Book Review: 'What's a Homeowner to Do?'
By Tara-Nicholle Nelson
Inman News®
Share This
Book Review
Title: "What's a Homeowner to Do?"
Author: Stephen Fanuka and Edward Lewine
Publisher: Artisan, 2011; 432 pages; $17.95
Nearly every mother will attest that at some point in her parenting career, often while still pregnant, every worst-case scenario that could ever possibly happen to her progeny (or progeny-to-be) has run through her mind.
Laid-back moms take a deep breath and dismiss such fears as fanciful.
But many others take the Scout-inspired "be prepared" approach, taking serious measures against kidnapping by tagging their kids with GPS-enabled trackers; against school admission drama by sticking their toddlers in enrichment classes ranging from Kinder Kung Fu to Mandarin; and against the ills of being whatever the opposite of well-rounded is (ill-rounded? squared?) by enrolling them in hip-hop dance, golf, Latin and Hebrew school -- all at the same time, all before they reach grade school.
This is yet one more way in which buying a home has parallels to birthing -- and raising -- children. Years before they ever buy, when they've barely begun padding their down-payment nest eggs, buyers-to-be report tossing and turning, waking up with night sweats, concerned about all the calamities that might befall their home.
What if a hurricane hits? An earthquake? What if they've been completely spoiled by apartment living, neglect to spend 10 hours every weekend working on their house and let the place fall into ruin?
What about all the more mundane, and more-likely-to-arise events that go along with homeownership: Will their effort to unstick a window send them to the hospital, or their do-it-yourself efforts to replace a single roof shingle spiral into a bigger leak than they had before?
These nightmarish concerns of homebuyers everywhere are precisely the issues addressed in the meaty little tome, "What's a Homeowner to Do?" by DIY Network star/contractor Stephen Fanuka and co-author Edward Lewine.
If you've ever bought one of those little gift books that has a year's worth of daily inspirational messages, this book will remind you of one of those -- on steroids. It's a small-format book filled with 442 tips, diagrams, and easy-to-use, bite-sized tutorials for do-it-yourself home improvement, maintenance and safety projects.
Fanuka, the star of the show "Million Dollar Contractor," teams up with Edward Lewine (who writes a couple of home improvement columns for The New York Times Magazine) to comprehensively catalog and address precisely the sorts of items that keep buyers and homeowners awake at night, offering their insomnia-soothing home improvement knowledge in a highly digestible format.
Throughout, they flag items that homeowners need to maintain on a regular basis to avoid disasters, parse out which items owners can do themselves (and which they should refer to the pros), empower them to ask the right questions and have the right conversations with those pros, and walk them through simple instructions for doing it themselves, where applicable.
The book starts out with a "green manifesto" that briefs readers on all the ways in which their homes impact the environment by offering them a long bullet point list of choices they can make to green their homes. It then moves on to cover the down-and-dirty, do-it-yourself tutorials with a chapter on how to assemble and use a basic toolkit, including what not to do (e.g., get "mesmerized by fasteners").
Then, the book proceeds to offer hundreds of mini-lessons categorized by area of a home, from the exterior, to windows, plumbing, electrical, HVAC, and such subjects as carpentry, doors and locks, walls, basements, garages, yards, and safety and security issues.
Many of these lessons, which run from how to locate a roof leak to how a door lock works, come complete with the authors' "Tricks of the Trade," pithy one-liners with uber-handy suggestions, workarounds, troubleshooting, insider secrets for handling common issues and even warnings for avoiding common complications.
And the range of topics the authors cover maps directly to the range of concerns real homeowners have, from maintaining their roofs to installing baseboards, cabinet doors, landscape lighting and supports for adjustable shelves.
Often, these sorts of tips books can be tough to use for readers who have a high need for information -- those who want to know why they should do things a particular way, or why they should trust the proffered advice.
But interspersed throughout the book's tips on what to do to your home are highly interesting briefings on "how" things in your home work. In short-and-sweet plain English, Fanuka and Lewine answer questions like "What's so important about rain gutters?" and "How are wooden stairs constructed?"
If you own a home and feel at loose ends when it comes to knowing what you should be doing to keep it in tip-top shape, "What's a Homeowner to Do" is an accessible, yet smart, primer and reference guide you'll turn to time and time again. If you're still in house hunt mode, definitely put it on your housewarming registry -- it'll save you some sleepless nights, and maybe even some money!
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
Tuesday, January 31, 2012
Wednesday, January 25, 2012
Refinance or modify while it's still possible
Refinance or modify while it's still possible
As income and property values change, so do your chances to qualify
By Jack Guttentag
Inman News®
Editor's note: This is the first of a multipart series.
Interest rates have been very low for several years, and right now they are lower than ever, yet millions of mortgage borrowers who could profit from a refinance haven't.
Similarly, millions of borrowers who are having trouble making their mortgage payments but want to remain in their homes could have their mortgages modified to make the payment affordable but haven't.
The reasons in both cases probably include apathy, resignation and ignorance, but this article is about ignorance only. I find that many borrowers are even hazy about the difference between a refinance and a modification.
Refinance vs. modification
In a refinance, you take out a new mortgage, either from your current lender or from a different one, and use the proceeds to pay off your existing mortgage. In a modification, the terms of your current mortgage are changed by your existing servicer, usually for the purpose of reducing the payment.
Most often this involves an interest-rate reduction, but it may also include a term extension and, in some cases, the loan balance may be reduced.
A refinance is a market-based transaction entered into by a lender who wants the new loan. A modification is an administrative measure designed to prevent the costs of a foreclosure. In both cases, however, the borrower must document an ability to make the new payment.
Refinance profitably if you can
In general, borrowers should refinance if a profitable refinance option is available to them. A refinancing will not drop a borrower's credit score, while a modification will. Refinancing borrowers can deal with their existing lenders but are free to shop alternatives.
A modification is a lot more complicated, takes a lot more time, and borrowers are wholly dependent on their existing servicers, which means that they have no bargaining power.
Qualifying for a refinance vs. qualifying for a modification
Declining home values have severely restricted the ability of many borrowers to refinance by eroding the equity in their homes. (Equity is property value less the mortgage balances.) With an important exception noted below, borrowers who have negative equity cannot qualify.
Borrowers with equity of 3 percent to 20 percent can qualify if they purchase mortgage insurance, which in some but not all cases will eliminate the profit from the refinance.
Borrowers with equity of 20 percent or more are best positioned to refinance profitably. In contrast, insufficient or negative equity will not bar a modification.
A low credit score will also prevent a refinance, but not a modification. Because lenders have become extremely risk-averse in the post-crisis market, credit scores have increased in importance and are related to equity.
On a Federal Housing Administration (FHA) mortgage, for example, the minimum score is usually 620, but a 620 score may require equity of 15 percent. If the borrower's equity is the minimum of 3 percent, the required credit score is likely to be 660.
Borrowers who have suffered income declines to the point where the ratio of housing expense to income is viewed as excessively high will have their refinance applications rejected. However, an income decline of this magnitude will not necessarily prevent a loan modification.
On the contrary, an income decline that weakens the ability of the borrower to continue current payments but still enables the borrower to afford lower payments is the major problem loan modifications are designed to meet.
Borrowers can check on whether they qualify for a refinance using the new qualification calculator on my website.
The HARP exception
The earlier statement that borrowers with negative equity cannot refinance has a major exception: If their loan is owned by Fannie Mae or Freddie Mac, they are eligible for refinancing under the Home Affordable Refinance Program (HARP). This program was recently extended and liberalized.
The previous negative equity ceiling of 25 percent was eliminated for fixed-rate mortgages; fees were reduced; the requirement for a new appraisal was eliminated in some cases; and incentives were provided to the lenders servicing the loans to refinance them.
Qualifying for a modification
Determining whether a borrower is eligible for a modification is a complicated exercise on which the rules are anything but clear. The government-supported program, which differs from the strictly private programs, requires that the borrower's income be large enough to afford a reduced payment but it cannot exceed 3.23 times the current mortgage payment. Further, the borrower cannot have "sufficient liquid assets" to make the payments, whatever that means.
In addition, the owner of the loan must be better off with the modification than without it, which is determined by a complicated algorithm that is available to servicers but not to borrowers or to me. The servicer has the final say.
More on navigating the modification maze next week.
(Special thanks to Igor Roitburg.)
The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.
As income and property values change, so do your chances to qualify
By Jack Guttentag
Inman News®
Editor's note: This is the first of a multipart series.
Interest rates have been very low for several years, and right now they are lower than ever, yet millions of mortgage borrowers who could profit from a refinance haven't.
Similarly, millions of borrowers who are having trouble making their mortgage payments but want to remain in their homes could have their mortgages modified to make the payment affordable but haven't.
The reasons in both cases probably include apathy, resignation and ignorance, but this article is about ignorance only. I find that many borrowers are even hazy about the difference between a refinance and a modification.
Refinance vs. modification
In a refinance, you take out a new mortgage, either from your current lender or from a different one, and use the proceeds to pay off your existing mortgage. In a modification, the terms of your current mortgage are changed by your existing servicer, usually for the purpose of reducing the payment.
Most often this involves an interest-rate reduction, but it may also include a term extension and, in some cases, the loan balance may be reduced.
A refinance is a market-based transaction entered into by a lender who wants the new loan. A modification is an administrative measure designed to prevent the costs of a foreclosure. In both cases, however, the borrower must document an ability to make the new payment.
Refinance profitably if you can
In general, borrowers should refinance if a profitable refinance option is available to them. A refinancing will not drop a borrower's credit score, while a modification will. Refinancing borrowers can deal with their existing lenders but are free to shop alternatives.
A modification is a lot more complicated, takes a lot more time, and borrowers are wholly dependent on their existing servicers, which means that they have no bargaining power.
Qualifying for a refinance vs. qualifying for a modification
Declining home values have severely restricted the ability of many borrowers to refinance by eroding the equity in their homes. (Equity is property value less the mortgage balances.) With an important exception noted below, borrowers who have negative equity cannot qualify.
Borrowers with equity of 3 percent to 20 percent can qualify if they purchase mortgage insurance, which in some but not all cases will eliminate the profit from the refinance.
Borrowers with equity of 20 percent or more are best positioned to refinance profitably. In contrast, insufficient or negative equity will not bar a modification.
A low credit score will also prevent a refinance, but not a modification. Because lenders have become extremely risk-averse in the post-crisis market, credit scores have increased in importance and are related to equity.
On a Federal Housing Administration (FHA) mortgage, for example, the minimum score is usually 620, but a 620 score may require equity of 15 percent. If the borrower's equity is the minimum of 3 percent, the required credit score is likely to be 660.
Borrowers who have suffered income declines to the point where the ratio of housing expense to income is viewed as excessively high will have their refinance applications rejected. However, an income decline of this magnitude will not necessarily prevent a loan modification.
On the contrary, an income decline that weakens the ability of the borrower to continue current payments but still enables the borrower to afford lower payments is the major problem loan modifications are designed to meet.
Borrowers can check on whether they qualify for a refinance using the new qualification calculator on my website.
The HARP exception
The earlier statement that borrowers with negative equity cannot refinance has a major exception: If their loan is owned by Fannie Mae or Freddie Mac, they are eligible for refinancing under the Home Affordable Refinance Program (HARP). This program was recently extended and liberalized.
The previous negative equity ceiling of 25 percent was eliminated for fixed-rate mortgages; fees were reduced; the requirement for a new appraisal was eliminated in some cases; and incentives were provided to the lenders servicing the loans to refinance them.
Qualifying for a modification
Determining whether a borrower is eligible for a modification is a complicated exercise on which the rules are anything but clear. The government-supported program, which differs from the strictly private programs, requires that the borrower's income be large enough to afford a reduced payment but it cannot exceed 3.23 times the current mortgage payment. Further, the borrower cannot have "sufficient liquid assets" to make the payments, whatever that means.
In addition, the owner of the loan must be better off with the modification than without it, which is determined by a complicated algorithm that is available to servicers but not to borrowers or to me. The servicer has the final say.
More on navigating the modification maze next week.
(Special thanks to Igor Roitburg.)
The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.
Wednesday, January 18, 2012
Perspectives on a 'better' real estate market
Housing recovery may not bring a sales spike
By Glenn Roberts Jr.
NEW YORK -- When the real estate market improves has a lot to do with your perspective on the market, said Alex Perriello, president and CEO for Realogy Franchise Group, during a panel presentation Thursday at the Real Estate Connect conference.
"Oftentimes I'm asked, 'When's the market going to get better?' It all depends on how you define the word 'better,' " Perriello said during a panel presentation titled "The State of Real Estate: The Year Ahead."
"If you define 'better' as 'When will I not have to deal with foreclosures, short sales, underwater homes, people with damaged credit, (problems with appraisals), tough lending standards?' the answer to that is 'No time soon' -- at least for the next two or three years, and in some places, depending on where you live, it could be much longer than that."
He added, "If you define 'better' as 'When am I going to make more money in this business?' he noted that even if real estate sales fall to 4 million this year -- less than the 4.2 million in 2011, $35 billion in sales commissions are going to be earned by someone in this industry over the next 12 months." Realogy operates company-owned offices and franchise networks under the Coldwell Banker, Century 21, Sotheby's International Realty, and Better Homes and Gardens Real Estate brands, among others.
Diana Olick, real estate correspondent for CNBC and author of the "Realty Check" blog at CNBC.com, who also participated in the panel session, said she doesn't expect a sharp rebound once the real estate recovery takes hold.
She said she expects that at some point in the middle of 2012 "we are going to see the price stabilization we need, then people are going to start to buy," adding, "I don't think we're going to see a great surge up ... we're going to see pockets of strength in certain markets."
The factors that she expects will keep the real estate market subdued: deflated consumer confidence, and the need to work through the stream of distressed properties.
Olick and Perriello agreed that reduction of principal for distressed homeowners has proven one of the most effective deterrents to foreclosure, and panelists generally agreed that the foreclosure process is taking far too long to run its course in many areas.
Olick said that the problem is that many homeowners appear to be "staying in their houses and gaming the system," living in their homes without paying the mortgage for several years, in some cases. "That's a big problem right now," Olick said.
She also said she believes that investors will be at the forefront of the real estate recovery.
While investors -- namely house-flipping speculators -- have been vilified for their role in driving up prices during the boom years, Olick said that "it is the private equity, the institutional markets, coming in and taking the distress out of the markets that we need right now. That's going to be the strength in the market this year, and that's a good thing."
Margaret Kelly, CEO for Re/Max LLC and a fellow panelist, said that real estate professionals "have to embrace investors," agreeing that investors have an important role to play in working through excess inventory. Many investor-bought properties are converted to rental housing, she noted.
Kelly said she believes the short-sale process must be improved and expedited, and appraisal reform is also needed. "Appraisals have been a nightmare," she said.
Perriello's primary hope for the housing market: "If I could fix one thing, it would be a clear, concise national housing policy from Washington, D.C.
"If you think about the last three or four years, it's been a mixed bag," he said. "On the good side we've had government agencies buying up mortgage-backed securities, which has provided capital to the market, which has been a good thing -- it's kept interest rates low."
The series of federal homebuyer tax credit programs have also provided some welcome relief, he said.
"On the negative side, you've got legislation that's been passed -- like Dodd-Frank would be a perfect example -- that's now in the hands of the regulators. And if the regulators have their way it's going to be, I believe, very damaging for housing and it's going to make mortgage lending even more difficult for the homebuyer to get a loan and it's going to be more expensive."
There have also been mixed messages over the mortgage interest tax deduction, and policy reversals over loan limits, he said.
"People are concerned, there's doubt in the market, and whenever there's uncertainty and doubt in the market people sit back and say, 'I think I'll wait,' " he said.
By Glenn Roberts Jr.
NEW YORK -- When the real estate market improves has a lot to do with your perspective on the market, said Alex Perriello, president and CEO for Realogy Franchise Group, during a panel presentation Thursday at the Real Estate Connect conference.
"Oftentimes I'm asked, 'When's the market going to get better?' It all depends on how you define the word 'better,' " Perriello said during a panel presentation titled "The State of Real Estate: The Year Ahead."
"If you define 'better' as 'When will I not have to deal with foreclosures, short sales, underwater homes, people with damaged credit, (problems with appraisals), tough lending standards?' the answer to that is 'No time soon' -- at least for the next two or three years, and in some places, depending on where you live, it could be much longer than that."
He added, "If you define 'better' as 'When am I going to make more money in this business?' he noted that even if real estate sales fall to 4 million this year -- less than the 4.2 million in 2011, $35 billion in sales commissions are going to be earned by someone in this industry over the next 12 months." Realogy operates company-owned offices and franchise networks under the Coldwell Banker, Century 21, Sotheby's International Realty, and Better Homes and Gardens Real Estate brands, among others.
Diana Olick, real estate correspondent for CNBC and author of the "Realty Check" blog at CNBC.com, who also participated in the panel session, said she doesn't expect a sharp rebound once the real estate recovery takes hold.
She said she expects that at some point in the middle of 2012 "we are going to see the price stabilization we need, then people are going to start to buy," adding, "I don't think we're going to see a great surge up ... we're going to see pockets of strength in certain markets."
The factors that she expects will keep the real estate market subdued: deflated consumer confidence, and the need to work through the stream of distressed properties.
Olick and Perriello agreed that reduction of principal for distressed homeowners has proven one of the most effective deterrents to foreclosure, and panelists generally agreed that the foreclosure process is taking far too long to run its course in many areas.
Olick said that the problem is that many homeowners appear to be "staying in their houses and gaming the system," living in their homes without paying the mortgage for several years, in some cases. "That's a big problem right now," Olick said.
She also said she believes that investors will be at the forefront of the real estate recovery.
While investors -- namely house-flipping speculators -- have been vilified for their role in driving up prices during the boom years, Olick said that "it is the private equity, the institutional markets, coming in and taking the distress out of the markets that we need right now. That's going to be the strength in the market this year, and that's a good thing."
Margaret Kelly, CEO for Re/Max LLC and a fellow panelist, said that real estate professionals "have to embrace investors," agreeing that investors have an important role to play in working through excess inventory. Many investor-bought properties are converted to rental housing, she noted.
Kelly said she believes the short-sale process must be improved and expedited, and appraisal reform is also needed. "Appraisals have been a nightmare," she said.
Perriello's primary hope for the housing market: "If I could fix one thing, it would be a clear, concise national housing policy from Washington, D.C.
"If you think about the last three or four years, it's been a mixed bag," he said. "On the good side we've had government agencies buying up mortgage-backed securities, which has provided capital to the market, which has been a good thing -- it's kept interest rates low."
The series of federal homebuyer tax credit programs have also provided some welcome relief, he said.
"On the negative side, you've got legislation that's been passed -- like Dodd-Frank would be a perfect example -- that's now in the hands of the regulators. And if the regulators have their way it's going to be, I believe, very damaging for housing and it's going to make mortgage lending even more difficult for the homebuyer to get a loan and it's going to be more expensive."
There have also been mixed messages over the mortgage interest tax deduction, and policy reversals over loan limits, he said.
"People are concerned, there's doubt in the market, and whenever there's uncertainty and doubt in the market people sit back and say, 'I think I'll wait,' " he said.
| Contact Glenn Roberts Jr.: |
Wednesday, January 4, 2012
2 best ways to boost home's energy efficiency
Why replacing windows is not one of them
By Arrol GellnerInman News®
Share This
Even in these days of belt tightening, installing replacement windows remains a virtual mania among homeowners. Take a walk through any suburb built before 1980, and you may find that half the houses no longer have their original windows. Alas, the usual replacements -- extruded PVC or "vinyl" windows -- are dismayingly easy to spot, what with their wavy, cellophane-like glass and glaring white plastic frames. Considering the impact window replacement can have on your home's appearance, it shouldn't be taken lightly. To wit: The last big window-replacement fad happened during the 1960s, when that era's perceived "modern" upgrade -- sliding aluminum windows -- were retrofitted to countless traditional homes, from Victorians to bungalows. The aesthetic fallout from this campaign is still painfully obvious in many old neighborhoods. In retrospect, of course, aluminum sliders installed in a traditional home are rightly seen as a glaring anachronism, and frequently bring a penalty in resale value over homes with their original windows. Today, thanks to the same kind of offhand, insensitive and often just plain unnecessary ways in which vinyl windows are installed in older homes of all eras, they've essentially become the modern-day version of the aluminum slider. And with a little historic distance, the aesthetic results will be just as regrettable. Window replacement is often cannily advertised as a great energy-saving investment, which is probably why so many well-intentioned homeowners choose this route. And it's true enough that switching from single-glazed windows to double-glazed ones will save roughly half the energy lost through the glass. But here's the catch: In the average house, windows typically make up a relatively small fraction of the total heat loss. Hence, dollar for dollar, there are far more cost-effective ways to improve your home's energy efficiency. Upgrading attic insulation ranks first among them, since ceilings are typically the single greatest source of heat loss. The current standard for attic insulation is R-30; so if your house has appreciably less than this, adding insulation will be far more cost effective than replacing your windows. The same holds true if your furnace and ductwork predate 1980 or so. Modern furnaces now have thermal efficiencies in the neighborhood of 95 percent, versus typically dismal efficiencies in the 70s and even down into the 50s for some older gravity furnaces). Because a furnace upgrade addresses the root of inefficiency rather than just nipping at the leaves, the resulting energy savings can be truly dramatic. One more thing to consider: Aside from offering double glazing, there's very little that's green about vinyl windows. Vinyl is, of course, the plastics industry's more euphonious name for polyvinyl chloride, which a number of environmental authorities consider to be the most toxic plastic in the environment. Bury it in a landfill, and it just sits there. Burn it, and it produces dioxin, a toxic chemical compound that's a known teratogen, mutagen and carcinogen. The bottom line? Think twice about replacing your current windows with vinyl ones for energy-efficiency reasons alone. Chances are you'll get more bang for your energy buck with simpler upgrades that don't even show on the outside. Read Arrol Gellner's blog at arrolgellner.blogspot.com, or follow him on Twitter: @ArrolGellner. Contact Arrol Gellner:
The power of real estate negotiators
The power of real estate negotiators
Letter to the Editor
By Inman News
Inman News®
Re: 'You can't predict the future, but you can plan for it' (Dec. 27)
Dear Editor:
One of the main points of the article by Gahlord Dewald was that a negotiation expert was only necessary when the "two sides" are relatively close in power. He indicates that when one side is particularly powerful or one side particularly vulnerable, there is little point in negotiation.
It is my experience that when there is significant disparity in the power of the parties, negotiating skill is very significant. I have spent most of my adult life negotiating real estate transactions, and it is the negotiator who makes the difference -- not the power of the parties.
A good negotiator is not a steamroller; a good negotiator is a fine-tuned instrument who can evaluate needs and wants and match each participant's needs to the available capital. The more powerful the opponent, the more delicate the touch required.
Negotiation with the government, for example, as Mr. Dewald points out, pits David against Goliath. The point Mr. Dewald tries to make is that in such cases, negotiation has little to do with the outcome.
I have been in that position, and the poor negotiator is indeed at a disadvantage. The good negotiator works to find the goal of the government and uses that to the advantage of the client. You may not win the battle, but artful negotiation will win your client a better outcome.
For example (a real one), the government was widening an exit ramp ... there was never a doubt that it would eventually get the ramp. By negotiation, we were able to save a 40-foot-high road sign for our client (even when the city demanded it be removed) and increase the award to allow our client to rework his lot's traffic flow.
This was (accomplished without) holding up the project with a protracted legal battle, and being willing to put up with several months of business disruption. Our client now has the only highway sign for miles in either direction, and even though his access was harmed, his business has maintained its sales.
While I do not question the wisdom of planning for the new realities of real estate, I also suggest that remembering our strengths and not underestimating that value is worthwhile.
Greg Semos
REALTOR®, Regency Real Estate Brokers
Mission Viejo, Calif.
Contact Inman News:
By Inman News
Inman News®
Re: 'You can't predict the future, but you can plan for it' (Dec. 27)
Dear Editor:
One of the main points of the article by Gahlord Dewald was that a negotiation expert was only necessary when the "two sides" are relatively close in power. He indicates that when one side is particularly powerful or one side particularly vulnerable, there is little point in negotiation.
It is my experience that when there is significant disparity in the power of the parties, negotiating skill is very significant. I have spent most of my adult life negotiating real estate transactions, and it is the negotiator who makes the difference -- not the power of the parties.
A good negotiator is not a steamroller; a good negotiator is a fine-tuned instrument who can evaluate needs and wants and match each participant's needs to the available capital. The more powerful the opponent, the more delicate the touch required.
Negotiation with the government, for example, as Mr. Dewald points out, pits David against Goliath. The point Mr. Dewald tries to make is that in such cases, negotiation has little to do with the outcome.
I have been in that position, and the poor negotiator is indeed at a disadvantage. The good negotiator works to find the goal of the government and uses that to the advantage of the client. You may not win the battle, but artful negotiation will win your client a better outcome.
For example (a real one), the government was widening an exit ramp ... there was never a doubt that it would eventually get the ramp. By negotiation, we were able to save a 40-foot-high road sign for our client (even when the city demanded it be removed) and increase the award to allow our client to rework his lot's traffic flow.
This was (accomplished without) holding up the project with a protracted legal battle, and being willing to put up with several months of business disruption. Our client now has the only highway sign for miles in either direction, and even though his access was harmed, his business has maintained its sales.
While I do not question the wisdom of planning for the new realities of real estate, I also suggest that remembering our strengths and not underestimating that value is worthwhile.
Greg Semos
REALTOR®, Regency Real Estate Brokers
Mission Viejo, Calif.
Contact Inman News:
Tuesday, December 20, 2011
4 steps to buy again after foreclosure
Mood of the Market
By Tara-Nicholle Nelson
Inman News®
Homeowners facing foreclosure seem to be desperate to buy again.
Frequently, I receive letters from someone who hasn't yet lost their home to foreclosure but anticipates they soon will, and wants to be able to get back into the market, quick-like.
Many claim their haste is because they don't want to miss out on today's bargain housing prices or interest rates. Yet neither seems poised to rise significantly any time soon.
In the same breath, many of these folks say they're ready to pay top dollar for their next home, and pay an additional premium if they are forced to rely on lease-to-own, seller financing, or a hard-money mortgage.
Others claim they don't want to miss out on the opportunity to build equity in a home instead of paying rent, or cite the tax advantages of homeownership as the piece they particularly want to retain.
My advice is almost always this: Slow down! Most legitimate loan programs now impose a three-year-plus waiting period after a borrower loses a home to foreclosure, even if they would otherwise qualify for a mortgage based on their credit score, income and assets.
Here are my four suggestions for how you can wisely use that waiting period to recover from a foreclosure -- these steps also do double duty in terms of setting you up for success and sustainability the next time you buy a home.
1. Feel the pain.
Many folks who write to me are still in the early stages of grief at the loss of their home: anger and denial. They are angry at the bank, and in denial about the loss of their home and its advantages, from status to tax write-offs.
What I know is that getting through this grief is an essential first step to truly moving forward. Inherent in grief is an acknowledgement that something is dead and over. The acceptance of that finality is what allows you to move forward and learn the lessons that such experiences can teach.
As long as you're stuck in the emotional protestations of how unfair it was that you lost your home, or spinning in a place of outrage about the Wall Street bailouts, you're probably not making emotional progress to the point where you can begin to learn from your experience.
2. Metabolize the loss.
Henry Cloud, bestselling author of "Necessary Endings: The Employees, Businesses, and Relationships That All of Us Have to Give Up in Order to Move Forward" (Harper Business, 2011), recommends that we treat our painful past experiences as our bodies do food, metabolizing them by taking away the lessons we can distill from them that will fuel our future decisions, and leaving behind the pain and other toxic wastes from the experience.
Individuals and couples should take time out to acknowledge what has happened, and distill and discuss mistakes that were made and insights you've gained so that you can avoid repeating them in the future. It's a meaningful method for progressing past grief and repositioning yourself to make smarter decisions about your money and your mortgage for the rest of your life.
3. Avoid rebound home purchases.
There's a whole lot of what I call tuition -- the price we pay to learn life lessons -- involved in the loss a home to foreclosure. If rush in too quickly to the next home purchase, chances are good we'll miss the lesson and get nothing for the tuition. This is evident in the gymnastics many foreclosed homeowners are considering going through in order to buy a home at all costs. These may mirror their willingness a few years ago to take on an unsustainable mortgage, which is what got some portion of them into foreclosure in the first place.
Trying to replace our losses on the rebound, be it after a breakup or after a foreclosure, is how people end up repeating their mistakes. Making new, unsustainable mortgage commitments and chronically overspending or over borrowing is no different from your friend who keeps repeating the same old dysfunctional relationship patterns, year after year.
4. Heal your finances.
My advice to foreclosed homeowners is to devote some real time to working on their finances, without worrying about buying another home. Get your debt paid down or off. Change your spending habits and your overall relationship with money. Get your taxes current and paid. Save some money. Create the habit of paying every bill on time every time. Eliminate unnecessary monthly expenses. Work the programs in "365 Days to Organized Finances or Financial Recovery," or some similar book, or both. Focus for awhile on your career development.
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
By Tara-Nicholle Nelson
Inman News®
Homeowners facing foreclosure seem to be desperate to buy again.
Frequently, I receive letters from someone who hasn't yet lost their home to foreclosure but anticipates they soon will, and wants to be able to get back into the market, quick-like.
Many claim their haste is because they don't want to miss out on today's bargain housing prices or interest rates. Yet neither seems poised to rise significantly any time soon.
In the same breath, many of these folks say they're ready to pay top dollar for their next home, and pay an additional premium if they are forced to rely on lease-to-own, seller financing, or a hard-money mortgage.
Others claim they don't want to miss out on the opportunity to build equity in a home instead of paying rent, or cite the tax advantages of homeownership as the piece they particularly want to retain.
My advice is almost always this: Slow down! Most legitimate loan programs now impose a three-year-plus waiting period after a borrower loses a home to foreclosure, even if they would otherwise qualify for a mortgage based on their credit score, income and assets.
Here are my four suggestions for how you can wisely use that waiting period to recover from a foreclosure -- these steps also do double duty in terms of setting you up for success and sustainability the next time you buy a home.
1. Feel the pain.
Many folks who write to me are still in the early stages of grief at the loss of their home: anger and denial. They are angry at the bank, and in denial about the loss of their home and its advantages, from status to tax write-offs.
What I know is that getting through this grief is an essential first step to truly moving forward. Inherent in grief is an acknowledgement that something is dead and over. The acceptance of that finality is what allows you to move forward and learn the lessons that such experiences can teach.
As long as you're stuck in the emotional protestations of how unfair it was that you lost your home, or spinning in a place of outrage about the Wall Street bailouts, you're probably not making emotional progress to the point where you can begin to learn from your experience.
2. Metabolize the loss.
Henry Cloud, bestselling author of "Necessary Endings: The Employees, Businesses, and Relationships That All of Us Have to Give Up in Order to Move Forward" (Harper Business, 2011), recommends that we treat our painful past experiences as our bodies do food, metabolizing them by taking away the lessons we can distill from them that will fuel our future decisions, and leaving behind the pain and other toxic wastes from the experience.
Individuals and couples should take time out to acknowledge what has happened, and distill and discuss mistakes that were made and insights you've gained so that you can avoid repeating them in the future. It's a meaningful method for progressing past grief and repositioning yourself to make smarter decisions about your money and your mortgage for the rest of your life.
3. Avoid rebound home purchases.
There's a whole lot of what I call tuition -- the price we pay to learn life lessons -- involved in the loss a home to foreclosure. If rush in too quickly to the next home purchase, chances are good we'll miss the lesson and get nothing for the tuition. This is evident in the gymnastics many foreclosed homeowners are considering going through in order to buy a home at all costs. These may mirror their willingness a few years ago to take on an unsustainable mortgage, which is what got some portion of them into foreclosure in the first place.
Trying to replace our losses on the rebound, be it after a breakup or after a foreclosure, is how people end up repeating their mistakes. Making new, unsustainable mortgage commitments and chronically overspending or over borrowing is no different from your friend who keeps repeating the same old dysfunctional relationship patterns, year after year.
4. Heal your finances.
My advice to foreclosed homeowners is to devote some real time to working on their finances, without worrying about buying another home. Get your debt paid down or off. Change your spending habits and your overall relationship with money. Get your taxes current and paid. Save some money. Create the habit of paying every bill on time every time. Eliminate unnecessary monthly expenses. Work the programs in "365 Days to Organized Finances or Financial Recovery," or some similar book, or both. Focus for awhile on your career development.
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
Wednesday, November 30, 2011
Top reasons to sell home in winter
Aside from less competition, low borrowing costs give buyers incentive
By Dian Hymer
We're getting close to the end of the year, which begs the question of whether it's worthwhile trying to sell your home now. Is it a waste of time? Will it sit on the market and become shopworn? Should I take my house off the market for the holidays? Will the home-sale market be better for sellers in 2012? The first question you need to ask yourself is: Are you emotionally prepared to sell? Selling is a challenge for most sellers, although some markets are better than others. Unless you bought more than eight to 10 years ago and preserved your equity, you may not be able to sell for enough to pay off the mortgages secured against the property and the other costs of selling. For sellers who have no additional assets, a short sale or foreclosure may be the only option. If so, first look into government programs that might help you out financially. Also, talk to your attorney and tax adviser. Sellers who have the resources to make up the difference between the sale price and the amount they owe need to ask themselves if they are willing to pay the additional cash in order to sell and move on. There are two reasons why you might prefer bringing cash to closing. One is that your credit will not be negatively impacted, as would be the case with a short sale or foreclosure. The second is that many buyers shy away from short sales because of the lengthy and uncertain process involved. The next thing to consider is the condition of your home. Is it ready for the market? The most salable homes are those that are in move-in condition. Before racing to the hardware store, ask your REALTOR® about how much competition there would be for your home if you put it on the market before the holidays. Some areas are shy on inventory of good homes on the market. If so, now could be a good time to sell. HOUSE HUNTING TIP: The supply/demand ratio plays a significant role in the health of a local real estate market. No matter what is said about the housing market nationally, it's the local picture that tells the tale in terms of the possibility of selling your home at any given time. Most sellers don't put their homes on the market during the last or first couple of months of the year. The inventory of homes for sale tends to dwindle during the winter months. Interest rates are low. So, if there are buyers in your local market, you may be at an advantage selling when most sellers are waiting. Some sellers feel that if they've waited this long to sell, they should put the process on hold until spring and get the house ready in the meantime. Certainly, it's not a good idea to put your house on the market until it looks great. But if you and your house are ready to sell, move ahead. The market in general tends to slow down over the holidays. But rather than pull your house off the market and miss a likely prospect, change the showing procedure to require advance notice. And enjoy your holidays. A sale before year end could be a great holiday gift. There is a lot of pent-up demand, on both the buyer and seller sides. Sellers have been waiting for a better time to sell. Buyers have been waiting for more quality inventory and a sense that prices have bottomed or are close to it. THE CLOSING: Recent projections call for another five or so years of bouncing along close to the bottom of this market cycle. Many experts believe that the big price declines are behind us. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide." Contact Dian Hymer:
By Dian Hymer
We're getting close to the end of the year, which begs the question of whether it's worthwhile trying to sell your home now. Is it a waste of time? Will it sit on the market and become shopworn? Should I take my house off the market for the holidays? Will the home-sale market be better for sellers in 2012? The first question you need to ask yourself is: Are you emotionally prepared to sell? Selling is a challenge for most sellers, although some markets are better than others. Unless you bought more than eight to 10 years ago and preserved your equity, you may not be able to sell for enough to pay off the mortgages secured against the property and the other costs of selling. For sellers who have no additional assets, a short sale or foreclosure may be the only option. If so, first look into government programs that might help you out financially. Also, talk to your attorney and tax adviser. Sellers who have the resources to make up the difference between the sale price and the amount they owe need to ask themselves if they are willing to pay the additional cash in order to sell and move on. There are two reasons why you might prefer bringing cash to closing. One is that your credit will not be negatively impacted, as would be the case with a short sale or foreclosure. The second is that many buyers shy away from short sales because of the lengthy and uncertain process involved. The next thing to consider is the condition of your home. Is it ready for the market? The most salable homes are those that are in move-in condition. Before racing to the hardware store, ask your REALTOR® about how much competition there would be for your home if you put it on the market before the holidays. Some areas are shy on inventory of good homes on the market. If so, now could be a good time to sell. HOUSE HUNTING TIP: The supply/demand ratio plays a significant role in the health of a local real estate market. No matter what is said about the housing market nationally, it's the local picture that tells the tale in terms of the possibility of selling your home at any given time. Most sellers don't put their homes on the market during the last or first couple of months of the year. The inventory of homes for sale tends to dwindle during the winter months. Interest rates are low. So, if there are buyers in your local market, you may be at an advantage selling when most sellers are waiting. Some sellers feel that if they've waited this long to sell, they should put the process on hold until spring and get the house ready in the meantime. Certainly, it's not a good idea to put your house on the market until it looks great. But if you and your house are ready to sell, move ahead. The market in general tends to slow down over the holidays. But rather than pull your house off the market and miss a likely prospect, change the showing procedure to require advance notice. And enjoy your holidays. A sale before year end could be a great holiday gift. There is a lot of pent-up demand, on both the buyer and seller sides. Sellers have been waiting for a better time to sell. Buyers have been waiting for more quality inventory and a sense that prices have bottomed or are close to it. THE CLOSING: Recent projections call for another five or so years of bouncing along close to the bottom of this market cycle. Many experts believe that the big price declines are behind us. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide." Contact Dian Hymer:
Subscribe to:
Posts (Atom)
