Real Estate in Steamboat

(This is Part 3 of an eight-part series. Read Part 1 and Part 2.)

Even if you don’t itemize your income tax deductions and claim the standard deduction, if you are one of the more than 25 million taxpayers who changed homes in 2006, you may be entitled to big tax savings for your household moving expenses as an “adjustment to gross income.”

To qualify, you must also have changed your job location in 2006. It doesn’t matter if you work for the same employer, changed employers, became self-employed, or started your first job.

Purchase Bob Bruss reports online.

You must meet the job-location-change rule to be eligible for moving-cost deductions. Either spouse can qualify, but part-time work does not count.

THE JOB-LOCATION-CHANGE TEST. If you changed your residence location, but you also didn’t change job locations, you are not eligible to deduct household moving costs. The simple job-location-change test requires your new job site to be at least 50 miles further away from your old home than was your old job location.

To illustrate, suppose the distance from your old home to your old job location was 10 miles. Your new job must be at least 50 miles further away from your old home. That’s 10 plus 50, or 60 miles, in this example from your old home to your new job location.

If you passed this first test to qualify for the moving-expense tax deduction, then you must also pass a more difficult test.

THE WORK-TIME TEST. Your second and final test to qualify for the moving-expense tax deduction requires you to stay in the vicinity of your new job site and work full time at least 39 weeks during the 52 weeks after your residence move. However, time spent searching for a new job doesn’t count and you need not continue working for the same employer or at the same location.

If you are self-employed, this test requires you to work at least 78 weeks full time in the vicinity of your new qualifying job location during the 104 weeks after the household move.

The purpose of this tougher test is to prevent self-employeds from deducting moving costs if, after moving, they work only a few hours each week. But this work-time test is waived for job layoffs, disability, or the taxpayer’s death.

DON’T PANIC IF YOU DON’T MEET THIS TEST BY APRIL 16, 2007. Most taxpayers who meet the job-location-change test won’t meet the work-time test before their tax returns are due by April 16, 2007 (April 15 is on a Sunday). That’s all right. Uncle Sam understands.

If you meet the 50-mile additional-job-distance test but you haven’t yet met the work-time test by April 16, 2007, you have a choice if you expect to continue working in the vicinity of your new job site.

Your first choice is to claim the moving-expense tax deduction and then, if you later become ineligible, you can amend your tax returns and pay the additional tax.

Your second choice is to not claim the moving-expense tax deduction but, when you later meet the work-time test, then file an IRS Form 1040X to claim the moving-expense deduction, which will probably result in a tax refund for you.

Most tax advisers suggest making the first choice because if you don’t claim the moving-expense deduction when filing your tax returns you might forget to later amend your tax return to claim a tax refund.

INDIRECT MOVING EXPENSES ARE NOT TAX-DEDUCTIBLE. If you have read this far, you probably want to know how much is deductible. To answer that question, it is critical to understand there are indirect and direct moving expenses. One is deductible; the other is not.

An indirect moving expense, which is not deductible, involves costs related to the move but not part of the actual household move.

Examples of indirect, nondeductible expenses include pre-move inspection-trip airline fares, meals enroute during the move, and real estate sales or lease commissions. Also, the costs of moving your butler, cook, maid, chauffeur, nurse, and nanny are nondeductible indirect moving costs.

NO LIMIT ON DEDUCTIONS FOR DIRECT MOVING COSTS. The good news is there is no limit to your direct moving-cost deductions. Examples of deductible direct household moving costs include costs of hiring a moving van, in-transit storage up to 30 days, pet shipping expense, moving insurance, and even expenses for transporting your “personal effects” such as your yacht, horse and recreational vehicle.

If you fly from your old location to your new city, the airline, train or bus fare is deductible. Or, if you drive from your old home to your new home, you can deduct actual out-of-pocket automobile expenses, such as gasoline and oil, but not auto repairs and depreciation.

Or, you can elect the standard 18 cents per mile for moves in 2006, plus parking and tolls. In addition, costs of lodging — but not meals — enroute are deductible.

EMPLOYER REIMBURSEMENTS MIGHT AFFECT MOVING-COST TAX DEDUCTIONS. If your employer reimburses you for direct moving costs for which you have receipts, there is no additional taxable income because the deductible moving costs are offset by the employer reimbursement.

However, if your employer gave you a flat moving-cost allowance, the excess allowance exceeding your deductible direct moving costs is taxable income. Employer reimbursement for nondeductible indirect moving costs, such as a pre-move house-hunting trip, is taxable income for the employee.

Members of the U.S. Armed Forces have special rules that do not include moving and storage expenses furnished by the military or cash reimbursements for expenses actually paid. There is also an income exclusion for moving and storage costs incurred by a spouse and dependents of the Armed Forces member even if they do not reside with the military member before or after the move.

However, reimbursements in excess of actual moving costs are included in the service member’s gross income, but moving expenses exceeding reimbursements are tax deductible. Further moving-cost deduction details are available from your tax adviser.

Next week: How to maximize casualty-loss tax deductions.

(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 2007 Inman News

Q: Do you have any ideas onhow to clean my Cadet baseboard heaters? When I first turn them on for the winter, I get a black film on the wallabove the heater.  What should I do? –G.K.

A: What’s probably happeningis that during the time the heater is off, dust or other material isaccumulating inside the unit. When the heater is turned on in winter, thismaterial burns off and streaks the wall. 

First of all, try to minimizethe dust buildup. This might be done by rearranging furniture, increasing freshair in the room, or increasing air flow in front of the heaters. Then, prior tostarting the heater in the winter, make sure it’s clean. For their baseboardheaters, Cadet recommends that you remove the front cover, and use a vacuum toclean out the inside of the heater before starting it for the season. Be sure the power is off before removing thefront cover, and be careful not to damage the aluminum fins inside theheater.

Q: We have a fireplaceinsert. At times, especially when the fire is low, it doesn’t draw well andsmoke comes out into the room when we open the door to add more wood. Would oneof those chimney toppers you often see at the coast — the ones that look like abig bird and turn with the wind — help the problem?  If not, do you have any other suggestions? –Richard J.

A: There are a couple ofthings that can cause the woodstove to not draw well. One of them, as yousuggest, is wind across the top of the flue pipe, but that really only becomesan issue in high-wind areas such as the coast, which is why you commonly seethose moveable chimney caps there. A dirty flue can cause draft issues, as canan obstruction in the flue, damage to the flue cap, problems with the catalyticconverter or obstructions to the draft damper.

The situation you describecan sometimes be an indicator of a serious problem that could result in a fluefire, so you don’t want to ignore it. I would strongly suggest that you have alicensed woodstove contractor or licensed chimney sweep come out to the house,examine the stove, and make any corrections or repairs they might suggest. 

Q: I want to lay down sheetsof plywood and use that as my finished flooring, not as subfloor. I then wantto stain it a deep cherry color and then polyurethane the heck out of it. I sawa DIY TV show where they took squares of plywood and stained them different colorsand laid them in a pattern. Do you have any idea how to do this? (My boyfriendsaid he’ll do the work as long as YOU think it can be done and that it willlook great afterward!) –Charise M.

A: To answer your boyfriend’squestions first, yes, what you suggest certainly can be done, but since beautyis in the eye of the beholder, the two of you will have to be your own judge ofwhat looks great afterward!

First, you need to start witha sound, relatively smooth subfloor. Cut your plywood into squares of whateversize you wish — to ensure smooth edges and uniformity of the squares, I wouldsuggest ripping the plywood into strips on a table saw, then cutting the stripsto length using a miter saw or a circular saw with a saw guide. Pre-stain eachsquare, allow them to dry completely, then install. I would suggest a flooringadhesive that is formulated for wood, applied with a notched trowel (again foruniformity of application), or you could just use construction adhesive. If youwant visible fasteners, you could also install the wood with finish nails, boxnails or screws. Finally, sweep and then vacuum the floor completely to removedust, then apply two to three coats of clear polyurethane that is specificallyformulated for floors — follow all of the manufacturer’s instructions forapplication and ventilation.

As to the type of wood, thatdepends on the finished appearance you want. A-C plywood will have one smooth,clear face, while C-C Plugged or shop grades, which are less expensive, willhave one smooth face that has repairs in it. You can get plywood in fir, oak,birch, mahogany, cherry and any of a number of other woods. I have also seenthis done with OSB (oriented strand board, also commonly known as waferboard),which has a whole different look than plywood. 

Some home centers have small,precut plywood pieces for craft projects that you might want to experimentwith, or you might also check local construction sites and cabinet shops to seeif you can buy some small scraps of different woods to play around with. Whileyou can use any thickness for your experiments, I would suggest 1/2-inch-thickmaterial for the final installation.

Be forewarned that once thewood is glued in place, it is quite a chore to get it back up again if you wantto change it. To keep peace in the family, make sure you both like theappearance of the floor before you actually glue it down.

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

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

Copyright 2007 Inman News

“Usecommon sense to make sense.”

It soundslike Ben Franklin, but the speaker in this case is David Johnston, agreen-building consultant in Boulder, Colo. His Ben Franklin-sounding aphorism,he said in a recent interview, has proved to be a useful, shorthand way ofexplaining sustainable green-building principles and practices.

Althoughthese have been embraced by more and more home builders, there is still muchconfusion among the general public as to what exactly makes a house green. Oneway to keep things straight, Johnston said, is simply to remember to “usecommon sense to make sense.”

Forexample, Johnston is regularly asked if a green house is one that ispetroleum-product-free. His common sense answer: “If you eliminateeverything that contains petroleum, you can’t enjoy the accoutrements of a 21stcentury lifestyle.” All the heating and cooling equipment and standardappliances contain plastic, he pointed out, adding that “even something asbasic as a toilet has plastic parts.”

Themake-sense part of green building, Johnston went on to say, has to make senseboth environmentally and economically. For example, building materials thathave recycled content are generally considered to be a plus because recyclingcan significantly reduce both the volume of the waste stream and pressure onoverflowing landfills.

But,speaking like the hard-headed home builder that he once was, Johnston said youshouldn’t select a product solely on this basis. A product with recycledcontent may be much more costly than the conventional product it is intended toreplace, and it may not perform any better.

Materialshave to make sense from a health perspective as well, Johnston said. Manybuilding materials are made with unstable, volatile organic compounds, calledVOCs. They can off gas into the air for weeks and sometimes years after theyare installed in your house. Of the hundreds of VOCs that have been identified,the one that concerns most people is formaldehyde, a potent eye and noseirritant that can cause respiratory problems. It has been classified by theWorld Health Organization as a confirmed human carcinogen. You can easily avoidit by using one of the many building products now available with low or no VOCcontent, Johnston said. Though the non-VOC products often cost more, this isone instance where a higher cost is worth it, he added.

Segueingfrom materials to other aspects of green-home builders Johnston talked abouthousehold energy use. His common sense rule: Use as little as possible. Hiscommon sense reason: to save money and the planet. If you use less energy,you’ll save money on your utility bills. You’ll save even more as the price ofnatural gas, fuel oil and electricity inevitably goes up.

If you useless energy you’ll help save the planet because you will be reducing thegreenhouse gas emissions associated with your house. Unbeknownst to mosthomeowners, buildings are the largest source of the greenhouse gas emissionsthat are causing global warming. In the United States, half of building-relatedemissions are from houses.

Johnstonfeels that energy issues are so important, he urges homeowners to put themfront and center in the design of any new house — “from the first sketchof a floor plan to the final dotting your I’s and crossing your T’s.”

But,Johnston hastened to say, energy savings should not come at the cost of havinga great-looking house with lots of windows and great views. The trick is to getall this and save energy.

Johnston’scommon sense strategy for supplying household energy needs: Use what’s freebefore using what you have to pay for. That is, tap as much free solar energyas you can for your heating and lighting needs before turning to conventionalsolutions.

To dothis, you really do have to think about energy from the start because thefeasibility of passive solar solutions depends on how you place your house onyour building site, the first step in any building project. To capture thesun’s rays for heating your house during the winter, your living areas must beoriented to the south. You can keep the same spaces cool in the summer by addingoverhangs. With some additional refinements to the overhangs, the sun can alsosupply your lighting needs during the day.

Tomaximize the benefit of passive solar heating and cooling, you need tocarefully tailor your building envelope to reduce heat loss or heat gainthrough the walls and roof. This generally requires adding insulation to thewalls, attic and basement in amounts far above code requirements and upgradingwindows to get ones with a low-emission coating that helps to keep the heatinside during winter and outside in summer.

Unless youlive in Hawaii or Santa Barbara, Calif., where passive solar strategies cansupply all your heating and cooling needs, you’ll still need a furnace forthose cold days when the sun’s heat is not enough to keep you comfortable. Butwith your upgraded building envelope, you can use a smaller furnace and airconditioning condenser, and that is a cost savings, Johnston said.

You’llalso need electric lights for nighttime use and cloudy days. Surprisingly,lighting accounts for about 12 percent of household energy use in the averagehousehold. Solar daylighting shaves part of this, but you can shave it furtherwith compact fluorescent bulbs, commonly called CFLs, Johnston said. They useabout 75 percent less energy to produce the same amount of light as anincandescent bulb, and they last six to eight times as long. CFLs can bescrewed into almost any conventional light socket and their color correctionhas vastly improved in recent years.

The otherpart of the home energy puzzle that green building can affect is the sizeableenergy draw for hot water. The luxury of having 40 to 50 gallons available 24/7consumes another 12 percent of household energy use. But, Johnston said, it’sanother instance where you can tap free solar energy by installing a solarcollector on your roof. For those cloudy days, though, you’ll need a backuphot-water heater.

The other35 percent of the energy that the average household consumes is out of abuilder’s hands, because it is the “plug loads” that homeowners bringinto the house when they move in — appliances, computers, home-entertainmentequipment, and all the other doodads that most households accumulate. The mosteffective way to reduce this load is to purchase Energy Star products, nowavailable in more than 40 categories.

How doesJohnston’s “common sense to make sense” work in real time on a realhouse?

To findout I contacted McStain Neighborhoods, a small production-home-building firm inBoulder that has built sustainable, green houses for more than 40 years. Thefirm builds about 350 houses a year in the Denver and Boulder markets.

Like allhome builders, McStain evaluates everything from a cost-benefit perspective.But, unlike almost all the others in the United States, McStain has a researchand development department that carries out in-depth reviews of about 50 newproducts and building techniques a year. Periodically, the firm builds a testhouse that incorporates the most promising of these innovations. The test housesare eventually sold, but the firm continues to monitor them for several yearsafterwards, said McStain marketing head Barr Hall.

JeffMedanich, who heads up McStain’s research efforts, said that much of his workis a balancing act, spending more here but saving more there so that in sum,the cost of an innovation is relatively small.

Medanichoffered as an example McStain’s current exterior wall construction. Instead ofthe dimensional wood studs that are used by most home builders (a single pieceof wood sawn from a tree log), McStain uses finger jointed studs, which aremade up of several smaller pieces of recycled scrap lumber that are gluedtogether. These cost more but their superior quality means that fewer aretossed as unusable — only about 4 percent compared with 20 percent of thedimensional studs. The cost difference is a wash, but the finger-jointed studshave the added benefit of lowering costs down the line. Because they arestraighter, the walls are plumb, and this makes the work of subsequent tradesgo more smoothly and faster.

Questionsor queries? Katherine Salant can be contacted at www.katherinesalant.com.

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

Copyright 2007 Katherine Salant

DEAR BOB: I inherited a house and a two-family duplex frommy uncle who died in 2004. The properties are located out of state. I have beenin contact with the estate attorney who, I think, is “milking” thissimple probate to get as much in fees as he can. It has now been more than twoyears since my uncle died. He left some stocks and bonds, plus a few bank accounts,and the two properties. But that’s about it. The stocks and bonds, as well asthe bank accounts, went to other heirs. There are no complications as far as Iknow. Do probates usually take two years? –Mavis R.

DEAR MAVIS: If your late uncle left a written will, unlessthere are contested debts to be paid or other complications, a two-year probateis far too long to distribute the assets to the heirs. Because you live out ofstate, the probate attorney probably figures you are in no hurry so there is nourgency to close the probate proceeding.

Purchase Bob Bruss reports online.

I suggest you write a polite letter to the probate attorneyasking when you will receive title to the two properties (I presume somebody ismanaging them so they don’t deteriorate and the rent is being collected). Ifyou aren’t satisfied with the reply, a few phone calls might be necessary.

This unnecessary probate delay could have been avoided ifyour late uncle held title to his real estate and other major assets such asthose bank accounts and the stocks and bonds in a revocable living trust. Then,after his demise, the assets could have been distributed promptly according tothe terms of his living trust without probate costs and delays, usually in lessthan six months.

MORTGAGE DEFAULT WILL RUIN YOUR CREDIT

DEAR BOB: In 2004 my mother bought a condo as her firsthome. In early 2005 she listed it for sale at $350,000 and received a $360,000purchase offer. But the bank appraisal came in at only $325,000. Rather thangive it away, she decided to rent the condo and take out a home equity line ofcredit (HELOC). A year later, the tenant moved out and now we have a hard timefinding and keeping tenants. If we can’t sell the condo or find a new tenant,foreclosure will likely occur. There is roughly about $40,000 left on the HELOC.If she gives up the condo with a deed in lieu of foreclosure to the lender, isshe required to pay off the HELOC? –Jill U.

DEAR JILL: Defaulting on either the condo mortgage and/orthe HELOC will ruin your mother’s credit. Don’t even think of that.

Because there is a HELOC on the condo (which is really asecond mortgage), I doubt the first mortgage lender will accept a deed in lieuof foreclosure. If your mother stops paying on the condo’s first mortgage andthe condo is foreclosed, that will wipe out the HELOC. However, the HELOClender will probably sue your mother for its loss.

Your mother should do everything possible to either rent thecondo or sell it for at least enough to pay off its first mortgage plus theHELOC.

NO MINIMUM HOLDING TIME FOR PROPERTY ACQUIRED IN A TRADE

DEAR BOB: What is the minimum holding time for a rentalproperty acquired in an Internal Revenue Code 1031 tax-deferred trade? In Julyof 2006 I acquired a six-unit rental property in such an exchange. Now I havean opportunity to trade it for a commercial property that would be lessmanagement intense. But my tax adviser says I must hold title to my rentalproperty at least 12 months before trading again. I can’t find this anyplace inthe tax code that says that. What is the minimum holding time? –Julia L.

DEAR JULIA: There is no minimum holding time for a propertyacquired in an IRC 1031 tax-deferred exchange. I suggest you consult anothertax adviser for a second opinion.

The new Robert Bruss special report, “The 10 Key QuestionsSmart Home Buyers Ask to Avoid Getting Ripped Off,” is now available for$5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare 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 2007 Inman News

DEAR BOB: We got ripped off when buying our first home lastNovember. Our first mistake was letting the listing agent act as a “dualagent” to represent both the seller and buyer. Our second mistake wastrusting her, as she turned out to be a real crook. Imagine our surprise, afterthe closing, when we got the keys to our new home and discovered the sellershad removed all the light fixtures (leaving bare wires in the ceiling). Theytook even the built-in dishwasher, cook-top range and built-in oven. Weunderstand they were entitled to remove the refrigerator, washer and dryer,which were freestanding. The realty agent says there was nothing said in thesales contract so the sellers presumed we didn’t want the nice light fixtures,especially the dining-room chandelier. What recourse do we have, as the sellersmoved out of state? –Brett R.

DEAR BRETT: That was a very bad home sales contract if itdidn’t specify that the fixtures are included in the sales price. It’s notnecessary to itemize fixtures because they are personal property, which bymeans of permanent attachment became part of the real property.

Purchase Bob Bruss reports online.

Didn’t you have a “walk through inspection” theday before the schedule sale closing? Every good real estate agent encouragessuch an inspection to be certain the seller has left the home in the agreedcondition so there won’t be any later surprises. Shame on that realty agent fornot arranging such a walk-through inspection, which would have prevented theproblem you describe.

At this point, I suggest you contact the realty agent’soffice manager, politely explain the problem, and ask for compensation for yourestimated replacement cost of the fixtures, including the built-in appliances.

Because the sellers moved out of state, it will be extremelydifficult to sue them so your best leverage is over the realty agent whoallowed this problem to be created. If necessary, your recourse is a lawsuitagainst the realty agent and the sellers. For details, please consult a localreal estate attorney.

CAPITAL GAIN, NOT SALES PRICE, DETERMINES HOME-SALE TAXEXEMPTION

DEAR BOB: I plan to sell my home in the next few months. Ihave owned and lived in it about 10 years. The sales price should be around$325,000. I paid about $100,000 and I have added some improvements. My mortgageis around $62,500. A friend told me I will owe tax on the amount exceeding$250,000. Is this true? –Marcia C.

DEAR MARCIA: No. Internal Revenue Code 121 provides up to$250,000 tax-free principal-residence-sale capital gains profits for a singlehome seller (up to $500,000 for a married couple filing jointly where bothspouses qualify).

To qualify, you must have owned and occupied your principalresidence at least 24 of the last 60 months before its sale. It appears youqualify.

Your adjusted cost basis for your home is its $100,000purchase price, plus the cost of capital improvements you added. The mortgagebalance doesn’t matter. Subtracting $100,000 from the estimated $325,000adjusted sales price is a $225,000 capital gain. That is well below the$250,000 exemption so it appears your entire principal-residence sale profitwill be tax-free. For details, please consult your tax adviser.

ZERO-LOT-LINE HOUSE CAUSES UNUSUAL PROBLEM

DEAR BOB: My mother-in-law lives in a zero-lot-linesingle-family house where the windowless left side of her home sits on theproperty line with her neighbor on that side. This neighbor refuses to properlylandscape her back yard. The result, when it rains, is water stands against mymother-in-law’s exterior house wall. This water seeps into her home and iscausing interior damage. What can she do? –Rick T.

DEAR RICK: That is a very unusual situation. It appears theneighbor is maintaining a “private nuisance” that affects yourmother-in-law’s house. I presume she has tried to work out a friendly solutionwith the neighbor.

At this point, legal action is probably necessary to abatethis private nuisance. She should consult a local real estate attorney forfurther information.

The new Robert Bruss special report, “The 10 KeyQuestions Smart Home Buyers Ask to Avoid Getting Ripped Off,” is nowavailable for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare 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 2007 Inman News

Michael William Hawkins was a tenant at the KentfieldApartments, which is owned by Mark Wilton. On May 5, 2003, manager and nightsecurity guard David Anthony Rodriguez shot Hawkins on the sidewalk outside theapartment complex.

Rodriguez was convicted for attempted murder and relatedcharges.

Purchase Bob Bruss reports online.

Hawkins later sued Wilton for negligent hiring of Rodriguezbecause Wilton knew Rodriguez had been convicted of manslaughter, served aprison term, carried guns, used methamphetamines, and threatened tenants whileworking for him.

Hawkins sued Wilton for “respondeat superior”employer liability for negligence in not protecting the tenants fromforeseeable criminality and allowing a dangerous person to remain on theproperty.

Landlord Wilton replied the shooting took place on thepublic sidewalk outside the complex. He also alleged Rodriguez and Hawkins were”pretty good acquaintances” who spoke and smoked cigarettes almostdaily. Hawkins responded that he warned Wilton’s managers “a week or twobefore” that Rodriguez acted weird, carried guns, and was going to kill somebody.

But Hawkins continued to socialize with Rodriguez and evenlet him into his apartment. At the trial, Wilton testified this evidence showedHawkins did not consider Rodriguez to be a threat.

If you were the judge would you rule landlord Wilton can beheld liable to Hawkins for negligently hiring ex-con Rodriguez?

The judge said yes!

“An employer who allowed such conduct by a manager orsecurity guard would not be insulated from ‘respondeat superior’ liabilitysimply because the tenant chose to socialize with the employee, or simplybecause the shooting took place on the sidewalk outside the apartmentcomplex,” the judge began.

“In our view, an employer cannot allow a drug-addledconvicted felon to carry and brandish loaded firearms during the course andscope of employment, particularly where, as here, the employment necessarilyconsists of making contact with members of the public, such as tenants andvisitors to the complex,” the judge continued.

“Such conduct merits liability because it should be discouraged,the victim should be compensated and the victim’s losses should be borne by theenterprise causing the risk; moreover, liability will not impose an undueburden but will merely ensure that apartment owners who choose to employsecurity guards or managers will select, train and supervise them to avoidinflicting additional risks on their tenants,” the judge ruled.

Based on the 2006 California Court of Appeal decision in Hawkinsv. Wilton, 51 Cal.Rptr.3d 1.

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

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Copyright 2007 Inman News

The peaksand valleys of the 2006 housing market were curious — perhaps even unique –but consumers and real estate professionals will probably experience a moreconsistent, positive environment in 2007, according to leading industryanalysts.

Nationaleconomists and pollsters, even the legendary Alan Greenspan who retired aschairman of the Federal Reserve early last year, also concurred that housingactivity should pick up some steam in 2007.

“Mostof the negatives in housing are probably behind us,” Greenspan said.”The fourth quarter should be reasonably good, certainly better than thethird period.”

Others, includingSteve Murray, publisher of Real Trends, a real estate research and informationcompany, were willing to push a positive outlook further into the future.Murray feels the desire for a home as a residence, or as a recreation orretirement investment will remain strong for the next decade.

“Webelieve that housing consumers will purchase more homes in the next 10 yearsthan they did in the last 10 years,” Murray said. “And, we believethat real estate professionals will earn more in the next 10 years than theydid in the last 10 years.”

The keyquestion, according to Murray, is who will earn it?

“Consumersdo not, and will not, rely on sales professionals solely for their housinginformation,” Murray said. “Consumers will increasingly rely on theInternet for their information. Sales professionals who deliver information toconsumers via the Web and then provide rapid response to consumer requirementswill win the day.”

DavidLereah, chief economist for the National Association of Realtors, said 2006 wasa different market because past declines were associated with the traditionalfactors of employment losses and rapidly increasing interest rates. The 2006slump occurred while jobs were being created, sound economic fundamentals werein place, and mortgage interest rates were at near-historic lows.

“The2006 declines came from affordability problems because prices were too high,forcing consumers to borrow too much,” Lereah said. “We alsoexperienced investors leaving the market, the perception that real estate wasno longer a favorable investment, and the scare provided by some members of themedia that a national bubble was bursting.”

NARpredicts that existing-home sales are expected to “coast” at roughlythe same level this year.

“Overallhome-price gains will be modest,” Lereah said of 2007′s national outlook.”Home sellers are becoming realistic about current market conditions andare now offering more competitive pricing, in addition to some incentives orconcessions — especially to help first-time buyers.”

NARexpects the national median existing-home price to rise 1.7 percent this yearto $227,500 and the median new-home price to gain 1.3 percent to $241,400.

“Wenow have the most favorable market for home buyers in several years, and mostsellers — who’ve been in their home for a normal period of home ownership –are still seeing very healthy returns on their investment,” Lereah said.”Conditions for buyers have improved because sellers are flexible now andmortgage interest rates are near historic lows. The market promises to be morebalanced between buyers and sellers by early spring, supporting future pricegrowth.”

Existing-homesales are projected to be essentially even in 2007 with a 0.6 percent declineto 6.43 million. New-home sales are forecast to fall 8.7 percent this year to975,000, largely due to a significant reduction in construction by builders.

How canthe housing industry get better? Murray believes that sales agents can improvetheir efforts in serving sellers.

“We(agents) are not listening first and talking second,” Murray said.”Sellers are far less satisfied than buyers. We have to remember thatsellers are giving something up, and often that something is great memories. Weneed to ask them what matters to them as a seller — and then shut up andlisten to what they really need.”

TomKelly’s new book, “Cashing In on a Second Home in Mexico: How to Buy, Rentand Profit from Property South of the Border,” was written with MitchCreekmore, senior vice president of Houston-based Stewart International. Thebook is available in retail stores, on Amazon.com and on tomkelly.com. Tom canbe reached at news@tomkelly.com.

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

Copyright 2007 Tom Kelly

Q: I have an old house (built in 1927) that has theoriginal, old-fashioned, cold-air gravity furnace. It works very well, butthere is a lot of dust and I wonder if it comes from the old ductwork. I wouldlike to have these ducts cleaned but I don’t know if there could be asbestosthat could be loosened up by the cleaning. What do you recommend? We changedthe filters but maybe I should just get the big air intake cleaned.

A: Wedon’t wonder that your 1927 furnace spits out a fair amount of dust. Over the80 years your furnace has been working, many pounds of debris have recirculatedthroughout your home.

Changingthe filters in a heating system is part of regular maintenance, and we applaudyour attention to this detail. But, cleaning and vacuuming ductwork is the lastthing on most people’s mind when it comes to home maintenance. We’re noexception to that.

We’d besurprised if your ducts have ever been cleaned. Stop wondering if you shouldsuck the dust out of them. We recommend that you do it, and there is no timelike the present.

In ouropinion, you shouldn’t worry too much about asbestos. Although at least until the1960s asbestos was commonly used to insulate heating ducts, it was applied tothe outside of the ducts, not the inside.

Heatingducts were covered with a cardboard-like material containing asbestos fibers toreinforce them and hold in the heat. Unless the ductwork has been penetratedand the wrapping is shredded, releasing particles into the airflow in thesystem, asbestos contamination is not an issue. So long as that covering isintact, it’s safe.

You can doa little investigation yourself to see if the duct wrapping might containasbestos. Go into the basement or in the crawl space and take a look at theducts. If they are wrapped very tightly with what looks like white muslin,there’s a good chance the wrap contains asbestos.

That’s notat all bad, though. Asbestos is only dangerous when it is friable — that is,particles that float in the air are potentially ingested. If it encapsulated,it’s safe. Asbestos-impregnated material on the outer duct surfaces has notbeen exposed to the air stream flowing on the inside of the ducts and isunlikely to have penetrated the duct walls and entered your home. If thewrapping is in good shape, you’re probably OK.

To makedoubly sure and to put your mind at ease, have an environmental testing firmgather filtered air samples from your home for testing by an EPA-approvedlaboratory. This will remove any uncertainties regarding possible contaminationand will provide some welcome reassurance if the lab test is negative.

Whensearching for a company to clean your ductwork, don’t necessarily go for thecheapest game in town. Ask questions from prospective tradesmen about exactlywhat they are going to do, how long it will take them to do it and what type ofequipment they are going to use. Also, voice your concerns about asbestos tothem.

Look forsomeone who will do a thorough, full-service cleaning: vacuuming each duct andcleaning out each register.

A moreextensive process uses a larger suction cleaning system and thoroughly cleansout each duct and register. Expect to pay several hundred dollars for this. Thegood news is that the cleaning should last up to 10 years.

Finally,give your gas and electric utility company a call and ask for someone to comeout and inspect your furnace. The old beast has been in service a long time andyou want to make sure it’s still effective and safe. It’s a good insurancepolicy. And it’s free.

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

Copyright 2007 Bill and Kevin Burnett

DEAR BOB: For the last six years, I have lived in mymother’s house to take care of her, as she is very senile. I have been makingthe mortgage payments and paying the property taxes. However, when I had myincome taxes prepared last year, I was told I am not entitled to thesedeductions because my name is not on the title and my mother’s name and SocialSecurity number are on the mortgage. Is this true? –Michele M.

DEAR MICHELE: Yes. The reason you are not entitled to claimthose itemized deductions on your personal income tax return is you have nolegal obligation to make those payments. You may have a moral obligation tohelp your mother, but that doesn’t count with the IRS.

Purchase Bob Bruss reports online.

However, this problem is easily solved. If your mother iscapable of signing a quitclaim deed, she can add your name to her title,perhaps by holding title in joint tenancy with right of survivorship. Her namestill remains on the title but now you will be legally obligated for thosepayments you have been making and can claim them as itemized deductions on yourpersonal income tax returns.

But there is no need to add your name to the mortgageobligation. Millions of U.S. homeowners make payments on mortgages that are notin their names. All that matters to the IRS is you must be legally obligated topay the expenses, as you will be after your mother adds your name to the housetitle. For details, please consult your tax adviser or a local real estateattorney.

REMAINDER INTEREST ISN’T WORTH MUCH IF LIFE TENANT IS STILLALIVE

DEAR BOB: I am a joint remainderman with my husband on afarm and house where my mother lives as the life tenant. I am divorcing myhusband and want to know what value my remainder interest has at this time, ifany. The property and farmhouse were appraised at $122,000 –Mary L.

DEAR MARY: Until your life-estate-tenant mother dies, yourremainder interest has very little market value. The reason is, unless yourmother is at death’s door with a terminal disease, there is no resale marketfor remainders.

Maybe you can trade your ex-husband something of littlevalue if he will sign a quitclaim deed to you for his remainder interest in theproperty.

REFINANCE TO GET OUT OF BAD 8.5 PERCENT ADJUSTABLE-RATEMORTGAGE

DEAR BOB: Why did my ARM (adjustable-rate mortgage) go from6.5 percent to 8.5 percent interest last November? It is tied to the 11thDistrict Cost of Funds Index. I will soon be 76 and owe only $74,500 on a houseworth about $700,000. At my age, my life expectancy isn’t too long. I doubt Ican qualify to refinance because my income is Social Security benefits, plussome rental income. What should I do? –Diana C.

DEAR DIANA: You definitely should refinance. The reason yourARM adjusted last November, I suspect, is your locked-in interest-rate periodexpired and now your ARM interest rate is a combination of the Index (currently4.346 for the cost of funds index, as I write this) plus the margin.

It appears you have a very high margin above the index. Getrid of your bad ARM.

If you have any problem qualifying to refinance with afixed-interest-rate mortgage around 6 percent interest, ask the lender for a”no doc” mortgage. That means the lender won’t check your income.Sometimes these are called “stated income” mortgages.

If you need cash, perhaps for a new roof, you can borrowmore than the $74,500 on a “cash-out mortgage” to pay off your oldARM.

Another alternative is to get a home equity line of credit(HELOC) at your bank to pay off the old mortgage. The best rate I’ve seen isthe prime rate minus 1 percent, which would be about 7.25 percent interest. Getthe biggest HELOC you can obtain so you will have a credit line available foremergencies.

Still another alternative, if the property is your principalresidence and you plan to stay in it at least five years, is a reversemortgage. You can use a lump sum to pay off your $74,500 existing mortgage andthen either take a credit line (except in Texas) or lifetime monthly income forthe balance of your entitlement.

The big advantage of reverse mortgages is no monthlypayments. Details are in my special report, “The Whole Truth About ReverseMortgages for Senior Citizen Homeowners,” available for $5 from RobertBruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736or 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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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2007 Inman News

Dear Barry,

When I bought my house, the home inspector reported noproblems with the main electrical panel. After moving in, my insurance companywrote to request a photo of the panel. I sent the photo, and they replied witha cancellation notice, stating that Federal Pacific breaker panels are firehazards and must be replaced. The new panel cost me $1,050. When I called thehome inspector, he admitted that Federal Pacific panels are hazardous but saidhe had no obligation to tell me this. He said that 30 percent of the homes heinspects have these panels and that routine disclosures of this kind wouldcause many deals to fall out of escrow, exposing him to lawsuits from sellers.This sounds crazy to me and has me considering Small Claims Court against theinspector. Do you think he is liable? –Ellen

Dear Ellen,

Your inspector should be nominated for the Dirty Nerve Awardof the year. His stated position exceeds the normal boundaries of professionaloutrage. Any reasonable inspector would be stunned by such responses. Simplystated, your inspector failed to disclose an electrical condition that is aknown fire hazard. Then he compounded the damage with insult, claiming that hewas not required to provide disclosure. On the basis of such thinking, a homeinspector could avoid reporting any and all hazardous conditions, includingdefective heating fixtures, substandard fireplaces, damaged balcony railings,etc.

This inspector clearly has no concept of the purpose andintent of a home inspection, which essentially is to represent the interests ofhome buyers by reporting observable conditions that could be of concern orconsequence. By all means, give him the opportunity to declare his defense to aSmall Claims judge. Aside from reclaiming your losses, it would be interestingto observe the judge’s responses to the inspector’s outlandish arguments.

Dear Barry,

We bought our home about six weeks ago. At the time, ourhome inspector found no problems with the plumbing, other than a leaky sinkfaucet. But now our tub is backing up and our toilet won’t flush. We believethat this is a pre-existing condition because the floor under the toilet hadbeen replaced recently. How can we resolve this plumbing problem? Are thesellers liable for nondisclosure? And is our home inspector liable fornegligence? –Julian

Dear Julian,

This has all the appearance of a no-fault situation. Sewagebackups after the close of escrow are often matters of unfortunate timing,arising from causes that may or may not have been known to the sellers. In yourcase, it all depends upon whether there have been past or ongoing drainageproblems experienced by the sellers. The home inspector, of course, would havehad no way of knowing that sewage backups might occur unless symptoms wereapparent during the inspection. The fact that the flooring was previouslyreplaced at the toilet is probably unrelated to any sewage problem. Subfloorsbeneath toilets typically become rotted when there is a leaking seal.

At this point, the cause of the sewage backup needs to bedetermined by a licensed plumber. It could be something as simple as roots inthe sewer main or something more costly such as a deteriorated main line. Avideo inspection of the sewer lines would provide the most comprehensiveanalysis.

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

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

Copyright 2007 Barry Stone