Real Estate Information

Most home owners opt to add some upgrades to a new home, which can be rolled into the mortgage opposed to paying for them later on their own. But the choices of what flooring, lighting, or other upgrades to choose can be overwhelming.

Designer Candice Olson, author and host of HGTV's "Candice Tells All," says lighting and extra wiring are key upgrades new home buyers should consider.

"Adding lighting -- or at least the wiring for it -- means you'll be able to have bathroom sconces instead of that one overhead light the builder gives you,” Olson says. “Your flat-screen TV can be where you want it. You'll have a floor outlet for the lamp in middle of the open room. And you won't be ripping out walls later to do all this."

Also, she says home owners shouldn’t forget about the exterior lighting either. "Outside lighting, plus landscaping, will set apart your house from the others in the neighborhood where buyers chose from plans A, B and C," Olson says.

As for flooring, Olson recommends hardwood floors for the main living areas, and cork floors for the basement, since there’s potential for water leakage in basements.

She also says the addition of taller baseboards, chair rails, crown molding, coffered ceilings, built-ins or a banquette also are smart investments for upgrades.

Source: “Decisions, Decisions: Add Character to Your Home With a Few Choice Upgrades,” Chicago Tribune (Feb. 4, 2011)

By Melissa Dittmann Tracey, REALTOR® Magazine

Simple, affordable do-it-yourself projects such as cleaning and decluttering and just adding lighting can help increase a home’s resale value, according to HomeGain’s annual home improvement and staging survey.

HomeGain, an online real estate marketing resource, surveyed nearly 600 real estate professionals in creating a list of the top do-it-yourself home improvement projects that offer the biggest return for your buck.

Overall, the home improvement projects that boasted the highest price returns were updates to the kitchen and bathroom–an estimated $3,435 price increase for resale. Painting the outside of the home ($2,222 price increase) also offered one of the highest returns, according to HomeGain’s Home Sale Maximizer study.

Here are six do-it-yourself projects–all under $1,000–that made HomeGain’s list, as well as the estimated increase to the home’s price at resale for each project.

1. Cleaning and decluttering: Remove any personal items, unclutter countertops, organize closets and shelves, and make the home sparkling clean.

Cost: $290

Estimated return: $1,990

2. Light and bright: Clean all windows inside and out, replace old curtains, update lighting fixtures, and remove anything that blocks light from the windows.

Cost: $375 cost

Estimated return: $1,550

3. Staging: Rearrange furniture, bring in new accessories and furnishings to enhance rooms, including artwork and playing soft music in the background.

Cost: $550 cost

Estimated return: $2,194

4. Landscaping: Punch up the home’s curb appeal in the front and backyards by adding bark mulch, bushes and flowers, and ensuring current plants and grass are well-cared for and manicured.

Cost: $540

Estimated return: $1,932 

5. Repair electrical or plumbing: Repair any leaks under the bathroom or kitchen sinks, remove any mildew stains, and ensure all plumbing is in good working condition. Update the home’s electrical with new wiring for modern appliances, fix any lights or outlets that don’t work, and replace old plug points with new safety fixtures.

Cost: $535

Estimated return: $1,505

6. Replace or shampoo dirty carpets: Steam-clean carpets, replace any worn carpets, and repair any floor creaks.

Cost: $647

Estimated return: $1,739

The Federal Emergency Management Agency has been remapping America’s aging floodplains for the last eight years, taking into account changes along waterways brought by development, storm patterns, and natural processes.

While FEMA is only about two-thirds of the way through the project nationwide, some home owners are already finding out that their property’s boundaries are now being designated as flood zones. The redrawn floodplains are leading some home owners to have to buy costly flood insurance, which can equate to hundreds or even thousands of dollars annually.

Home owner Amy Marren says she was surprised when she recently received notice from her lender that she needed flood insurance for her home in Wayne, Pa. She now has to pay a $2,400 annual policy, after an insurance agent told her the house was zoned like it were a “beach house.”

"It's an emotional issue," says David Bollinger, a hazard-mitigation specialist in FEMA's Philadelphia region. "People are upset with us at times."

To find flood maps and other information from FEMA, visit www.fema.gov.

Source: “Remapping of Floodplains Costly for Some Homeowners,” The Philadelphia Inquirer (Feb. 6, 2011)

While renting offers zero tax breaks, buying a home offers several tax benefits that can make homeownership more affordable. Real estate professionals need to be careful in providing detailed tax advice to clients to avoid lawsuits, but you can ensure clients have the information they need to understand the all of the tax benefits of home ownership.

The following is a few of the tax benefits to home ownership, according to Stephen Fishman, an author and lawyer who specializes in small business, tax and intellectual property law.

▪ Home mortgage interest deduction: Home owners can take an itemized deduction on interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home. This deduction could potentially reduce the cost of borrowing by one-third or more.
▪ Property tax deduction: Home owners can deduct from their federal income taxes the state and local property taxes that you pay on the home.
▪ Deductible home buying expenses: Several closing costs in a home purchase are also deductible, such as loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.
▪ $250,000/$500,000 home-sale exclusion: Home owners who have lived in their home for two of the prior five years prior to its sale do not have to pay income tax on the majority of their profit — $250,000 for single home owners and $500,000 for married homeowners who file jointly.
▪ 14 days of free rental income: Home owners can rent the home up to 14 days during the year and pay no tax at all on the rental income.

Source: “The Tax Benefits of Homeownership,” Inman News (Feb. 4, 2011)

While Las Vegas boasts the worst foreclosure rate in the country, several other cities are creeping up with the fastest growing rates of foreclosures — and they’re in some unexpected places.

These cities mostly have one thing in common: They’re all battling a growing number of job losses among their residents that are leading more home owners to default on their mortgages.

Here are five cities with some of the fastest-growing foreclosure rates in the country:

1. Spartanburg, S.C.
Foreclosure rate: 1 in 60 homes

This city in upstate South Carolina faced a 228 percent increase in foreclosure filings in 2010 — making it the nation's fastest-growing foreclosure rate. In 2009, the city’s unemployment rate hit 12.7 percent in 2009, dropping to 10.9 percent in 2010, yet still well above the national average.

2. Albuquerque, N.M.
Foreclosure rate: 1 in 46 homes

Albuquerque had a 60 percent increase in foreclosures in 2010. This city has had one of the fastest-growing metro areas over the past decade, attracting young professionals and retirees, but its economy was hard hit by the recession.

3. Myrtle Beach, S.C.
Foreclosure rate: 2.25 percent

Myrtle Beach had a 44 percent increase in foreclosures in 2010. Once a big draw for vacation-home buyers, the city’s second-home market was crushed by the recession when tourism dropped and unemployment increased.

4. Savannah, Ga.
Foreclosure rate: 1 in 40 homes

Savannah had a 37 percent increase in foreclosure filings in 2010. Its unemployment rate is still on the rise; in November it rose to 8.9 percent. Many of the foreclosures in the city are in its Historic District or The Landings, popular areas where home prices rose quickly during the housing boom days.

5. Charlotte, N.C.
Foreclosure rate: 1 in 50 homes

Charlotte also had a 37 percent increase in foreclosure filings in 2010. Its unemployment rate is dropping; it was 10 percent in November. Charlotte has become the 33rd largest metro area in the country, growing by more than 30 percent in the past 10 years.

Source: “10 Surprise Foreclosure Hotspots,” CNN Money (Feb. 1, 2011)

States that once topped charts for new home sales gains are absent from this year’s list, according to new research from Housing Intelligence. While California, Nevada, Arizona, and Florida are handling a flood of distressed properties, states with strong employment growth are emerging as the strongest markets in new-home sales.

Here are the top five states with the largest new home closings and the percentage of increase in volume compared from 2009 to 2010, according to Housing Intelligence:

1. Hawaii: 26 percent
2. North Dakota: 21 percent
3. Wyoming: 11 percent
4. Washington, D.C.: 10 percent
5. Delaware: 2 percent

The key -- for at least the top four states on the list -- is they boast low unemployment rates compared to the national average.

Housing Intelligence, an independent research company, says in its weekly Key Indicator Alert that “it’s certainly no surprise that states with healthier labor markets have healthier housing markets, but it underscores the vital need for better job growth elsewhere across the nation.”

Source: “Only Five States Nab Net New Home Gain,” National Mortgage News (Jan. 29, 2011)

 
Many customers don’t realize that closing costs are negotiable, mortgage experts tell The New York Times.

“There’s a lot of room for negotiation in the costs of closing and consumers should examine every charge and not hesitate to challenge them and try to bring them down,” says Barry Zigas, director of housing policy at the Consumer Federation of America.

Closing costs can really add up when buying or refinancing, running anywhere from 3 to 6 percent of the price of the property. For example, in 2010 the average closing costs for a $200,000 purchase rose nearly 37 percent to $3,741, according to Bankrate.com.

Many of the fees associated with closing are negotiable and consumers should review line-by-line estimates and challenge them.

Simply ask the lender which fees are negotiable and which are fixed to find out where there’s wiggle room. Questions such as “Who is getting paid this fee, and why am I being asked to pay it?” can start the conversation, experts say.
“It’s not a time to be polite,” says Kathleen Day, a spokeswoman for the Center for Responsible Lending. “You have to have a strong stomach and a stiff spine and not bow to pressure from the other side of the table to close the deal.”

Lenders are required within three days of receiving a loan application to provide an estimate of closing costs for buying or refinancing a home. Good-faith-estimate forms provided by lenders can be used to easily compare closing costs among lenders in shopping around for the best deal too.

Source: “Curbing Close Costs,” The New York Times (Jan. 27, 2011)

While home prices are expected to continue to fall in most metro areas, Clear Capital’s Home Data Index report says a few cities are already on the rebound and showing some gains in home values.

“There really is this segmentation of these markets occurring where the one-size-fits-all national level numbers to represent all numbers really isn’t valid anymore,” Alex Villacorta, senior statistician at Clear Capital, told MSNBC. “Overall we’re seeing prices start to stabilize going into 2011, but unfortunately some of those markets will stabilize in the downward direction where others will see a sustained recovery.”

Clear Capital takes into account unemployment rates, foreclosure rates, and real estate inventory in its index.

The following is a list of 10 cities that Clear Capital expects will rise in property value in 2011:

1. Washington, D.C.: 6.5 percent price increase
2. Houston: 3.6 percent price increase
3. Honolulu: 3.4 percent price increase
4. Memphis, Tenn.: 3.2 percent price increase
5. Columbus, Ohio: 2.1 percent price increase
6. Dallas: 1.4 percent price increase
7. New York: 1.3 percent price increase
8. Birmingham, Ala.: 0.9 percent price increase
9. Pittsburgh: 0.8 percent price increase
10. New Orleans: 0.5 percent price increase

Meanwhile, Clear Capital reports that real estate markets in Florida and the Western parts of the U.S.—such as cities in Arizona and “Breadbasket metros” like Oklahoma City, Okla., and Dayton, Ohio—likely will see the largest price drops in home values over the year. Virginia Beach, Va., is expected to have the highest drop in 2011, with a 12.8 percent price decrease, according to Clear Capital report.

Source: “Where Home Prices Will Rise, Fall the Most in 2011,” MSNBC (Jan. 26, 2011)

The foreclosure crisis is now spreading to cities that were once relatively unscathed from the crisis. Seattle, Houston, and Chicago have joined the list of other cities in the United States plagued by a growing number of foreclosures and home owners unable to make their mortgage payments.

Foreclosure activity increased in 149 of the country’s 206 largest metro areas last year, reported RealtyTrac Inc., a foreclosure listing firm.

In the Houston-Sugar Land-Baytown metro area, the foreclosure rate jumped 26 percent from 2009 — the largest increase in foreclosures among the top 20 metro areas, according to RealtyTrac.

In Seattle-Tacoma-Bellevue, the foreclosure rate increased nearly 23 percent — ranking second in areas with the largest increases. In Georgia, the Atlanta-Sandy Springs-Marietta metro area was third with a 21 percent spike.

In the Chicago-Naperville-Joliet area, foreclosure activity rose 16 percent and home repossessions climbed nearly 20 percent, making it the second-highest city with the largest number of bank repossessions. (Phoenix-Mesa-Scottsdale in Arizona had the highest number of bank repossessions overall.)

Bad mortgages are no longer taking most of the blame for the spike in foreclosures either.

"We've actually had a sea change in what's causing foreclosures, from the overheated home prices and bad loans to a second wave of foreclosures actually caused by unemployment and economic displacement," Rick Sharga, a senior vice president at RealtyTrac, told MSNBC.

As unemployment and the economy improve, Sharga expects metro areas like Houston, Seattle, and Chicago to bounce back quickly. However, he expects the traditional foreclosure hotbeds — California, Florida, Nevada, and Arizona — to take longer to recover. Those states account for 19 of the top 20 metro areas with the highest foreclosure rates in 2010.

The highest overall foreclosure rate in the nation? Las Vegas-Paradise, Nev.: One out of every nine households received a foreclosure-related notice in 2010, which is nearly five times the national average, RealtyTrac reports.

Source: “Foreclosures Spread Into Previously Safe Areas,” MSNBC (Jan. 27, 2011)

In the housing downturn, many home owners have not only had to leave their homes behind, but also their pets. In foreclosed properties, more pets are being found locked in basements, garages, or in backyards.

A new program, No Paws Left Behind, recently announced its 1,000^th foreclosure animal rescue. The program rescues abandoned animals — everything from dogs and cats to llamas and pot-bellied pigs — and places them in “no kill” shelters until foster care can be arranged.

"Sadly, the current housing crisis has severely affected countless home owners creating a trickle down negative effect on helpless animals," says Cheryl Lang, the founder of The No Paws Left Behind program and also CEO of Integrated Mortgage Solutions, a provider of REO property inspections. "During routine housing inspections, we frequently discover animals left behind in deplorable conditions with no food and at times inadequate shelter.”

Lang says they receive more than 20 calls a week across the nation regarding abandoned pets found in foreclosure properties.

Source: “National Non-Profit Committed to Helping the Silent Victims of America’s Foreclosure Crisis Hits Major Milestone,” PRNewswire.com (Jan. 10, 2011)