the market so sellers (and their listing agents) are extremely anxious.

It’s a great time to be a home buyer. But not such a good time to be a home seller.

BEFORE SHOPPING FOR A HOME, SHOP FOR A MORTGAGE. However, before rushing out to buy a house or condo, smart home buyers first get approved in writing for a home mortgage. This is a slow time of year for mortgage lenders so they welcome your loan application.

Although mortgage brokers can arrange mortgage pre-approvals, the letter or certificate must come from an actual lender, such as a bank or mortgage banker. Most home mortgage pre-approvals are valid for 60 to 90 days.

Don’t even consider a mortgage “pre-qualification,” which means only, “We looked at your loan application and you appear to qualify but we haven’t actually verified your credit and income.” In other words, a mortgage pre-qualification is worthless.

However, home buyers should understand a lender’s mortgage pre-approval is subject to (a) the lender’s appraisal of the home you decide to buy, and (b) reverification of your credit and income (don’t apply for additional credit or go out and buy a new car before you complete your home purchase).

WORK WITH AN EXPERIENCED BUYER’S AGENT. After obtaining a written mortgage pre-approval from a lender, the next step to buying a home during this best time of the year to purchase is to work with an experienced buyer’s agent who understands the market in the vicinity where you want to buy.

Ask friends, relatives and business associates for recommendations of buyer’s agents. Although any licensed agent can be your buyer’s agent, many agents prefer to list homes for sale rather than working with home buyers who are often “time wasters.”

A buyer’s agent costs nothing extra. The reason is the listing agent of the house or condo you purchase will split the sales commission with your buyer’s agent. Only in the rare event you buy a “for sale by owner” (FSBO) home and the seller refuses to compensate your buyer’s agent would you owe any sales commission.

EXPECT YOUR BUYER’S AGENT TO PREPARE A “CMA” BEFORE MAKING YOUR PURCHASE OFFER. When you find “the house” or “the condo” you want to buy, before making a purchase offer ask your buyer’s agent to prepare a written CMA (comparative market analysis). This CMA is the same form the listing agent prepared for the seller when the house or condo was listed for sale.

However, your CMA will be up to date, whereas the seller’s CMA might be several months old. The CMA shows (a) recent sales prices of comparable nearby residences within the last few months (never older than six months); (b) current asking prices of similar neighborhood homes now on the market for sale; and (c) asking prices of recently expired comparable listings (usually overpriced).

As a savvy home buyer, you probably will have inspected many of the homes on your CMA. With the help of your buyer’s agent, you can use the CMA information to arrive at a fair purchase-price offer.

Many buyer’s agents recommend making a purchase offer based on a per-square-foot basis. For example, if nearby homes of comparable quality construction recently sold for $150 per square foot, you might want to make your purchase offer based on $150 per square foot.

Be sure to attach a reasonable good faith deposit check to your purchase offer. If you are making an especially low offer far under the seller’s asking price, a substantial deposit accompanying your offer will often convince the seller you are a serious buyer.

You can be sure your buyer’s agent will use the CMA prepared for your use to show to the home seller and the listing agent to justify your purchase offer as being reasonable.

However, if the seller doesn’t accept your purchase offer, a luxury of buying during this slow season is there are few other home buyers in the market. The result is you usually need not be in a rush to respond to a counteroffer or make a new purchase offer.

Waiting a few days to respond, presuming you still want to buy the residence, will often make the seller think, “That was a pretty good offer. Maybe I should have accepted it.”

KEEP YOUR PURCHASE OFFER SIMPLE. As experienced buyer’s agents will tell you, it’s best to keep your purchase offer as simple as possible. “A confused mind usually says no” is a very true motto. For this reason, it is best to include only a few contingency clauses in your purchase offer. Typical contingencies are:

1. LENDER’S APPRAISAL CONTINGENCY. Presuming you need a mortgage to finance your purchase, be sure to include a mortgage lender’s appraisal contingency clause in the purchase offer. If the home doesn’t appraise for at least the amount of your purchase offer that was accepted by the seller, then you don’t have to complete the purchase and can get your good faith deposit fully refunded.

2. PROFESSIONAL HOME INSPECTION CONTINGENCY. Smart buyers make their home-purchase offers contingent on their approval of a professional home inspector’s report to be obtained by the buyer after the seller accepts the purchase offer.

The cost is usually around $300. Buyers should always accompany their inspector for the two- to three-hour inspection because it is a good way to become familiar with the home and to discuss any unexpected material defects that are discovered.

A good source of experienced professional home inspectors is to hire a member of the American Society of Home Inspectors (ASHI). To find local ASHI inspectors, go to www.ashi.org or phone 1-800-743-2744.

If the professional inspection report reveals serious undisclosed home defects, as the buyer you can (a) cancel the purchase and obtain refund of your good faith deposit, (b) reopen negotiations with the seller to obtain a repair credit, or (c) if the seller refuses to renegotiate, go ahead with the purchase anyway (presuming you badly want the home).

3. SALE OF YOUR CURRENT HOME CONTINGENCY. During the last few years of a home “seller’s market” in most cities, this contingency fell out of favor with home sellers and real estate agents. But during a buyer’s market where any purchase offer is very welcome, many home sellers will accept a purchase offer that is contingent on the buyer’s sale of their current home.

However, to be fair to the seller, most sellers will insist on keeping their homes listed on the market for sale while the buyer tries to sell his/her current home. In addition, most realty agents suggest a 48-hour or 72-hour contingency-release clause. That means if another buyer produces an offer acceptable to the seller, the first buyer then has 48 or 72 hours to remove his/her contingency clause for sale of their current residence.

SUMMARY: The season between Thanksgiving and New Year’s Day, even extending to Super Bowl Sunday in many communities, is the slowest time of the year for home sales so it is an especially good time to be a home buyer.

(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

DEAR BOB: Our neighbor complained that some of our trees and a fence post are on his property. We had a survey done to confirm the boundaries. It differs from the “improvement location certificate” (ILC) our home builder provided to us at the closing. Is it unusual for an actual survey and the builder’s certificate to differ? We hired the same surveyor who did the ILC to mark the boundaries and he said this not unusual –Sue B.

DEAR SUE: It sounds like the licensed surveyor goofed when he surveyed the boundaries for the home builder.

Purchase Bob Bruss reports online.

At the time you purchased your new home, I hope you bought an owner’s title insurance policy that specified the boundaries of your lot. If so, you may have recourse against the title insurer if the actual boundary is substantially different than the builder’s ILC that was provided to you.

If the new survey shows the trees and fence post are on the neighbor’s property, he can then remove the trees and/or fence post if he wishes. The reason is they belong to him. For more details, please consult a local real estate attorney.

QUITCLAIM DEED CONVEYS EVERYTHING, OR NOTHING

DEAR BOB: I am trying to buy a cabin on a beautiful lake. The seller is a cranky old man. We have agreed on the cash price. He says, “Bring me the cash and I’ll give you the quitclaim deed.” Somehow, I don’t feel safe doing this. What protection should I get? –William L.

DEAR WILLIAM: You could be on the trail of a “good deal.” Or that “cranky old man” might be out to swindle you.

A quitclaim deed, presuming it is properly prepared and the grantor’s signature is notarized so the deed can be recorded in the county title records, can convey full fee-simple absolute title. Or, if the old man’s title is defective, you might get nothing.

Your best protection is to have a local real estate attorney or title insurance company check the seller’s title.

If the title is marketable, then insist you receive an owner’s title insurance policy. Arrange to meet the old man at an appropriate place, depending on local custom, such as the attorney’s office, a title company or a local bank, where your cash (a cashier’s check is much safer for you) can be exchanged for the quitclaim deed.

WHAT HAPPENS AFTER FIRST 10 YEARS OF AN INTEREST-ONLY MORTGAGE?

DEAR BOB: You recently discussed the pros and cons of a 10-year interest-only home mortgage. What happens after the 10 years are completed? –Carol G.

DEAR CAROL: There are two types of 10-year interest-only mortgages. After 10 years of interest-only, fully tax-deductible monthly payments, most residential interest-only loans amortize over the next 20 years.

However, some 10-year interest-only mortgages have a balloon payment due in the 10th year, and the full mortgage balance becomes due. Before you sign up for a 10-year interest-only mortgage, be sure you fully understand its terms.

The new Robert Bruss special report, “The 20 Essential Questions Smart Home Buyers Must Ask to Avoid Overpaying in a Buyer’s Market,” 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 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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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News