Some Things Never Go Out of Style

Every year newspapers and magazines compile there “in” and “out” lists to tell readers what is passé from the old year and what will be all the rage in the new year. Fashions change, celebrity popularity waxes and wanes, and certain phrases that were once cool start to become very annoying.

Well, in real estate some things never go out of style (money, good location) and some things never really come into style (there still is no such thing as a free lunch or a free house).

Here are some things that, while not totally out, are getting harder to find:
-Jumbo loans (Loans for mortgages that are more than $417,00)
-No down payment
-100% financing for people who don’t have terrific credit scores
-Adjustable-rate mortgages (ARMS)

Here are some trends that we are seeing going into the new year:
-Lenders are looking beyond credit scores. Even when a consumer has a good credit score, a lender is looking to see how much you have in saving s and if you have job stability.
-More scrutiny. Lenders are not approving loans quite as quickly
-Adjustable-rate mortgages (ARMS) have not disappeared. Although many people see ARMS as the culprit for the nation’s foreclosure woes, they are not going away.

Congress Gives Homeowners a Break

The growing crisis in the housing market has prompted Congress to act and relieve some of the anxiety and pain the American public is experiencing. In two separate bills, the Senate has turned its attention to the real estate industry and we can only hope that these measures will really provide the assistance that homeowners need.

The FHA Modernization Act could lower down payments, while at the same time also making the mortgage rates higher for loans that the FHA insures. The FHA Modernization Act has been in the works for a long time and just in time for Christmas, the Senate decided to give out the gift of its approval.

The Mortgage Forgiveness Debt Relief Act is a complicated piece of legislation, but one of its main tenets is that it aims to help homeowners who are threatened with foreclosure. It will make it easier for homeowners to refinance a mortgage because they will not have to pay as much in taxes. Under this Act there will be a three-year window during which homeowners can refinance and not pay taxes on the debt that has been forgiven.

For more information on the Mortgage Forgiveness Debt Relief Act, check out this fact sheet.

When Considering Carpet, Look at Traffic Patterns

In my last post, I wrote about carpet padding, since padding must hit the floor before you can put any carpet down. Now let’s look at the carpet itself.

To boil t down the very basics, you can look at two types of carpeting: loop pile and cut pile.

Loop pile got its name because (you guessed it) it has loops. To make loop pile carpet, strands of yarn are pulled through the backing and this forms loops.

Loop pile carpet is often used for the high traffic areas of a home. The kind I am referring to is also known as “level loop” since it is made so the loops are the same height. This kind of carpet does a good job of holding up against the tracking marks that are created when someone walks or runs over the carpet.

There are other kinds of loop pile carpet that have uneven loops. The loops are purposefully created to be uneven so make patterns and give the carpet a decorative effect. This kind of carpet does not withstand tracking marks as well as the level pile carpet does.


Cut pile carpet is created in a process that is similar to loop pile, with one final distinction: those loops are cut off at the top. After the cut, the strands of yarn are standing at attention.

Sometimes cut pile carpet is also called “plush” carpet. This kind of carpet has a level surface and is reminiscent of a buzz cut. You can easily see tracking marks in this type of carpet because the pile will lean in a certain direction when pressure is applied.

Consider Carpet Padding

If you’ve finally made a decision about what carpet you want for home, don’t just throw it on the floor without carpet padding. You want padding that is thin and dense. If it is too thick, it won’t provide the right kind of support. If it is not dense enough, it will not be very effective.

Experts agree that thinner padding works best in areas that see a lot of foot traffic. However, there are some rooms that could benefit from thick padding. Thick padding can be beneficial in rooms where people don’t walk around too much, like bedrooms or closets.

Be sure you get padding in the right size. If you get padding in an incorrect size, you will compromise safety.

Here are two reasons why you should consider carpet padding:

Noise reduction The extra layer under the carpet will help absorb noise.
Longer-lasting carpet Padding can help your carpet keep its shape. It won’t slip or get stretched. Without padding, a carpet must withstand the weight of everyone that walks on it, and it will wear out sooner.

Insulation Your carpet itself does provide some insulation, but you can get even more when you put padding under it. Depending on the kind of floor you have, the added insulation can cut costs on heating and cooling.

Home Alone

When selling your home, you should be flexible about letting agents show it. At the same time, agents really should call ahead and not just drop in at the spur of the moment. When they call, you have to put your own desire to lounge at home aside, so that you can get your house sold. Of course if you absolutely must in the house at a certain time or if you are feeling ill, then by all means, tell the agent that the home is not ready for show. But if you are watching a favorite TV program, you might want to make the sacrifice and leave.

As a homeowner, you should not be at home when potential buyers are coming to view your home. If possible, go to a nearby coffee shop. Or ask a good friend if they’d be willing to let you and your family drop by when you need to show the house.

If for some reason you really can’t leave, try your very best to be inconspicuous. Do not linger or follow the agent and their client around. Give them the freedom to explore the house without interference. Open the door to greet them, and let them know where you’ll be if they need anything. Try not to volunteer any information and be careful about answering any questions they ask.

Homes that are Built to Last

Can you imagine a customizable house designed to survive a natural disaster? Architect Marianne Cusato did and won the first People’s Design Award from the Smithsonian earlier this fall.

The aftermath of Hurricane Katrina sparked an interest in affordable housing. People in home construction came together to explore ways to help victims of hurricanes, floods, and other natural disasters.

Cusato designed a small home—about the size of an apartment—that could later be expanded as desired. These homes would also be resistant to storms and mildew. They are ideal for many people who were displaced by Hurricane Katrina because they are affordable and weather-resistant.

Home Front Homes has also designed a home that can literally “weather the storm.” Their design can outlast total submersion in water and can hold its own in 140 mph winds. If flooding occurred, the homeowner would have to get rid of wet furniture, but the house would survive.

All of the designs managed to connect to local culture by including features that are popular in the region: wood siding, wood windows, front porches, and picket fences.

A national retailer appreciated these designs so much, they decided to make them available in their stores. These houses range from 300-1800 square feet.

Save to Avoid Sticker Shock

Many buyers, especially first-time homebuyers, experience sticker shock at the closing table when they find out just how much they will need to pay in closing costs to purchase their home. Actually, many would-be buyers experience sticker shock when they first start shopping for a home, but those who find a home they can afford are in for more surprises when they reach the very end of the process. Those who have purchased homes before are not immune to this phenomenon either: if it has been years since your last real estate transaction, you may be in for a surprise.

People tend to concentrate their energy on saving enough money for a down payment and the closing costs that come later become an afterthought. If you are shopping for a home, you’d do better to look at the entire transaction from beginning to end. A concerned agent will talk with you about these costs beforehand and provide you with a list of possible closing costs so you are prepared.

Closing costs, which may include administrative fees, transfer taxes, title insurance, and appraisal fees, can add up to 2-4 percent of the purchase price. This is not very comforting to potential buyers who are already working hard a saving for a down payment, moving expenses, and the other costs of homeownership. But it is better to know this ahead of time, rather than be surprised when it comes time to close on a property.

Be Pet Smart (p.2)

In my last post, I talked about a woman who is allergic to cats and decided not to buy a property after learning that the house she wanted had recently been home to cat. All situations are not this cut and dry. Some potential buyers may not have a severe allergy to your pet; they just may not be all that fond of animals.

In order to avoid offending these buyers, a seller should do what they can to remove hints of a pet. Your best bet is to remove the pet during open houses and at other times when potential buyers are viewing the house. Someone could be turned off or frightened by a barking dog or squawking bird. You don't want to scare off a potential buyer because your cat jumped off of a banister.

As you clean and de-clutter the house, you can also take care to air out the house and remove pet hair from furniture. You are accustomed to your pets, so the scent they sometimes leave can stay in the air longer than you realize.

Once you take care of the inside, don’t forget the outside. Remove any evidence of your pets from the lawn and backyard. This includes droppings, toys, holes that were dug up, etc.

You love your pets and they are an important part of your life, so I don’t suggest denying their existence. I do suggest that you take the time to make sure your home is appealing to all—and that may mean taking extra steps to make sure pets do not hinder your ability to sell your home.

Be Pet Smart (p.1)

I know a woman who had wanted to buy a home for the longest time and when she finally felt ready, she quickly found a home she really liked. This woman (let's call her Betty) was a very careful sort of person, so she made sure to really look at every aspect of the home she wanted to buy. Everything added up except one thing: she was very certain that she smelled the presence of a cat.

Betty is allergic to cats, so she was very concerned that this home which as right in every other way, could potentially cause her allergies to flare up. She asked her realtor to inquire is the seller had a cat and they denied it. But she really felt as if she could smell the presence of a cat. Once when Betty went to visit a relative who had a cat, the family left the cat in the basement. She still had a violent reaction and ended up having to get a shot at the hospital.

After having the home inspector go over the place with a fine tooth comb, Betty learned that all evidence (including a lot of cat hair found in the attic) pointed to the fact that there had once been a cat in the house. She did not buy this property.

In a previous post, I spoke about full disclosure. No matter how motivated you are as a seller, it does not pay to withhold information from a buyer. Even if you know disclosing something may mean losing the sale, it is better to do so than to risk legal complications later.

An Invisible Enemy: Carbon Monoxide

Carbon monoxide is always present in the air in non-lethal quantities. So a carbon monoxide detector does not work to tell you that it is present. Instead, it works to alert you if there is enough carbon monoxide in the air to cause you harm. These alarms are usually quite loud since many carbon monoxide-related deaths occur when people are sleeping.

No matter how much carbon monoxide is present, you wouldn’t be able to verify its presence on your own. Carbon monoxide is an invisible, odorless, tasteless gas and that is what makes it so very deadly.

The appliances we use for heat and various types of engines emit carbon monoxide. Some items in and around your home that give off carbon monoxide include: ovens and ranges, clothes dryers, water heaters, space heaters, grills, furnaces and of course your cars.

Everyone that suffers from carbon monoxide poisoning does not die. The actual number of people who have been poisoned by carbon monoxide is unknown since non-fatal carbon monoxide poisoning is often not reported.

It is important that you install a carbon monoxide detector in your home to keep your family safe. You should have one on every floor in your house. A carbon monoxide detector should be installed five feet higher than the floor. It should not be placed over or even adjacent to something that produces a flame, such as a fireplace.

New Plan to Help Homeowners

The Bush administration detailed a plan to assist struggling homeowners yesterday. The night before I went to a reception and overheard someone in the mortgage industry discussing why he thinks the plan won’t help much.

Like anything else, if it can help you, you’ll be quite happy. But if you find that you do not meet the qualifications, it will be easy to say that the plan didn’t work.

For example, the plan will not help everyone an adjustable rate mortgage (ARM). It has been fashioned to be a lifesaver for someone who would lose their homes if there is a significant increase in their mortgage payment. Homeowners who are already facing foreclosure probably won’t benefit from the plan.

If you purchased a home with an ARM between 1/1/05 and 7/31/07 and your rate is set to increase between 1/1/08 and 7/31/10, you may qualify to have your rate frozen under the plan.

The thought behind the plan is that it will help to stabilize the troubled housing market. Unfortunately, it is not a cure-all. Although it has been called a bailout, it is not a bailout in the truest sense. The government will not be handing out money or forgiving all home loans. It is worth it to investigate whether you qualify if you are in need of this assistance.

If you have any questions, feel free to to drop me a line at john.day@longandfoster.com.

Don't Say "Humbug" to Holiday Homeselling

You might be thinking that the holiday season is a time when you should remove your home from the housing market, but you do not have to do this. True, there may be fewer people out there looking, especially if the weather is really cold…but people who do continue house hunting despite lower temperatures and holiday distractions really want to find a home.

One way to make your home really stand out this time of year is to consider trimming back the trimmings. In other words, don’t drag out every single bauble and ornament you have. A wreath here and a holiday candle there will do. Make the sacrifice to go light on the decorations this year and when your property is sold, you can decorate every inch of your new home.

Although some buyers might feel more cheerful seeing your home all dolled up, it is important that you don’t cover up your home’s key features with decorations. If the fireplace is blocked by your life-size statue of Santa, potential buyers may not be able to appreciate what a great find your home is.

If you host the family’s annual holiday dinner, you may consider moving it to someone else’s home or trying a restaurant this year. Otherwise, it will be hard for you to resist the temptation to go all out on decorations . Plus, you’ll have to work extra hard to streamline your home’s look when you think someone will be coming to view it.

Relocating? Maybe Your Employer Can Help

In the past, employers have offered to assist relocating employees with moving expenses and covered the costs of those who needed to travel to look for homes in a new city. But now with the recent issues in the housing market, there are employers who are taking things a step further.

If you are relocating for your current job or moving because you've accepted a new job in a different city, ask about what the company can do to help you as you transfer to a new area.
If you put your house on the market and it doesn't sell right away, you will have the added burden of trying to cover expenses for your old home and your new life. Companies know that you will be less than productive in that situation. You will have so many adjustments to make already so here is how they may try to ease your load.

Temporary Housing
Some companies supply temporary housing for a certain period time. In light of the fact that houses aren't selling as quickly as before, some employers are becoming less restrictive about the deadlines for employees to leave temporary housing.

Making up the difference
An employer may compensate you for the loss you take on selling your home if the price you get is less than the home's appraised value.

Buyout
Really motivated employers are actually buying employees' houses themselves.