Real Estate in Steamboat

Long-term rates are moving up this morning, mortgages rising toward 6.25 percent, the definitive 10-year T-note to 4.61 percent, out of a three-week rest in the four-fifties.

The bond market got so low in gleeful observation of a global stock-market dive, and stayed in anticipation of a slowdown in the U.S. economy. GDP guesses for the first quarter are weak, just as they were in several fleeting episodes of lower rates last fall. The rates-up turnaround clincher came today in news of a 3.9 percent February jump in sales of existing homes and stable inventories of unsold homes. Earlier in the week, bearish traders ignored a 9 percent rebound in new-home starts, instead seizing on a decline in new building permits.

Shoulda known better: housing is weak, but not collapsing. Some small indicators are more useful than the traditional national aggregates. Example: tightening credit standards are supposed to shut out hundreds of thousands of buyers. However, the MBA’s loan application count is steady, and there’s no news of increased turn-downs. Lower-quality borrowers are finding substitutes for extreme subprimes.

Another one. Fremont General, one of the idiot subprime providers (not redundant; Fremont made the loans and kept them as investments, bad banking but free of hypocrisy), this week dumped $4 billion of its subprime portfolio, taking a $140 million loss. In a true foreclosure meltdown, loans uncollectible, the discount would have been a hell of a lot deeper than 3.5 percent.

This week’s comic relief came courtesy of the Fed. After each meeting since the early 1990s, the Fed has made clear its bias: to ease, to tighten, or balanced. On Wednesday, for the first time in 15 years, Fed Chair Ben Bernanke was unable to explain which of the three he had in mind, and a two-day argument ensued.

At first, confident gods of bonds announced that the Fed had retreated from bias-to-tighten to balanced, and a further switch to easing lay soon ahead. Mere mortals read the statement a few more times (the damned thing is only six sentences long), and couldn’t miss the obvious: “…The predominant policy concern remains the risk that inflation will fail to moderate.”

Inflation is still out of the box, core north of 2.5 percent, and the Fed can’t ease. The mangled statement did acknowledge the obvious in its reference to housing: January’s mention of “stabilization” gave way to this week’s “adjustment … ongoing.” The housing worst is obviously not over, but nobody has a good grasp of linkage from housing to the real economy — many say they do, but don’t trust ‘em.

In the new, everybody-is-an-expert land of mortgage meltdown analysis, here is one way to detect a poseur. Any story that makes reference to “Liars’ Loans” — just toss the whole thing. You’ve found an author who might accidentally have something accurate to say elsewhere in the article, but no wisdom.

“Stated-income” loans go back a long way. In earliest form, in small towns, a common borrower statement to a banker looking for merit in an application was, “My Daddy plays golf with your Chairman.” Many borrowers have significant financial resources beyond paychecks.

By 1980, the first modern SI loans opened mortgage credit to borrowers whose incomes were sheltered from IRS view in dozens of legitimate ways, or whose cash-flow defied traditional definitions of income. Making a loan to a documented high-net-worth borrower putting 25 percent down is the soul of prudence. Recent abuse of the approach has these hallmarks: little or nothing down, or failure to document assets or track record.

“Liar’s Loan” is a gratuitous insult to both borrower and banker, and exposes an ignorant author piling on in a tough situation.

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 2007 Lou Barnes

DEAR BOB: In August 2004, I purchased a junior one-bedroom condo, advertised as “approximately 551 square feet.” A week ago, I receive a list of recent sales in my building from the realty agent who sold my unit. It listed the condo like mine three floors above me, which sold at 523 square feet. That is 28 square feet smaller than I was lead to believe. If my math is correct, based on my purchase price I overpaid by $11,180 in square-foot value. Is “approximately” a common wording realty agents use to inflate the square footage and price? Should buyers be responsible for verifying this? The appraisal didn’t evaluate size. What advice do you have on recouping the misrepresented square footage and associated value? –Daniel R.

DEAR DANIEL: Have you measured the square footage of your unit? Maybe the upstairs unit is different. Unless you can prove you paid on the basis of the advertised square footage, such as $200 per square foot, you would have a very weak case to prove misrepresentation.

Most real estate listing information includes “weasel word” disclaimers such as “Information deemed reliable but not guaranteed.” You said your condo was advertised as “approximately” 551 square feet, indicating there was no specific representation.

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Your chances of finding an attorney to take your case on a contingency are slim. The statute of limitations is another issue. I suggest you forget the matter and spend your time on something important.

HOW TO GET RID OF CO-OWNERSHIP OF A HOUSE

DEAR BOB: Last year I took out a mortgage to help my son purchase a house. The house is titled in my name. How can I re-title the house to him so he can benefit from the mortgage interest and property tax deductions since he makes all the payments? –Jesse H.

DEAR JESSE: That’s easy. Just sign and record a quitclaim deed transferring title from you to him. Then he can deduct the mortgage interest and property tax he pays. Your name will then be off the title. However, your name will remain on the mortgage obligation so be sure your son pays the mortgage on time or your credit will be harmed.

HOW TO DETERMINE IF BUILDING PERMIT AND INSPECTION WAS OBTAINED

DEAR BOB: I hired a licensed, insured contractor to do some renovation work on my property several years ago. We agreed he would obtain all the required permits, do the work, and have the work passed by the building inspector. The work was completed and paid in full. But I am not sure the permits and inspections were obtained. The contractor is now out of business. Will this renovation work affect the sale of my property in the future? What should I do? –Gregg R.

DEAR GREGG: Pay a visit to city hall to see what building permits have been obtained on your property. You don’t have to tell the clerk what you really want to know.

Most building departments maintain records by the property address. The file will include copies of all building permits issued for your property, plus copies of all completed inspections.

If you discover either a building permit was not obtained or the work was not inspected upon completion, when you sell the property you must disclose those facts to your buyer. The result might be a diminished market value for the property. Or the buyer might not care.

The new Robert Bruss special report, “Everything You Need to Know About the Pros and Cons of Reverse Mortgages for Senior Citizens,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

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

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Copyright 2007 Inman News

DEAR BOB: In February I closed on the “as is” purchase of a condo, which was a foreclosure sale by Fannie Mae. At the closing, I was surprised by a $600 debt due to the condo homeowner’s association. I thought Fannie Mae should have paid this. The lawyer who handled the closing agreed with me, but it had to be paid or I wouldn’t receive title. I reluctantly paid. When I protested to the condo association, I was told to hire a lawyer because it is my responsibility to pay. What is your opinion? –Ken M.

DEAR KEN: When buying an “as is” foreclosure property from the foreclosing lender, which was Fannie Mae, it is customary to deliver marketable and insurable title. Frankly, I am surprised Fannie Mae refused to pay that $600 condo association lien. The sale term “as is” refers to physical condition, meaning the seller will not pay to make any repairs. It does not mean the seller will surprise the buyer with undisclosed liens that the seller refuses to pay.

PurchaseBob Bruss reports online.

Thankfully, the amount is small. I suggest you write a very polite demand letter insisting Fannie Mae reimburse you $600 for the unexpected cost you had to pay at the closing. Ask for payment to be received within 10 business days. Send it by registered mail to be sure Fannie Mae receives it.

If you don’t receive payment, bring a local Small Claims Court action against Fannie Mae. Chances are a Fannie Mae representative will not show up and you will win a default judgment.

YOUR “UNDERSTANDING” ABOUT WATER LEAKS DOESN’T MATTER

DEAR BOB: We bought a rental house “as is” but with the understanding it had no water leaks. That is what the written disclosure said. However, since purchase we have been fixing roof leaks for months now. My tenants told me the past landlord knew of the leaks but would not fix them. What can I do to make him pay for the repairs? –Kevin C.

DEAR KEVIN: Your “understanding” doesn’t matter. Did the seller’s written disclosure statement say there were no material defects in the house? If so, you might have recourse for misrepresentation if you can prove the roof leaked at the time of the sale.

Depending on your cost of the roof repairs or replacement to stop the leaks, you might want to take the seller to the local Small Claims Court. If you can get your tenant to testify as a witness that the landlord knew the roof leaked before the sale but he refused to repair it, that is excellent evidence for you.

However, if the cost of repairs or roof replacement exceeds the local Small Claims Court jurisdiction, then you can either reduce your claim to that maximum amount or hire an attorney to sue the seller in a formal court proceeding.

NO ADVERSE POSSESSION AGAINST GOVERNMENT, UTILITY OR RAILROAD

DEAR BOB: Can you stand another adverse-possession question? There are numerous properties in my city that are owned by government agencies and are not being used. Is there any way I can gain title by adverse possession to put these properties to use? –Rodger A.

DEAR RODGER: Sorry. Adverse-possession laws do not apply to real estate owned by any government agency, public utility or railroad.

The reason is these landowners cannot periodically inspect their many properties to see if someone like you might be adversely possessing them without permission, such as by planting a flower garden for the required number of years. For more details, please consult a local real estate attorney.

The new Robert Bruss special report, “Everything You Need to Know About the Pros and Cons of Reverse Mortgages for Senior Citizen Homeowners,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

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

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Copyright 2007 Inman News

James M. MacDonald II loaned Joseph Gayton $325,000, which was not secured by real estate or any other asset.

On Feb. 2, 2001, before repaying the debt to MacDonald, Gayton conveyed his joint-tenancy interest in the family home to his wife, Monica, by a quitclaim deed.

Before the transfer, Gayton and Monica held title to the home as joint tenants. The quitclaim deed was recorded with the county recorder of deeds on March 15, 2001.

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MacDonald, as trustee and sole beneficiary of a retirement plan, filed a lawsuit against Gayton on Aug. 7, 2003, for nonpayment of the $325,000 debt. But Gayton died on Nov. 26, 2003, without any assets. On Dec. 22, 2003, the court entered a judgment in favor of MacDonald for $357,140, including unpaid interest against Gayton’s estate.

On Jan. 16, 2004, MacDonald brought this lawsuit against Gayton’s estate and Monica to set aside Gayton’s quitclaim deed under the Uniform Fraudulent Transfer Act (UFTA).

The court ruled MacDonald was not entitled to any relief because he did not have a recorded judgment lien against Gayton’s family home or Gayton personally before his death.

As a result, the court reasoned, even if Gayton’s quitclaim deed to Monica was fraudulent, title to the home passed to Monica as Gayton’s surviving joint tenant, extinguishing any rights MacDonald might have in the home. MacDonald appealed.

If you were the appellate court judge would you rule Gayton’s title transfer to his home was fraudulent and MacDonald is entitled to a judgment lien against the home?

The judge said no!

Even if Gayton’s transfer of his joint-tenancy interest in his family home was fraudulent, the judge began, the UFTA would nullify that transfer and the property would be restored to the joint tenancy with right of survivorship.

In other words, he continued, the property would be treated as if Gayton’s title transfer had never occurred.

However, for MacDonald to reach the home for purposes of satisfying his $357,140 judgment against Gayton’s estate, the judge explained, MacDonald must have perfected his judgment lien on the home while Gayton was still alive and had a possible interest in it.

Since MacDonald did not record a judgment lien against the property while Gayton was alive, even if Gayton’s quitclaim deed was fraudulent, title to the home passed to Monica as surviving joint tenant unencumbered by the judgment, which was obtained after Gayton’s death, the judge ruled. MacDonald therefore is entitled to nothing, the judge concluded.

Based on the U.S. Court of Appeals decision in MacDonald v. Estate of Gayton, 469 Fed.3d 1079.

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

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Copyright 2007 Inman News

Who were the first snowbirds? It depends on where you ask the question.

Historically, snowbirds have been retirees who escape the cold of winter for a warmer climate. Residents of the East Coast tend to say they were the first to dodge the snow — heading to Florida and the Caribbean, while West Coasters picked up the trend much later and invaded Arizona and Southern California. The term “snowbird” also is given to a significant number of Canadians who make Victoria, British Columbia, their home in January and February.

Snowbirds usually are able to be away from home for long periods of time, often can afford to purchase a second home, and have even been known to use their primary and second homes for creative tax purposes and income streams.

David Collins, chairman of Active Living International, a company specializing in the research and development of active adult communities, is an expert in predicting where snowbirds prefer to land. His company’s recent assignments have included a study of the over-50 housing market for Mexican developer CEMEX and the construction of a 150-unit retirement resort for Sensara Partners on Spain’s Costa del Sol. The Spanish development, which opened in 2005, was honored by the National Association of Home Builders and was named Best Retirement Housing Project in Europe.

The Mexican project, called Sensara Vallarta, is the first “50-plus” active adult community developed in Mexico and contains 250 luxury condominiums inside the grounds of the El Tigre Golf Course near Puerto Vallarta. The complex, designed by Mexico City architect Jose Vigil who conceived many of the homes in nearby exclusive Punta Mita area, is a 15-minute drive from the Puerto Vallarta airport.

Why Puerto Vallarta? What makes this destination the choice over so many wonderful communities in the sun south of the border?

“In addition to the sun, Puerto Vallarta is all about access,” Collins said. “There are more than 15,000 air flights a year now, and the prices are still reasonable for the type of person our developments target. Cancun definitely is a market, but it’s more of a hotel market. Los Cabos is really more higher-end and not that easy for a lot of people to get to.”

Active Living International’s presence has led to additional interest in the Puerto Vallarta area for developers of the over-50 market. Front Porch Development, a Burbank-Calif.-based company specializing in the senior market, is partnering with Mexico-based Plenus on Luma, a 440-residence community on the ocean in Nuevo Vallarta.

According to Active Living International, “active adults” are persons over the age of 50, who are independent and comfortable with an active, social lifestyle. They are physically fit and have a variety of interests, including travel, golf, tennis, swimming and socializing. Active adults think in terms of longevity rather than life expectancy. Active adults typically retain their own homes but plan to acquire a second home and may downsize their living arrangements without sacrificing quality or convenience. They want quality, upscale options and amenities for a vacation or retirement lifestyle.

Sensara condominiums start at approximately 1,312 square feet for one-bedroom units and range up to 2,786 square feet for the three-bedroom homes. Luma’s condos start at 1,678 square feet for one-bedroom units and range up to up to 5,498 square feet for penthouses. Prices for both developments start in the $300,000 range with the Luma penthouses commanding more than $1.2 million. (For more information, see www.mexicobuyersguide.com.)

Collins said Sensara Vallarta is designed for the homeowner who wants a luxurious, tropical escape from the stress of the “real” world while also having easy access to an unmatched range of activities and amenities. In addition to having their own pools, clubhouse and restaurant, Sensara residents will have memberships for Paradise Village’s new sports club plus entry to the Playa Royale Beach Club that stretches along the Bay of Banderas.

Luma’s waterfront residents also will have first-rate amenities, including high-tech security, American-style health care, high-speed Internet, English-speaking staff and a “personal lifestyle” concierge program.

Snowbirds — by definition — take flight for the sun. However, with rising second-home prices in the United States, the lure to the sun must include reasonable costs, available health care and non-negotiable, quality amenities. The world’s leaders in over-50 projects are now betting on Mexico, and other countries south of the border certainly will follow.

Tom Kelly’s book “Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border” was written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com. Tom can be reached at news@tomkelly.com.

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Copyright 2007 Tom Kelly

Q: After being ignored at Home Depot, I am coming to you for help. I am turning a dining room into a bedroom, and I want to build an interior wall with a door.

I foundthe prehung doors OK. But I am a bit confused. The width of the jamb on thesedoors is 4 1/2 inches. I figure I will center the 2-by-4 framing in the middleof the jamb. That should leave me with 1/4 inch remaining on each side of thedoor jamb. I would then use 1/4-inch drywall on each side, which would make itflush with the jamb. Correct?

Thisshould be a fairly basic weekend project, but I can’t get past visualizing theinstallation of the door. Can you help? Also, what is the best way tosoundproof the new wall? Can you please correct me if I am off track?

A: Weapplaud your willingness to tackle this project yourself. It’s projects likethese that both of us cut our remodeling teeth on.

Indeed,you are off track. We know the terminology can get a little confusing, so we’lltry to give you a step-by-step guide for installing the new partition wall. Oneword of caution: Your time estimate may be a bit optimistic. Taking the projectfrom soup to nuts will probably take more than a weekend, but not much more.

Confusionabout the thickness of the wall stems from the assumption that a 2-by-4actually measures 2 inches by 4 inches. That was the dimension of the board inits rough-sawn state. After milling, a nominal 2-by-4 framing member actuallymeasures 1 1/2 inches by 3 1/2 inches. The 4 1/2-inch-wide jamb on the pre-hungdoor is made to accommodate 1/2-inch drywall on each face for a total wallthickness of 4 1/2 inches. So no 1/4-inch drywall for you.

Now, as toframing the wall: You’ll need a stud every 16 inches and top and bottom platesthat run the length of the wall. Since it doesn’t bear any weight, you can getby with a single top plate for this type of retrofit. Realize, though, that ifyou were framing the house from scratch, two top plates would be used with thetop one being notched into the top plate of the intersecting walls to stabilizethe partition wall.

Inaddition, you’ll need framing material for the door opening. Figure one studfor each running foot of wall. A 12-foot wall requires approximately 12 studs,but get a couple extra to account for mistakes. You can always take them backor keep them around for your next project.

The firstthing to do is decide exactly where the wall will be placed. Remove thebaseboard from the walls that the new wall will intersect. Do it gently so youcan reuse the base. Then, with a chalk line, snap a line on the floor. If thefloor is carpeted, cut the carpet along the line and fold it back to expose thesubfloor. There’ll be some carpet repair to do at the end.

You mayneed to install some blocking in the ceiling and in the walls to anchor thepartition wall. The top plate should be nailed either to the ceiling joists orto 2-by-4 blocking that bridges the ceiling joists. The studs on each end ofthe new wall should be nailed to the top and bottom plates of the intersectingwalls and to a block that you have installed in the framing halfway up thewall.

Todetermine if you need to install blocking in the ceiling, look at the directionof the ceiling joists. If the attic is accessible, take a quick look from uptop. That will tell you the direction they run. Ceiling joists tend to run thesame direction as the rafters, though not always. If the joists areperpendicular to the new wall, no blocking is required. Just nail the top plateinto the ceiling joists. If not, it may be time for a little surgery.

Try toinstall the blocking from the attic. This will save you from having to patchthe ceiling. If that’s not possible, you will have to remove enough drywall toexpose the bay between two ceiling joists. Toe nail these 2-by-4 blocks intothe ceiling joists every 4 feet. That will give you something solid to nail thetop plate to. Then patch the holes with drywall. Don’t tape and texture at thistime. Do the same thing on both intersecting walls.

Next,frame the wall. Using a level, from the chalk line you have snapped on thefloor, draw plumb lines from floor to ceiling on each side wall. Then, snap aline between the two walls.

Now layout the wall. Place the top and bottom plate side by side on the floor. Beginat one end and measure 15 1/4 inches and draw a line across both plates. Markan “X” on the side of the line away from the wall. This mark will ensurethat the center of the stud falls on the 16-inch mark. Thus, the studs will be16 inches on center. That allows the edge of the drywall to bear on a stud withenough room for the adjoining sheet to also attach.

From thefirst line you drew, mark lines every 16 inches to the end of the wall. Locatethe door. It’s helpful to place it next to a stud.

The dooropening should be framed 2 inches wider than the width of the door. Forexample, a 30-inch door takes a 32-inch framed opening. The framed height isalso 2 inches higher than the height of the door.

Studs arenailed to the floor plate and top plate, cripple studs measuring 80 1/2 inchesare nailed to the studs and a header is nailed to the top of the cripple studsand to the studs. When the bottom plate is removed, the frame opening should besquare, plumb and measure 82 inches high by 32 inches wide. The measurementsassume a standard 80-inch-high door.

Some folksnail the wall together on the floor and tilt it up into place. But in aconfined space like a finished room, this can be difficult. With jobs likeyours, we’ve found it easier to nail the wall together stick by stick. Ineither case, don’t cut out the bottom plate for the door until the wall isbuilt and you’re ready to install the door.

To buildthe wall piece by piece, start by enlisting a friend or two to help hold thetop plate to the ceiling and nail it to the joist (or blocking). Nail thebottom plate to the subfloor. Then nail the studs in place, leaving room forthe door opening. Finally, frame the door opening. A doubled 2-by-4 works forthe header. When the wall is completely framed and the bottom plate is secured,cut out the bottom plate from the door opening.

Putdrywall on both sides of the wall. We like screws for attaching the drywall.Nails tend to work their way out of the studs and make ugly dimples. Tape andapply whatever texture you like. This is the time to tape and texture thepatches created when the blocking was installed. Add baseboard, door casing andpaint — and you have two rooms where there was once one.

For alittle sound suppression, install nonfaced batt insulation in the cavity. Makesure it’s not compressed.

By theway, we’re disappointed at the lack of help you got at the home center. It’sbeen our experience that these huge retailers tend to hire sales folk who areex-tradesmen and generally know their stuff. Perhaps you just caught someone ona bad day.

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Copyright 2007 Bill and Kevin Burnett

DEAR BOB: I am fascinated with the topic of “stepped-up basis” to market value for inherited properties, which often comes up in your articles. Now I see why you constantly advise parents not to add their adult children to their home titles because doing so would deprive them of the new stepped-up basis. Two questions: (1) does stepped-up basis apply to properties held in a revocable living trust, and (2) is there a limit to the number of properties that can be inherited with a new stepped-up basis? –Marvin G.

DEAR MARVIN: (1) Stepped-up basis to market value on the date of the decedent’s death applies to inherited properties and other assets held in a revocable living trust.

PurchaseBob Bruss reports online.

(2) There is no limit to the number of inherited properties where the heirs will receive a new stepped-up basis. For full details, please consult a tax adviser who is familiar with estate taxation.

CAN A PARTITION LAWSUIT APPLY TO JOINT-TENANCY PROPERTY?

DEAR BOB: I have learned so much from your educational articles. When I read about a partition lawsuit to force the sale of a property, I thought I would never need that information. But now I do. About six months ago my two brothers and I inherited some land from an uncle. Unknown to me, title was taken by the three of us in joint tenancy with right of survivorship. I thought we all agreed to sell the land. But now one brother refuses to sell. He thinks we should hold the land for five or 10 years. It is vacant and is not suitable for rental as farmland so we would have to pay the property tax each year. Can two of us bring a partition lawsuit to force the sale of this joint tenancy land? –Karen V.

DEAR KAREN: As far as I am aware, the law of every state allows a partition lawsuit to obtain a court order to force the sale of property held in joint tenancy with right of survivorship.

If for some reason the law of the state where the land is located does not allow a partition sale of joint-tenancy property, you and the brother who wants to sell can break up the joint tenancy by deeding your shares to yourselves as tenants in common. For full details, please consult a real estate attorney in the state where the land is located.

MORTGAGE RELIEF ON A “SHORT SALE” IS TAXABLE

DEAR BOB: Some time ago you explained a “short sale” means the mortgage lender agrees to accept as payment in full a sale for a home’s market value even if it is below the mortgage balance. That’s what we did in late 2006 to sell our house in Ohio. It was worth less than our mortgage balance and we had to move to obtain a job. The lender agreed to accept a short sale for $183,785 although our mortgage balance was about $210,000. However, we received an IRS Form 1099 from the lender showing we had taxable “debt relief” income of $26,215. Is this right? How can we be taxed on money we didn’t receive? –Ron D.

DEAR RON: As an alternative to foreclosure when a mortgage borrower stops making payments, some lenders will accept a “short sale” of the property for less than the mortgage balance. They realize it is better for the lender to accept a short sale than to go through a foreclosure sale and lose even more money.

However, the IRS says debt relief is taxable. That’s why your mortgage lender had to send you that 1099 form showing the exact amount of your taxable debt relief. For more details, please consult your tax adviser.

The new Robert Bruss special report, “Everything You Need to Know About the Pros and Cons of Reverse Mortgages for Senior Citizen Homeowners,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(Formore 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

The best thing about “The Fearless Home Seller” by Elizabeth Razzi is the title. Although the book touches on all the important topics for home sellers, it is far from being aggressive and authoritative. A more accurate title would be “The Kind, Timid, Shy, Pussycat Home Seller” because the book skirts the tough but vital home sales topics such as how to price the home right, key questions to ask prospective listing agents, and selling in a difficult “buyer’s market.”

Razzi, once upon a time the hard-hitting personal finance editor at Kiplinger’s Personal Finance magazine specializing in real estate, has mellowed and become far less aggressive. In today’s tough market for home sellers, she leaves out many of the essential steps home sellers need to understand and implement if they are to sell for top dollar.

PurchaseBob Bruss reports online.

A big problem is the author has written about selling homes but has never been a real estate agent working in the trenches. As a result, the book is filled with vague generalities rather than specific details and real-life examples. Her lack of experience selling homes shows.

The biggest oversight is failure to show how to interview and select the best real estate agent to list your home for sale. Razzi does a fine job of explaining the differences in listing types, such as exclusive right to sell, exclusive agency, open listing, and even the dangerous net listing.

Logically, the next step to listing a home for sale is interviewing at least three successful local agents who sell homes in the vicinity. At this point, the book falls apart with no list of key questions to ask each agent interviewed, what to expect from each agent, and how to check out agents by phoning their recent home sellers.

In the chapter about the key step of pricing a home correctly, there is absolutely no mention of the traditional comparative market analysis (CMA), which each agent interviewed should prepare for the home seller. Razzi doesn’t even mention the agent should base his/her estimate of a home’s market value on recent sales prices of comparable nearby homes, with adjustments up or down to compensate for the pros and cons of the home being listed for sale.

However, the author does mention why home sellers should not rely on home-market-value estimates from Web sites such as Zillow.com. She also warns the local property tax assessment is usually not an accurate reflection of a home’s current market value. But she totally neglects to explain how home sellers can accurately set a realistic asking price, such as by comparing CMAs from at least three successful local agents.

The chapter about selling your home alone without a professional agent, called “FSBO,” or for sale by owner, is unlikely to give any home seller enough information to be successful. Like most of the book, this chapter is lacking in details and is especially weak in building confidence in the do-it-yourself seller.

There is even a chapter on selling your home at auction. It explains the bare fundamentals but doesn’t provide any real-life examples of successful home sellers who sold their homes at auction and did better than they could have by listing with a successful sales agent.

Chapter topics include “When to Sell”; “Estimating Your Bottom Line”; “Remodel or Repair Before Selling”; “Dressed to Kill”; “The World of Brokers and How They Are Paid”; “How to Size Up Real Estate Agents”; “The Listing”; “What’s the Right Price?” “FSBO-Are You Cut Out for It?” “Hot Market Versus Cool Market”; “Showings”; “Sweetening the Deal”; “Negotiating Your Way to Agreement”; “Laws All Sellers Must Heed”; “Seller’s Remorse and Squirrelly Buyers”; and “Wrapping It All Up.”

In the past, Razzi has won several real estate writing awards. But this book isn’t up to her previous high standards. It is a very basic “how to sell a home” book with nothing unique to commend it. On my scale of one to 10, this disappointing book from an author who can do much better rates only a six.

“The Fearless Home Seller,” by Elizabeth Razzi (Stewart, Tabori and Chang, New York), 2007, $16.95, 257 pages; available in stock or by special order at local bookstores, public libraries and www.Amazon.com.

(Formore 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,

I’m preparing to start a new-home inspection business. My background is in aviation maintenance and home remodeling. In researching the topic, I see many more negative comments than positive ones concerning the effectiveness and competence of home inspectors. I believe the national average is 30 percent of new inspectors go out of business in the first year due to litigation. It also appears that many home buyers are unaware of the number of unqualified inspectors. Is there any good news out there for us potential inspectors? –Bill

Dear Bill,

You have apparently done more homework than the average entry-level inspector. That’s commendable, because the more you learn now, the less likely you are to be sued out of business.

Home inspection, as you’ve discovered, is a minefield profession, with more than a few unqualified practitioners. The expectation of home buyers is that their inspector will find every overt and latent defect in a home, and attorneys stand ready to awaken the attention of those who do not meet this expectation. Liability for inspectors, therefore, is enormous. A common saying in the profession is that there are two kinds of home inspectors: those who have been sued and those who will be.

To become truly qualified as a home inspector requires years of full-time field experience. In the mean time, each home inspector is actually an inspector in training — pretending to the world to be fully qualified. Getting through this novitiate without being sued requires miraculous good luck. To make things worse, there are litigious individuals who will sue an inspector who has made no professional errors at all.

Nevertheless, there are those who manage to enter the business and make an ongoing success of it. Before becoming a home inspector, one should spend at least a year in preparation. Enroll in an inspection course from a qualified school such as Inspection Training Associates or American Home Inspection Training Institute, attend the building code classes offered at many community colleges, and join a recognized association such as the National Association of Home Inspectors, NAHI, the American Society of Home Inspectors, ASHI, or a recognized state association.

If you make the plunge, you’ll be doing so with your eyes more widely opened than most.

Dear Barry,

When I bought my home, the builder’s purchase contract said nothing about hazardous soil conditions. That was two years ago. Last month, my friend bought a new home in the same area and from the same builder, but this time the contract disclaimed liability for soil hazards such as asbestos fibers. Why would this concern have been added to the contract for a home in the same neighborhood? –Leon

Dear Leon,

Liability disclaimers are ever-expanding aspects of most business contracts, prompted by growing streams of litigation throughout the nation. Year by year, new contractual clauses are devised, in vain attempts to construct sue-proof business agreements. In this case, the builder’s attorney probably advised the addition of an asbestos clause, in response to somebody having sued somebody else, somewhere.

If you have concerns regarding possible asbestos in your neighborhood, soil samples can be tested for asbestos for a nominal fee. Just package a few random soil samples in sealable plastic bags, and mail them to a certified lab.

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

DEAR BOB: About two years ago, I helped my daughter (then age 23) buy a one-bedroom condo by co-signing with her on her mortgage. She was fresh out of college with a good job at an accounting firm. About 18 months ago, she foolishly quit that well-paying job because she didn’t like her boss. Since then, she hasn’t been able to find another job paying as well. As a result, she is now three months behind on her mortgage payments, plus the monthly condo fees. I didn’t know about this until I recently applied for a car loan and the dealer told me I was three months late on my mortgage payments and my FICO score is now only about 600. This was news to me, as I always had a good FICO score over 700. Now I learned from my daughter the mortgage lender has started foreclosure. What can I do? How can I get my name off the title? –Andrew S.

DEAR ANDREW: If your daughter is now working and has enough income to make the monthly mortgage payments, she should contact the mortgage lender to work out a forbearance agreement to stop the foreclosure.

PurchaseBob Bruss reports online.

However, if that is not possible, she should sell the condo to pay off the mortgage. Let the lender know when it is listed on the market for sale with a realty agent.

Your situation shows the sometimes-bad results of co-signing a mortgage for an irresponsible relative. Not only did your daughter ruin her credit, but she also ruined yours.

Even if you sign and record a quitclaim deed to your daughter to get your name off the title, you are still obligated on that mortgage. There is no way for you to get out of that. If it goes to foreclosure, then you will have a foreclosure on your credit report.

TRANSFER HOME-SALE LISTING INSTEAD OF CANCELING IT

DEAR BOB: What can I do with a realty agent who refuses to cancel my listing? The reason to terminate is my agent is very hard to get in touch with and she doesn’t respond to my phone calls. –Delia F.

DEAR DELIA: There is no valid excuse for your listing agent not returning your phone calls or e-mails within 24 hours. However, that alone is not a reason to cancel your listing.

Lack of due diligence is the most valid reason to cancel a listing. For example, if she didn’t put your listing into the local MLS (multiple listing service), failed to put it on the national www.Realtor.com Web site and didn’t properly market your home, that would be lack of due diligence.

But rather than trying to prove lack of due diligence, a better alternative is to contact the listing agent’s supervising broker and ask to transfer your listing to a better agent within the same brokerage firm.

Presuming you still want to sell your home, your home will then be properly marketed, the listing agent will get a referral fee when your home sells, and everyone should be satisfied.

IT’S BETTER TO INHERIT HOUSE THAN PUT NAME ON TITLE NOW

DEAR BOB: My parents have a quitclaim deed on their home, naming all seven of their children’s names. Their home is worth $250,000. They paid $40,000 many years ago. Four of the seven kids live out of state. Two brothers live close by and would probably take occupancy as their primary residence after mom and dad are gone. Can tax be avoided if the two brothers take title as their residence? Should it be put in their names now? What should we do? –Mary Beth U.

DEAR MARY BETH: Stop worrying about nothing. Forget about that quitclaim deed idea. I hope it wasn’t recorded. Ask your parents to tear it up.

Instead, they should put the title to their home into their revocable living trust to avoid probate after they are both gone. Also, if one becomes incapacitated, such as by Alzheimer’s disease or a severe stroke, the other can still manage the property, even selling it if necessary.

After they both pass on, presuming the living trust leaves the house and other living-trust assets to all seven children, you all will inherit it at the fair-market, “stepped-up value” on the date of the last co-owner’s death.

Then you can sell the house to the two brothers and owe little or no capital gains tax. Putting the brothers’ names on the title now would be a major mistake. For details, please consult an attorney specializing in living trusts.

WHAT RECOURSE AGAINST WARRANTY COMPANY THAT WON’T PAY?

DEAR BOB: We bought our 15-year-old house in June 2006 and purchased a $500 one-year home warranty policy. Last month, our heaters began acting strange, turning on and off rapidly within seconds. So we called the home warranty company. We paid a $45 service fee to either repair or replace it. A local contractor came out and said both units are unsafe and needed to be turned off until replaced. He collected our $45 while he got approval from the warranty company. That left us without heat over a very cold weekend. The next week the warranty company rejected our claim because we couldn’t prove we properly maintained the units. We were completely without heat for 10 days while we hired another contractor for thousands of dollars to replace the units. What recourse do we have? –Mary Ann B.

DEAR MARY ANN: Home warranty companies are notorious for denying legitimate claims like yours. Most homeowners don’t need to do anything to maintain modern furnaces or heating units except to change the filters every few months. The claim denial was ridiculous.

Now that you have heat, send copies of the furnace bills to the warranty company by registered mail demanding full payment within 10 business days. Politely explain there was nothing you could have done to further maintain the furnace, which, after 15 years, became defective. But don’t threaten. If you don’t receive payment within 10 days, it’s then time to sue that nasty warranty company in your local court. Please contact a local attorney for details.

DON’T SIGN BUYER-AGENCY CONTRACT WITH AGENT YOU DON’T KNOW

DEAR BOB: My wife and I are in the market to buy our first home. We have been visiting weekend open houses where we have met many listing agents. They all want to become our buyer’s agent. One agent keeps e-mailing and phoning us to spend several hours looking at houses. When we had an appointment at her office last Saturday, she said before she could show us any houses we had to sign a 60-day buyer-agency contract. It would tie us up to buy only through her. We hardly know this agent. My wife refused to sign and we walked out. Should we have signed that contract? –Kevin G.

DEAR KEVIN: No. Congratulations on walking out. Unless that agent came highly recommended by a trusted friend or business associate, there is no reason to get tied up with an agent you don’t know who could turn out to be a “dunce.”

Most agents are glad to show you homes without requiring any buyer’s agency contract, especially one for a long 60-day period.

AGE IS IRRELEVANT WHEN AVOIDING HOME-SALE TAX

DEAR BOB: I am a single 67-year-old and want to sell my primary residence. Can I avoid or defer capital gains tax and what costs am I looking at when I sell? –Joan T.

DEAR JOAN: Your age is irrelevant. If you owned and occupied your principal residence at least 24 of the last 60 months before its sale, thanks to Internal Revenue Code 121 up to $250,000 (up to $500,000 for a qualified married couple filing a joint tax return) will be tax-free.

If you own the home and carry back an installment-sale mortgage for your buyer, you can defer tax on any profit exceeding the exempt amount. Ask your tax adviser to explain further.

As for sales costs to expect, your major expense will be the real estate sales commission. Interview at least three successful local agents before selecting the best agent to receive a listing not exceeding 90 days. There will be additional minor sale costs, such as transfer and recording fees. Each agent should show you how much you will net approximately from your home sale.

The new Robert Bruss special report, “Everything You Need to Know About Reverse Mortgages for Senior Citizens,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(Formore 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