What is 'Deed in Lieu Of Foreclosure'?

A Deed in Lieu of Foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The deed in lieu of foreclosure offers several advantages to both the borrower and the lender.

The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure. Another benefit to the borrower is that it hurts their credit less than a foreclosure does. Advantages to a lender include a reduction in the time and cost of a repossession, lower risk of borrower revenge (metal theft and vandalism of the property before sheriff eviction), and additional advantages if the borrower subsequently files for bankruptcy.

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Sometimes, the lender will not proceed with a deed in lieu of foreclosure if the outstanding indebtedness of the borrower exceeds the current fair value of the property. Other times, lenders will agree since they will end up with the property anyway and the foreclosure process is costly to the lender.

Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.

**In New York, the Home Equity Theft Prevention Act has created some confusion regarding this frequently-used method of settlement. It is unclear whether HETPA applies to deeds in lieu of foreclosure since there is no clear exclusion as there is for a referee's deed, for example. The 2-year right of recission is not a risk that banks or title insurers are comfortable with, especially given the complexities of compliance, so many banks and title insurers in New York are not willing to work with deeds in lieu.

taken from Wikipedia

Let's Talk about Roofs

Most shingle roofs are only built to last about 20 years. Granted, nowadays, you can find 30-year shingles but odds are your roof does not have them unless it was recently re-done. Roof replacement, next to termite control, is one of the most costly expenses in home maintenance. If you can avoid having to re-tile the roof, then do so by simply buying a home that doesn’t require a new roof for a very long while. 

Causes of Roof Damage

In the South they don’t get many snowstorms, but do on occasion have ice storms. Damage can occur from falling debris, ice jams that clog the gutters and heave the shingles off the edges of the roof. If gutters are not cleaned yearly, leaves and debris can also accumulate and cause damage to the roof. Wind can cause damage if there were already loose vents, shingles, or parts of the ridge. These can be torn away exposing parts of the roof and causing leaks. A leak itself does not indicate the total replacement of a roof, but once moisture gets in the house, the damage can escalate quickly. Mold can grow and water will find it’s way down the walls or wherever it finds a low point. If you see pieces of metal or shingles in your yard after a rainstorm or wind event, look up. Your roof may be compromised. 

Single Layer of Shingles

You want to have a roof that is going to last as long as the warranties on the materials state, then have the workers remove all the old shingles and felt and replace with new material. You can have a choice of 20, 25, and 30-year shingles. Using the 30-year shingles gives the roof architectural depth whereas 20 year shingles typically lie flat providing little variation. 

Double Layer of Shingles

Some contractors will recommend a cheaper way of re-installing the roof. They will simply re-tile over the existing roof. This is called a double layer of shingles and some businesses use it routinely because of the major cost savings. However, there are several drawbacks to this method. The double layer will:

1. Trap more heat in your attic space due to the added insulation. 

2. Be subject to deterioration if not done properly and might not last the full 20 years, 

3. Can look funny and affect your curb appeal if done improperly. 

4. Might affect sales value if a new owner thinks they will have to replace a double layer instead of a single one.

5. Could end up needing replacement again which subsequently will be much higher to remove a double-layer. 

More and more contractors are not even mentioning the double layered option because by doing them they find they have to come back more often to fulfill repairs after the job is supposedly completed. Also, should you inadvertently hire someone who is not reputable, you could end up replacing the entire roof again! For the removal of a double layer of shingles, the cost of roof replacement is staggering as compared to a single layer and most local laws now prohibit adding a third layer. 

What To Look For In A Roofing Contract

Obviously, your roofing contractor should have experience. They should offer a warranty on their workmanship, and they should hold insurance for their workers. Should anyone get hurt on the job, his or her insurance should pay for it, and not yours. Things that should be a normal part of the job are:

Nail pickup with magnets,

vent casings either stripped and repainted or replaced, 

ridge vent replaced, 

felting replaced, and

disposal of shingles and other waste. 

Get several bids for your roof. Bids fluctuate quite drastically. Some of this is either due to inexperience of the contractor or not including waste removal. Make sure you understand what the contractor is agreeing to do for the price set. Realize that many times contractor’s timetables are determined by their clients and not by the calendar. Also, any days that are raining or overcast will be days they cannot work. Be patient but also be sure they are getting the work done. Finally, the best way to find a decent roofer is to ask your neighbors. If they recently got their roof done they can give you a word of mouth recommendation on their work, which is often better than relying on fancy marketing by the contractor.by Claire Moylan, Yahoo Community

Note from Carol: In order to have our roof last longer, we had 'roof over roof' or 2 layers of shingles. We thought we had saved money and felt 2 layers might add insulation as well. However, after the massive winds, losing some of the shingles, our roofer found that the heat damage and wind damage compromised the rest of the roof and it only had a 1/2 life of what it should have had because of our choice. When we had the new roof installed, a ridge vent was added to take away the heat from the attic. With the new materials of todays roof, the dimensional shingle and the ridge vent is a very definite improvement over the old roof!

Will the tax credit closing deadline be extended?

Will the tax credit closing deadline be extended?

Lead by Senate Majority Leader Harry Reid, an amendment to HR 4213, the "American Jobs and Closing Tax Loopholes Act of 2010" would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000.

Unfortunately, the 57-41 vote in the Senate on June 24 rejected ending debate on the legislation, which would have sent the bill to a final vote. Democrats fell three votes short of the 60 required to crack a GOP filibuster, leaving the future of the bill unclear.

In an attempt to attract Republican votes, Senate Democrats cut billions from the bill. But the behemoth legislation, which would extend unemployment benefits for more than 200,000 people a week, has a projected cost of $100 billion and would have added roughly $33 billion to the deficit, an expenditure that Republicans say the U.S. can't afford.

-Posted by the Columbus Board of REALTORS®

What happens when an owner faces foreclosure on his house?

Few people think they will lose their home; they think they have more time.

Here's how it happens. Note: Timeline varies by state.

First month missed payment

– your lender will contact you by letter or phone. A housing counselor can help.

Second month missed payment

-your lender is likely to begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind. A housing counselor can help.

Third month missed payment after the third payment is missed,

you will receive a letter from your lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. This is called a "Demand Letter" or "Notice to Accelerate." If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender. A housing counselor can still help.

Fourth month missed payment

– now you are nearing the end of time allowed in your Demand or Notice to Accelerate Letter. When the 30 days ends, if you have not paid the full amount or worked our arrangements you will be referred to your lender's attorneys. You will incur all attorney fees as part of your delinquency. A housing counselor can still help you.

Sheriff's or Public Trustee's Sale

– the attorney will schedule a Sale. This is the actual day of foreclosure. You may be notified of the date by mail, a notice is taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees.

Redemption Period –

after the sale date, you may enter a redemption period. You will be notified of your time frame on the same notice that your state uses for your Sheriff's or Public Trustee's Sale.

Important: Stay in contact with your lender, and get assistance as early as possible. All dates are estimated and vary according to your state and your mortgage company.

From the HUD Web site
http://portal.hud.gov/portal/page/portal/HUD/topics/
avoiding_foreclosure/fctimeline

Is it true I don't have to pay Capital Gains when I sell?

It is true in most cases (that you won't have to pay Capital Gains when you sell your home). When you sell your home, the capital gains on the sale are exempt from capital gains tax. Based on the Taxpayer Relief Act of 1997, if you are single, you will pay no capital gains tax on the first $250,000 you make when you sell your home. Married couples enjoy a $500,000 exemption. There are, however, some restrictions on this exemption.

In order for the sale to be exempt, the home must be considered a primary residency based on Internal Revenue Service (IRS) rules. These rules state that you must have occupied the residence for at least two of the last five years. If you buy a home and a dramatic rise in value causes you to sell it a year later, you would be required to pay capital gains tax on the gain. This rule does, however, allow you to convert a rental property into a primary residence because the two-year residency requirement does not need to be fulfilled in consecutive years. For example, suppose that you invest in a new condo. You live in it for the first year, rent the home for the next three years and, when the tenants move out, you move back in for another year. At the end of this five-year period, you will be able to sell your condo without having to pay capital gains tax.

The other major restriction is that you can only benefit from this exemption once every two years. Therefore, if you have two homes and lived in both for at least two of the last five years, you won't be able to sell both of them tax free.

This act has been beneficial for home owners because it has significantly changed the implications of home sales. Before the act, sellers had to roll the full value of a home sale into another home within two years in order to avoid paying capital gains tax. This, however, is no longer the case, and the proceeds of the sale can be used in any way the seller sees fit.-article from www.investopedia.com/

How important is your credit report?

Lending money is risky business.

Remember that time your friend Bob borrowed $50 and said he'd pay you back the next day? You haven't seen Bob or your $50 in three years. If you had known that Bob had a long history of borrowing money from friends -- and not paying them back -- you probably wouldn't have lent him the cash in the first place.

Large lending institutions like banks, mortgage companies and other creditors take the same risk when they give loans to consumers for buying homes, financing cars and paying for a college education. Creditors attempt to minimize the risk of these loans by carefully examining the credit history of borrowers. If a borrower has a bad credit history, then the lender might not give him a loan, or may charge him a higher interest rate.

If you've ever owned a credit card or applied for a loan, then you have a credit history. Your credit history is compiled and maintained by companies called credit reporting agencies or credit bureaus. Credit reporting agencies collect your credit history from credit card companies, banks, mortgage companies and other creditors to create an in-depth credit report. The information in that report is also used to calculate a three-digit credit score.

Up Next

How Credit Scores Work

Every time you apply for credit, the bank or credit card company calls up one or more of these credit reporting agencies to review your credit report and credit score. The lending institution will decide whether to extend you a loan -- and at what interest rate -- largely based on the credit history reported by those agencies.

Credit reporting agencies are powerful institutions. One bad entry on your credit report can cripple your borrowing power for years. Even worse, credit reports are often requested by employers, landlords and insurance companies. That's why it's so important to make sure that everything on your credit report is true and accurate. According to a 2004 study, one out of every four credit reports contains serious errors: debts wrongfully listed as delinquent, closed accounts listed as open, debts that belong to other people with the same name, et cetera [source: MSNBC].

For decades, the information collected by credit reporting agencies was hidden from consumers. Individuals had no idea why they were denied credit or whether or not their reports contained mistakes. Beginning with the Fair Credit Reporting Act in 1971 and continuing with recent legislation, U.S. citizens have free access to their credit reports and credit scores from each of the three national credit reporting agencies: Experian, TransUnion and Equifax. Citizens also have the right to know exactly why their credit was denied.

In this HowStuffWorks article, we'll explain how the "Big Three" credit reporting agencies work, your rights when dealing with them, and how to protect yourself against errors and fraud.

Let's start with the Big Three.

The Big Three

A typical credit report you might receive from one of the "Big Three."

Experian, TransUnion and Equifax -- also known as the "Big Three" -- are not the only credit reporting agencies in the United States; they're just the biggest. According to the Consumer Data Industry Association, an international trade organization that represents credit reporting agencies, there are dozens of smaller, regional and industry-specific credit bureaus that provide clients with credit reports and other "risk-management" services [source: CDI Online]. There are also many international credit reporting agencies that focus on one country or region.

The Big Three get all the attention because they maintain the largest national databases of consumer credit information. Experian, for example, boasts that it maintains credit information on 215 million American consumers [source: Experian]. That's over two-thirds of the total U.S. population [source: U.S. Census].

The Big Three perform two basic services: collecting and reporting credit information. Here's how The Big Three collect credit information:

Every month, lending institutions and other creditors send updated consumer credit information to one or more of the Big Three credit reporting agencies. This information includes how much individual consumers owe and whether they make their payments on time.

Whenever you fill out an application for a credit card or a loan, all of that information (like income figures) is also sent to the credit reporting agencies.
The Big Three also scour public records for financial information, such as court records from bankruptcies and foreclosures.
[source: PBS]

The same lending institutions that supply information to credit reporting agencies also request reports when a consumer applies for credit. Individual consumers can request copies of their credit reports and credit scores, as well. Here's how credit reporting agencies share information with consumers and creditors:

Credit reporting agencies only share credit reports and scores when there's a request, formerly called an inquiry.

There are two kinds of inquiries: hard and soft.

Hard inquiries are requests made by institutional creditors like credit card companies and mortgage lenders and by rental applications to a landlord [source: Credit.com].

Soft inquiries are made by the consumer himself or by an employer.
Negative events like bankruptcies and foreclosures stay on a credit report between 7 and 10 years, while positive events, like on-time mortgage payments, can stay on even longer[source: Truecredit.com]

It's important to remember that the Big Three credit reporting agencies are independent companies that each collect information in different ways. Therefore, a credit report from Experian will contain slightly different information than a credit report from TransUnion, which will differ slightly from Equifax. Not every creditor and lending institution reports to all three credit bureaus, leading to further discrepancies.

For more information on how credit reporting agencies compile credit reports and calculate credit scores, see How Credit Reports Work and How Credit Scores Work.

Now let's talk about credit reporting agencies and your rights.

Credit Reporting Agencies and Your Rights

Keep yourself informed with what's going on with your credit. A bad report could prevent you from buying your own home.

As we mentioned earlier, credit reporting used to be a closed system. Consumers had no idea what information was on their credit report, why they were denied credit or if their credit reports contained mistakes. Also, in the past, credit reports only contained negative credit events, not positive information. They were also allowed to share "lifestyle" information about consumers, like sexual orientation and reported problems with drugs or alcohol [source: PBS].

In 1971, the U.S. congress enacted the Fair Credit Reporting Act, the first legislation protecting the rights of consumers when dealing with credit reporting agencies. U.S. citizens, under the Fair Credit Reporting Act, have a right to:
a complete copy of your credit report (for a fee) a free copy of the report with the negative information, if you're denied credit know exactly who has requested a copy of your credit report in the past six months report errors on a credit report and have the credit reporting agency respond within 30 days have proven errors removed within 30 days add comments to your credit report to tell have negative credit events removed from your report after 7 to 10 years restrict access to your credit report and block credit reporting agencies from selling your information to credit card companies and other marketing firms [source: Credit.com]

Impostor Credit Reporting Sites

According to a 2005 report, the World Privacy Forum found 112 "imposter" Web sites that contain domain names similar to annualcreditreport.com or that take advantage of common misspellings [source: World Privacy Forum].

Some of these sites ask for highly sensitive information like names, social security numbers and addresses to steal a consumer's identity and apply for credit in his name.

To avoid these scams, the World Privacy Forum recommends that consumers order their free annual credit report by phone, not online.

The Fair and Accurate Credit Transactions Act of 2003 (FACTA) goes even further, giving U.S. citizens the right to request one free copy of their credit report from each of the Big Three credit reporting agencies every year. FACTA also includes several provisions protecting against the growing problem of identity theft, which we'll talk about in the next section.

Here's how you request a free copy of your credit report, as established by FACTA:

You can request a report by phone at (877) 322-8228, online at www.annualcreditreport.com, or by mailing this request form to the following address:
Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

At annualcreditreport.com, select your state from the pull-down menu and press "request report."

On the following page, enter your personal information (name, birth date, social security number and current address).

You will then be asked to choose from which of the Big Three credit reporting agencies you want to request a report. You can choose to request a report from a particular agency or from all three (remember, you can request one copy from each CRA once every 12 months).

The free annual copy of your credit report doesn't include your credit score, which can be purchased directly from the individual CRAs for around $6. You can also purchase as many credit reports as you want from each of the Big Three CRAs. The price for a basic credit report is under $10.

article from HOW STUFF WORKS

Should I buy a house that has lead-based paint?

Should I buy a house that has lead-based paint?

Don't panic: Chanie Kirschner has the lowdown on lead.

Q: My family and I are moving into a new home and the inspection report says that there’s lead-based paint in some rooms of the house. What should I do? Is this a deal breaker? I thought they stopped using lead-based paint in houses years ago. What gives?

A: Good question. The truth is that lead-based paint was banned by the U.S. Consumer Product Safety Commission in 1978 after it was found to have disturbing health implications.

One of the key studies that led (pun intended) to the ban of lead in paint and in gasoline is as dramatic as a Hollywood movie. In the early 1970s, Philip Landrigan, an epidemiologist and pediatrician, tested the lead levels in the blood of children who went to school within one mile of ASARCO, a smelting plant in El Paso, Texas. What he found was, at the time, both devastating and astonishing. He concluded that even small amounts of lead in the blood contributed to lower IQ and impaired motor coordination.

In a later study, he even concluded that lead toxicity directly correlates to lowered lifetime earning potential — a sobering thought, to say the least.

(Another interesting lead-related study conducted in 2007 indicates a possible correlation between lead toxicity and crime-related behavior.) Though lead is harmful to adults as well, it is more dangerous to children whose bodies and immune systems are still developing and therefore are more susceptible to outside factors.

It was for this reason that lead-based paint was banned, and today is not used in new home construction. However, if you’re buying a home that was built before the ban went into effect, chances are there is still lead-based paint in the house, hence your dilemma above. Sellers are required to tell you about the lead in the house, so that you can make your own informed decision about whether to purchase and what kinds of renovations will be necessary.

So what can you do? Well, you can get rid of it or you can paint over it. No matter what you decide, though, you definitely want somebody who knows what they’re doing. That’s because when lead-based paint is disturbed in any remodeling-type activities, lead dust can be created and easily ingested. In addition, children are at a higher risk for ingesting it in the form of paint chips, since they’ll eat pretty much anything off the floor. (I’ve found pennies, paper clips, paper and even rocks in my son’s mouth.)

In 2008, the EPA passed a regulation stating that any contractor who is renovating a home with lead-based paint must be trained and certified to deal with it properly to minimize human exposure. In a nutshell, contractors have to contain their work area, minimize lead dust, and clean up thoroughly. Sounds simple enough, but then again, isn’t everything in life when you boil it down? (That’s a different article.) Lucky for you, this regulation just went into full effect, so you should be able to find plenty of contractors who can handle the job effectively and safely.

Even though conventional paint doesn’t contain lead anymore, it still can contain toxic fumes. These days, though, it is possible to find eco-friendly paint options that are comparable in durability and appearance to the conventional kind. And the best part is, you can rest easy at night knowing you don’t have to worry about your child’s lifetime earning potential — at least until he takes the SATs.

— Chanie

Couch on Houses

Officially, now, this blog can be found 2 different ways...probably more but I didn't research it. Couchonhouses.blogspot.com and www.ccouch.com. I was using my couch potato blog spot because I thought it was cute and something people could remember. It always bothered me, though. I am turning into a 'couch potato' and that's not a good thing and I sure don't want to see it in print...so, it's still out there but the official one is Couch on Houses. Thanks for listening.

Should you buy a House? or a Condo?

Should I Buy a Condo or House? was taken from a site called Buy-and-sell-house-fast.com but these are pretty common sense things when you think it through.

The American dream of owning property has changed in recent years. Nowadays, although the dream still boils down to having your own roof over your head, the options for doing so have changed drastically. One of the fastest growing segments of property sales today is in the area of condos.

Owning a condo has some things in common with owning a traditional home, but it's the differences that count. And there are a lot of them! So how do you know whether a house or a condo is right for you?

Take a look at the following points, and then do some research of your own before deciding to buy a condo or house.

What is a condo?

In order to explain the differences between owning a single family home and a condo, we should first define exactly what a condo is.

Condominiums resemble apartments in many ways. They consist of several units in the same building or complex, with common areas like courtyards and lobbies that are shared by everyone. But condos, as opposed to apartments, are owned by the individual tenants and not just rented.

When you purchase a condo, you're giving up some privileges in exchange for gaining others. It's this balance of benefits that will be most helpful when you're weighing what type of property to buy.

Benefits of a condo

Less maintenance

Although the price of your condo will cover the cost of maintenance, you will not be required to perform it yourself. Some small tasks may fall to the condo owner, but for the most part jobs like mowing the lawn, replacing broken fixtures, and insulating for the winter are all taken care of for you. Keep in mind, though, that you are still footing the bill.

Community environment.

Maybe you've got an empty nest at home and are looking forward to being around other people. Maybe you just hate the thought of rattling around in a large house by yourself. Some people prefer having neighbors in close proximity, and appreciate having common areas to share with others.

Amenities you couldn't afford otherwise.

Most condos feature special areas for their tenants. Some have gyms, while others have pools and saunas. Plenty of condo owners choose to buy a condo because they love the convenience of having these amenities right outside their doorways.

Standardized construction.

This particular point doesn't apply if the condo you choose happens to be in an older building that has been converted. If you purchase new, however, your condo will be built to new construction standards and will feature many modern conveniences. Buying a brand new single family home would give you the same benefit, but with a much larger price tag.

Benefits of a traditional home:

Privacy.

No matter how well a condo is built and how soundproof the walls are, the fact is that you're sharing the space. For some people, there's no substitute for your own walls and yard.

Investment value.

Even though the condo market is on the rise, condos will never replace single family homes as the real estate investment of choice. Homes have a wider appeal than condos and will always appreciate at a better rate in the market.

Freedom of choice.

The world of condos comes with certain restrictions. Condos operate with a central Home Owner's Association (HOA) that makes decisions regarding certain areas of the building's appearance. If you're the type who wants to paint the walls turquoise and display an assortment of lawn gnomes, you'll be better off in a single family home.

Should I buy a condo or house?

The bottom line: As baby boomers reach retirement age, the condo market is seeing an increase in purchase demand, and the fact is that condos are much more popular than they were ten years ago. In big cities where housing space is limited, condos are an excellent way to live in a populated area without having to pay inflated prices for a small square of land. Think about it this way: you can fit a lot more people into a certain amount of square footage if you build upwards, so condos certainly have their place. And in large expensive cities, they're a lot more affordable than traditional homes, particularly if you're a first-time buyer.

If you look at the situation from a financial point of view, you should weigh factors like investment value against things like proximity to your workplace. Maybe a house will be worth more if you sell it, but if buying a condo in a big city cuts your commute time in half then it could still be the cheaper choice. Maybe you'd rather have a single family house, but if you're trying to move to a big city the sticker price of a condo might look a lot more appealing.

Consider your options carefully before deciding what type of property to purchase. Listen to advice from those who have purchased property in the past, and get advice from Real Estate investors if necessary. In the end, whether you buy a condo or house is entirely dependent upon your needs. After all, you're the one who will be calling it home.

Termites, bees, and beetles-Oh my!

If you think you have heard all of the types of Wood-destroying Insects out there..here are some you might not have heard of:

In this post, you will find more wood destroying insects than you knew existed!
P.G. Koehler and J.L. Castner put together a list longer than I expected to see as I am used to hearing 3 words: Beetles, Carpenter Bees and Termites. That's 3 kinds.
But under those names come a sub list of creatures that live in many places in your home! Furniture, flooring, paneling, baskets, bamboo...just to name a few!

Lyctid powderpost beetle

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The larvae of Lyctid powderpost beetles develop and feed in hardwood. They usually infest furniture, flooring, paneling and molding. The beetles lay their eggs on the surface of wood. The larvae are C-shaped grubs that feed and pupate in the wood. Adults chew out of the wood, leaving circular emergence holes about 1 mm to 2 mm in diameter. Adult beetles are brown and are 3 mm to 5 mm long. The antennae have two-segmented clubs.

Bostrichid powderpost beetle

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The larvae of Bostrichid beetles live and feed in wood. They can attack both hardwood and softwood, including bamboo, wicker and weaving material of baskets. The beetles bore into the wood to lay eggs. The larvae eat and pupate in the wood. Adult beetles are 3 mm to 6 mm long. To emerge, they bore round exit holes greater than 3 mm in diameter.

Anobiid powderpost beetle

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Anobiid powderpost beetles are 4 mm to 6 mm and develop in softwood or hardwood in structures. They are very common in subflooring of buildings. The beetles lay their eggs in cracks or on the surface of the wood. The larvae bore into the wood and feed on it. Adult beetles emerge from the wood by boring circular emergence holes about 2 mm to 3 mm in diameter.

Old house borer

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This beetle is 15 mm to 25 mm long, flattened and grayish-black. The area behind the head has two shiny black spots. The larvae spend two to 10 years feeding on sapwood of pine, fir, spruce and other softwoods. Adults emerging from infested wood bore oval emergence holes that are 6 mm to 15 mm long.

Formosan termite.

The Formosan termite is a subterranean termite that has several unique characteristics that make it special compared to the Eastern subterranean termite. The reproductives are brown and swarm in the evening during May to July. Colonies of Formosan termites are large, with up to 5 million individuals. Therefore, they destroy wood faster than the Eastern subterranean termite. Formosan termites construct nests that are composed of carton material. These nests may be in the soil or in the structure.

Drywood termite

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Drywood termite colonies are found entirely within wood in structures. Because they do not require soil contact, they do not make mud tubes. The swarmers are usually light-brown and are most prevalent from September to December. Swarming usually occurs in the evening.

Eastern subterranean termite

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Eastern subterranean termites live in colonies composed of workers, soldiers, reproductives and supplemental reproductives. During the spring, the reproductives swarm and leave the colony. The reproductives are black and have a thick waist (Plate 8). The antennae are straight and both pairs of wings are the same length. Subterranean termites feed on wood, but nest in the soil. They construct mud tubes from their nests to the wood in structures.

Carpenter ant

Carpenter ants are large ants, about 13 mm to 15 mm, that nest in hollows of wood. The nest is usually associated with wood decay or termite damage in a house. Outdoors, carpenter ants nest in mulch or debris. The Florida carpenter ant is red and black. Carpenter ants do not eat wood; they hollow it out for nests.

Carpenter bee

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Carpenter bees are 20 mm to 35 mm long. They closely resemble bumble bees, except the abdomen of a carpenter bee is a shiny metallic greenish-black, and the abdomen of a bumble bee is very hairy. These insects sometimes build their nests in solid wood such as weather boarding, railings, supports and trim of buildings. Their nests are in the form of tunnels three to six inches deep in the wood. The entrance hole is about 12 mm in diameter. The holes are very clean and appear as though they were made by a drill. Damage to wood is seldom extensive.

I hear a lot about Mold these days...What DO I need to know about MOLD?

What do you need to know about Molds? Well, how , where, when, and why they grow and how they affect you and your family. When I show houses that have mold - I can tell you it takes a day or longer to get back to 'normal'. My sensitivity to mold has grown with each exposure. I can't imagine living with it in my home. This article is taken from the Center for Disease Control and Prevention.

I heard about "toxic molds" that grow in homes and other buildings. Should I be concerned about a serious health risk to me and my family?

The term "toxic mold" is not accurate. While certain molds are toxigenic, meaning they can produce toxins (specifically mycotoxins), the molds themselves are not toxic, or poisonous. Hazards presented by molds that may produce mycotoxins should be considered the same as other common molds which can grow in your house. There is always a little mold everywhere - in the air and on many surfaces. There are very few reports that toxigenic molds found inside homes can cause unique or rare health conditions such as pulmonary hemorrhage or memory loss. These case reports are rare, and a causal link between the presence of the toxigenic mold and these conditions has not been proven.

In 2004 the Institute of Medicine (IOM) found there was sufficient evidence to link indoor exposure to mold with upper respiratory tract symptoms, cough, and wheeze in otherwise healthy people; with asthma symptoms in people with asthma; and with hypersensitivity pneumonitis in individuals susceptible to that immune-mediated condition. The IOM also found limited or suggestive evidence linking indoor mold exposure and respiratory illness in otherwise healthy children. In 2009, the World Health Organization issued additional guidance, the WHO Guidelines for Indoor Air Quality: Dampness and Mould [PDF, 2.52 MB].

A common-sense approach should be used for any mold contamination existing inside buildings and homes. The common health concerns from molds include hay fever-like allergic symptoms. Certain individuals with chronic respiratory disease (chronic obstructive pulmonary disorder, asthma) may experience difficulty breathing. Individuals with immune suppression may be at increased risk for infection from molds. If you or your family members have these conditions, a qualified medical clinician should be consulted for diagnosis and treatment. For the most part, one should take routine measures to prevent mold growth in the home.

How common is mold, including Stachybotrys chartarum (also known by its synonym Stachybotrys atra) in buildings?

Molds are very common in buildings and homes and will grow anywhere indoors where there is moisture. The most common indoor molds are Cladosporium, Penicillium, Aspergillus, and Alternaria. We do not have precise information about how often Stachybotrys chartarum is found in buildings and homes. While it is less common than other mold species, it is not rare.

How do molds get in the indoor environment and how do they grow?
Mold spores occur in the indoor and outdoor environments. Mold spores may enter your house from the outside through open doorways, windows, and heating, ventilation, and air conditioning systems with outdoor air intakes. Spores in the air outside also attach themselves to people and animals, making clothing, shoes, bags, and pets convenient vehicles for carrying mold indoors.

When mold spores drop on places where there is excessive moisture, such as where leakage may have occurred in roofs, pipes, walls, plant pots, or where there has been flooding, they will grow. Many building materials provide suitable nutrients that encourage mold to grow. Wet cellulose materials, including paper and paper products, cardboard, ceiling tiles, wood, and wood products, are particularly conducive for the growth of some molds. Other materials such as dust, paints, wallpaper, insulation materials, drywall, carpet, fabric, and upholstery, commonly support mold growth.

What is Stachybotrys chartarum (Stachybotrys atra)?

Stachybotrys chartarum (also known by its synonym Stachybotrys atra) is a greenish-black mold. It can grow on material with a high cellulose and low nitrogen content, such as fiberboard, gypsum board, paper, dust, and lint. Growth occurs when there is moisture from water damage, excessive humidity, water leaks, condensation, water infiltration, or flooding. Constant moisture is required for its growth. It is not necessary, however, to determine what type of mold you may have. All molds should be treated the same with respect to potential health risks and removal.

Are there any circumstances where people should vacate a home or other building because of mold?

These decisions have to be made individually. If you believe you are ill because of exposure to mold in a building, you should consult your physician to determine the appropriate action to take.

Who are the people who are most at risk for health problems associated with exposure to mold?

People with allergies may be more sensitive to molds. People with immune suppression or underlying lung disease are more susceptible to fungal infections.

How do you know if you have a mold problem?

Large mold infestations can usually be seen or smelled.

Does Stachybotrys chartarum (Stachybotrys atra) cause acute idiopathic pulmonary hemorrhage among infants?

To date, a possible association between acute idiopathic pulmonary hemorrhage among infants and Stachybotrys chartarum (Stachybotrys atra) has not been proved. Further studies are needed to determine what causes acute idiopathic hemorrhage.

What if my child has acute idiopathic pulmonary hemorrhage?

Parents should ensure that their children get proper medical treatment.

What are the potential health effects of mold in buildings and homes?

Mold exposure does not always present a health problem indoors. However some people are sensitive to molds. These people may experience symptoms such as nasal stuffiness, eye irritation, wheezing, or skin irritation when exposed to molds. Some people may have more severe reactions to molds. Severe reactions may occur among workers exposed to large amounts of molds in occupational settings, such as farmers working around moldy hay. Severe reactions may include fever and shortness of breath. Immunocompromised persons and persons with chronic lung diseases like COPD are at increased risk for opportunistic infections and may develop fungal infections in their lungs.

In 2004 the Institute of Medicine (IOM) found there was sufficient evidence to link indoor exposure to mold with upper respiratory tract symptoms, cough, and wheeze in otherwise healthy people; with asthma symptoms in people with asthma; and with hypersensitivity pneumonitis in individuals susceptible to that immune-mediated condition. The IOM also found limited or suggestive evidence linking indoor mold exposure and respiratory illness in otherwise healthy children.

How do you get the molds out of buildings, including homes, schools, and places of employment?

In most cases mold can be removed from hard surfaces by a thorough cleaning with commercial products, soap and water, or a bleach solution of no more than 1 cup of bleach in 1 gallon of water. Absorbent or porous materials like ceiling tiles, drywall, and carpet may have to be thrown away if they become moldy. If you have an extensive amount of mold and you do not think you can manage the cleanup on your own, you may want to contact a professional who has experience in cleaning mold in buildings and homes. It is important to properly clean and dry the area as you can still have an allergic reaction to parts of the dead mold and mold contamination may recur if there is still a source of moisture.

If you choose to use bleach to clean up mold:

Never mix bleach with ammonia or other household cleaners. Mixing bleach with ammonia or other cleaning products will produce dangerous, toxic fumes.

Open windows and doors to provide fresh air.

Wear non-porous gloves and protective eye wear.

If the area to be cleaned is more than 10 square feet, consult the U.S. Environmental Protection Agency (EPA) guide titled Mold Remediation in Schools and Commercial Buildings. Although focused on schools and commercial buildings, this document also applies to other building types. You can get it by going to the EPA web site at http://www.epa.gov/mold/mold_remediation.html. Always follow the manufacturer’s instructions when using bleach or any other cleaning product.

What should people to do if they determine they have Stachybotrys chartarum (Stachybotrys atra) in their buildings or homes?

Mold growing in homes and buildings, whether it is Stachybotrys chartarum (Stachybotrys atra) or other molds, indicates that there is a problem with water or moisture. This is the first problem that needs to be addressed. Mold growth can be removed from hard surfaces with commercial products, soap and water, or a bleach solution of no more than 1 cup of bleach in 1 gallon of water. Mold in or under carpets typically requires that the carpets be removed. Once mold starts to grow in insulation or wallboard, the only way to deal with the problem is by removal and replacement. We do not believe that one needs to take any different precautions with Stachybotrys chartarum (Stachybotrys atra), than with other molds. In areas where flooding has occurred, prompt drying out of materials and cleaning of walls and other flood-damaged items with commercial products, soap and water, or a bleach solution of no more than 1 cup of bleach in 1 gallon of water is necessary to prevent mold growth. Never mix bleach with ammonia or other household cleaners. If a home has been flooded, it also may be contaminated with sewage. (See: After a Hurricane or Flood: Cleanup of Flood Water) Moldy items should be removed from living areas.

How do you keep mold out of buildings and homes?

As part of routine building maintenance, buildings should be inspected for evidence of water damage and visible mold. The conditions causing mold (such as water leaks, condensation, infiltration, or flooding) should be corrected to prevent mold from growing.

Specific Recommendations:

Keep humidity level in house between 40% and 60%.

Use air conditioner or a dehumidifier during humid months.

Be sure the home has adequate ventilation, including exhaust fans in kitchen and bathrooms.

Use mold inhibitors which can be added to paints.

Clean bathroom with mold-killing products.

Do not carpet bathrooms.

Remove and replace flooded carpets.

I found mold growing in my home; how do I test the mold?

Generally, it is not necessary to identify the species of mold growing in a residence, and CDC does not recommend routine sampling for molds. Current evidence indicates that allergies are the type of diseases most often associated with molds. Since the reaction of individuals can vary greatly either because of the person’s susceptibility or type and amount of mold present, sampling and culturing are not reliable in determining your health risk. If you are susceptible to mold and mold is seen or smelled, there is a potential health risk; therefore, no matter what type of mold is present, you should arrange for its removal. Furthermore, reliable sampling for mold can be expensive, and standards for judging what is and what is not an acceptable or tolerable quantity of mold have not been established.

A qualified environmental lab took samples of the mold in my home and gave me the results. Can CDC interpret these results?

Standards for judging what is an acceptable, tolerable or normal quantity of mold have not been established. If you do decide to pay for environmental sampling for molds, before the work starts, you should ask the consultants who will do the work to establish criteria for interpreting the test results. They should tell you in advance what they will do or what recommendations they will make based on the sampling results. The results of samples taken in your unique situation cannot be interpreted without physical inspection of the contaminated area or without considering the building’s characteristics and the factors that led to the present condition.

Summary

In summary, Stachybotrys chartarum (Stachybotrys atra) and other molds may cause health symptoms that are nonspecific. At present there is no test that proves an association between Stachybotrys chartarum (Stachybotrys atra) and particular health symptoms. Individuals with persistent symptoms should see their physician. However, if Stachybotrys chartarum (Stachybotrys atra) or other molds are found in a building, prudent practice recommends that they be removed.

Reverse Mortages..what you've heard and what they are

Ads for Reverse Mortgages are becoming more popular on TV. They can be helpful but they can also create some up expected consequences. BEFORE you decide this option is a good one for you; READ about them. This article is from the FHA web site.

HUD's Federal Housing Administration (FHA) created one of the first Reverse Mortgage. The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more. You can receive additional free information about reverse mortgages in general by contacting the National Council on Aging at (800) 510-0301 or downloading a free booklet, "Use Your Home to Stay at Home," a guide for older homeowners who need help now. Since your home is probably your largest single investment, it's smart to know more about reverse mortgages, and decide if one is right for you!

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA's HECM provides these benefits.

You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

2. Can I qualify for FHA's HECM reverse mortgage?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan. You can find a HECM counselor online or by phoning (800) 569-4287.

3. Can I apply if I didn't buy my present house with FHA mortgage insurance?

Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new FHA HECM will be FHA-insured.

4. What types of homes are eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 1-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

5. What's the difference between a reverse mortgage and a bank home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities. With an FHA HECM you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

6. Can the lender take my home away if I outlive the loan?

No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current and maintains the property.

7. Will I still have an estate that I can leave to my heirs?

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.

8. How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You can use an online calculator like the one on the AARP website to get an idea of what you may be able to borrow.

9. Should I use an estate planning service to find a reverse mortgage?

FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. FHA provides this information free, and HECM housing counselors are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders. Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you.

10. How do I receive my payments?

You have five options:

Tenure- equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.

Term- equal monthly payments for a fixed period of months selected.

Line of Credit - unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.

Modified Tenure - combination of line of credit with monthly payments for as long as you remain in the home.

Modified Term- combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Radon: What is it, why should I care, and what can I do about it?

Radon: What is it, why should I care, and what can I do about it?

Q. Is radon real?

Yes..yes, it is. Radon is a naturally occurring radioactive gas that forms as the result of the breakdown of uranium in soil, rock, and water, and can be found anywhere in the world. This radioactive gas comes up out of the ground and can seep into buildings. According to the United States Surgeon General, radon is the second leading cause of lung cancer deaths in the United States after smoking. A 2003 report from the EPA estimated that radon causes about 21,000 lung cancer deaths a year.

Q: What could it do to us?

Radon gas decays into radioactive particles that can get trapped in your lungs when you breathe. As they break down further, these particles release small bursts of energy. This can damage lung tissue and lead to lung cancer over the course of your lifetime. Not everyone exposed to elevated levels of radon will develop lung cancer. And the amount of time between exposure and the onset of the disease may be many years.

Like other environmental pollutants, there is some uncertainty about the magnitude of radon health risks. However, we know more about radon risks than risks from most other cancer-causing substances. This is because estimates of radon risks are based on studies of cancer in humans (underground miners).

Smoking combined with radon is an especially serious health risk. Stop smoking and lower your radon level to reduce your lung cancer risk.

Scientists are more certain about radon risks than from most other cancer-causing substances.

Children have been reported to have greater risk than adults of certain types of cancer from radiation, but there are currently no conclusive data on whether children are at greater risk than adults from radon.

Q: How does it get into our houses?

Radon is a radioactive gas. It comes from the natural decay of uranium that is found in nearly all soils. It typically moves up through the ground to the air above and into your home through cracks and other holes in the foundation. Your home traps radon inside, where it can build up. Any home may have a radon problem. This means new and old homes, well-sealed and drafty homes, and homes with or without basements.

Radon from soil gas is the main cause of radon problems. Sometimes radon enters the home through well water (see "Radon in Water" below). In a small number of homes, the building materials can give off radon, too. However, building materials rarely cause radon problems by themselves.

You can't see radon. And you can't smell it or taste it. Finding radon in your home, either the home you currently live in or the home you wish to buy, is not the end of the world.

RADON GETS IN THROUGH:

Cracks in solid floors

Construction joints

Cracks in walls

Gaps in suspended floors

Gaps around service pipes

Cavities inside walls

The water supply

Nearly 1 out of every 15 homes in the U.S. is estimated to have elevated radon levels. Elevated levels of radon gas have been found in homes in your state. Contact your state radon office for general information about radon in your area. While radon problems may be more common in some areas, any home may have a problem. The only way to know about your home is to test.

Radon can also be a problem in schools and workplaces. Ask your state radon office about radon problems in schools, daycare and childcare facilities, and workplaces in your area.

Q:How do I test for it?

The quickest way to test is with short-term tests. Short-term tests remain in your home for two days to 90 days, depending on the device. "Charcoal canisters," "alpha track," "electret ion chamber," "continuous monitors," and "charcoal liquid scintillation" detectors are most commonly used for short-term testing. Because radon levels tend to vary from day to day and season to season, a short-term test is less likely than a long-term test to tell you your year-round average radon level. If you need results quickly, however, a short-term test followed by a second short-term test may be used to decide whether to fix your home

Follow the instructions that come with your test kit. If you are doing a short-term test, close your windows and outside doors and keep them closed as much as possible during the test. Heating and air-conditioning system fans that re-circulate air may be operated. Do not operate fans or other machines which bring in air from outside. Fans that are part of a radon-reduction system or small exhaust fans operating only for short periods of time may run during the test. If you are doing a short-term test lasting just 2 or 3 days, be sure to close your windows and outside doors at least 12 hours before beginning the test, too. You should not conduct short-term tests lasting just 2 or 3 days during unusually severe storms or periods of unusually high winds. The test kit should be placed in the lowest lived-in level of the home (for example, the basement if it is frequently used, otherwise the first floor). It should be put in a room that is used regularly (like a living room, playroom, den or bedroom) but not your kitchen or bathroom. Place the kit at least 20 inches above the floor in a location where it won't be disturbed - away from drafts, high heat, high humidity, and exterior walls. Leave the kit in place for as long as the package says. Once you've finished the test, reseal the package and send it to the lab specified on the package right away for analysis. You should receive your test results within a few weeks.

Q: What do the results mean?.

The average indoor radon level is estimated to be about 1.3 pCi/L, and about 0.4 pCi/L of radon is normally found in the outside air. The U.S. Congress has set a long-term goal that indoor radon levels be no more than outdoor levels. While this goal is not yet technologically achievable in all cases, most homes today can be reduced to 2 pCi/L or below.

Sometimes short-term tests are less definitive about whether or not your home is above 4 pCi/L. This can happen when your results are close to 4 pCi/L. For example, if the average of your two short-term test results is 4.1 pCi/L, there is about a 50% chance that your year-round average is somewhat below 4 pCi/L. However, EPA believes that any radon exposure carries some risk - no level of radon is safe. Even radon levels below 4 pCi/L pose some risk, and you can reduce your risk of lung cancer by lowering your radon level.

If your living patterns change and you begin occupying a lower level of your home (such as a basement) you should retest your home on that level.

Even if your test result is below 4 pCi/L, you may want to test again sometime in the future.

Q: What if it is high?

Ways to reduce radon in your home are discussed in EPA's "Consumer's Guide to Radon Reduction." Ask me for a consumer guide to Radon!.

The cost of reducing radon in your home depends on how your home was built and the extent of the radon problem. Most homes can be fixed for about the same cost as other common home repairs. The cost to fix can vary widely; consult with your state radon office or get one or more estimates from qualified mitigators. The cost is much less if a passive system was installed during construction.

Articles taken from US EPA "a citizens guide to Radon"

Life after a Short Sale

Is there Life after a Short Sale? Short sales are just about everywhere…it seems like you can’t get away from them. Many seller, loan officers and Realtors say they know a lot about short sales, but don’t know how to the short sale process works or even why a short sale is a better alternative to a foreclosure.

Why is a short sale better than a foreclosure? A short sale will enable to the seller to purchase a home about 2 years after a short sale completion while a foreclosure will make you wait 5 years till you can purchase a home. In addition, short sales are better for the lender or bank holding the mortgage as it will keep the house occupied, with water and electricity still on and also keep the lawn mowed (half the time). Plus the bank will lose a lot less money through a short sale. Foreclosure are VERY expensive.

But what happens after a short sale? What are the seller’s options? Where do they live?

Depending on your unique situation, your credit may be shot or you may have only a few blemishes from your previous mortgage. The most severe circumstances will leave the seller a renter for a short time while those issues become worked out. Usually a landlord will require a few months mortgage as a security deposit. And if you don’t want to be renter, there’s always the lease-option or you could live with family or friends.

If you file for bankruptcy or short sold your house , a good credit repair company or legal firm can help you get things back in order and ready to buy in 2 years if possible. It should be top priority to get your credit back into line. The sooner your credit is back to normal, the sooner you’ll be able to get purchase a home.

from Real Estate Short Sale Guide

What is a Short Sale?

What is a Short Sale? is written by JAY THOMPSON on JANUARY 18, 2010 · I'm putting it here because it is a very simple explanation to a complex problem. Hope you like it.

Often us real estate types tend to forget that the real estate vernacular (I’ve always wanted to use ‘vernacular’ in a blog post) we are so accustomed to might be unfamiliar to many who don’t deal with real estate on a daily basis.

I know I am guilty.

We throw around words and terms like REO, Option ARM, fixture, encumbrance, and short sale like everyone knows what those terms mean.However, not everyone does. This isn’t said to slight anyone’s intelligence – far from it. It is simply a function of if you don’t use these terms regularly, why would you know (or care) what they mean?

Enter “short sale”. . .

I’ve gotten no less than three emails this week from folks asking me exactly what is a short sale. The short answer, no pun intended, is that a short sale is the sale of real estate where the owner owes more to the bank than the property is worth.

In the Phoenix real estate market, this is not an uncommon scenario.

For example:

Let’s say Joe Homeowner bought a home in 2005 for $300,000. He put 20% down, which amounts to $60,000, and he got a mortgage for the other $240,000. So Joe owes the bank $240,000. (Yes, he’s paid down some of that $240K principal in the five years he’s owned the home, but not much. For the sake of simplicity, let’s just say he owes $240K).

Now Joe wants to sell his home. So he calls his trusty real estate professional who tells Joe that his home will probably sell for $200,000.

But wait, Joe owes the bank $240,000. How can he sell his home for $200,000?

Well, he could sell the home for $200K, and write the bank a check for the other $40K. This probably won’t sit well with Joe, but it is an option (assuming he has 40 grand lying around).

Or, he could sell his home short – sell it for less than he owes to the lender.

The lender however, won’t like this.

Selling a Home Short

Joe Homeowner can’t just up and decide that he’ll sell his home for less than he owes on it. Lenders, and investors in mortgages, don’t take kindly to getting stiffed for tens of thousands of dollars.

Joe is going to have to prove to the lender that he can no longer make the payments. Yep, he is going to have to submit financial statements that demonstrate he can not pay the mortgage. Not that he doesn’t like making payments on a house that isn’t worth what he paid for it – but that he can’t make the payments.

Let’s say for the sake of argument that Joe has a legitimate hardship – lost job, medical expenses out of control, something along those lines. Depending on his lender (or lenders), he may or may not have to actually get an offer on his home before the lender will take a serious look at approving him for a short sale. Unfortunately, there is no standardized short sale approval process – it varies from lender to lender and sometimes even within the same lending institution. Consult a real estate professional for help in listing your home for a short sale. And make it an agent experienced in short sales. It is also not a bad idea to consult a tax professional, and quite possibly an attorney. Trust me, you don’t even want to attempt to go “For Sale By Owner” on a short sale. There’s no point in that, given that you won’t pocket a nickel on a short sale.

Let’s say your lender has indicated they may be receptive to a short sale. Yes, it really is up to them. They are the ones after all that will be taking the loss. They will have to approve any short sale offer that comes across the table. So now you’ve got your home listed for sale. . .

Buying a Short Sale

Buying a short sale is like buying any other piece of real estate.

But different.

Here are some things to note if you are considering buying a short sale property:

1) Expect a long wait. In a “traditional” sale (not a foreclosure or short sale), you make an offer, and the seller reviews it. Maybe you go back and forth on the price a couple of times, but an agreement to sell the home typically happens in a couple of days. Not-so-much in a short sale. You make an offer just as in a traditional sale, the owner of the home agrees to sell it, and now the offer gets sent to the bank. Remember, it’s the lender/bank that has to approve the sale price. And that can take WEEKS. Sometimes MONTHS. If you aren’t in a position to wait for months on an answer as to whether or not the bank will accept your offer, then you really shouldn’t play in the short sale sand box.

2) Don’t expect the seller to make any repairs to the home. In a traditional sale, repairs are negotiated between the buyer and seller. In a short sale, the owner will not make any money on the sale. Hence, they are going to be completely reluctant to spend money on repairs. Plus, the owners are typically in financial distress and simply have no money for repairs.

3) The banks don’t give a damn about your personal situation. Selling a home is a very emotional experience – for real people. Banks are not real people. They have zero emotional investment in a home. All they care about is their bottom line. It means nothing to them that you’re a Veteran, that you are having a baby, that you’ve found your dream home. Nothing. They don’t care. You may make an offer, wait weeks for a response, only to find out someone submitted an offer after you for a thousand more and *poof*, you are out of the picture.

Yes indeed, someone can submit an offer after you, and have it accepted over yours. From the Arizona Association of Realtors Short Sale Addendum, lines 13 – 15:

Nothing shall limit a seller from accepting subsequent offers from subsequent buyer(s) and submitting the back-up contract(s) to the seller’s creditor(s) for consideration. All parties understand and agree that seller’s creditor(s) may elect to allow the seller to sell the premises only to the holder of the contract with terms and conditions most acceptable to the creditor(s).

Generally speaking, the banks play by their own rules. They are in almost complete control of the short sale process. Scary isn’t it?

4) Unrealistic listing prices. There are agents out there that list short sales at ridiculously low prices. Some of this may be due to ignorance, some may be agents trying to generate an offer and/or bidding war. Any list price on a short sale needs to be taken with a grain of salt. If it sounds too good to be true, it is. While banks often pull bone headed moves, they aren’t completely stupid and they aren’t going to approve a short sale significantly under market value. Many people think they can “steal” a short sale. Banks don’t take kindly to being stolen from.

In Short (if you call 1,325 words short). . .

If you can’t make your mortgage payments, a short sale may be an option. If you’re considering buying a short sale, bring the patience of Job and be prepared for significant frustration.

Anecdotally, we are seeing some banks respond in somewhat timely fashion to both short sellers and buyers. Loss mitigation officers, the poor slobs assigned to handle short sales for lenders, are overwhelmed with work. A good short sale listing agent can make a huge difference in pushing through a sale, but in the end, the ball is in the bank’s court.

Top 10 Energy Payback Projects

Make these simple improvements now, start slashing your energy bills for years to come.

Projects With Immediate Payback (0 to 6 months)

Wrap the Water Heater

Until you’re ready to upgrade to a super-efficient, on-demand water heater (which costs about 25 percent less to operate than that big tank in your basement because it heats only the water you need), get the most from your existing one by covering it with a water heater blanket. This insulated jacket fits over the tank to help reduce the gas, oil, or electricity that’s required to keep water hot and at the ready. You can install it in just a few minutes. And while you’re at it, insulate the first five feet of hot-water pipe after it exits the tank and the last five feet of cold-water supply before it enters the tank. Together, these fixes will yield an immediate 15 percent reduction in the heater’s operating costs.

COST: $30
PAYBACK: up to $50 per year

Install a Programmable Thermostat

Turning down the thermostat 7 degrees at bedtime will knock 10 percent off your heating costs, but who wants to wake up to a frigid house? A programmable thermostat automatically drops the heat at night and cranks it up in the morning, so the house is warm before your alarm clock rings. Program it to lower the heat again while you’re at work and the kids are in school all day and you’ll reap additional savings. Best of all, many of these battery-operated units are easy to install yourself.

COST: $30 to $80
PAYBACK: $100 to $250 per year

Seal Gaps and Cracks

Check the attic floor and basement ceiling for gaps around pipe and wire penetrations and fill them with insulating foam, such as Great Stuff, which expands to fill any void you find. Check doors and windows for air leaks and seal with self-adhesive weatherstripping. “Sealing the building envelope generates immediate energy savings for little upfront cost,” says Nate Kredich, a vice president at the United States Green Building Council.

COST: $50 for all the Great Stuff and weatherstripping you’ll need.
PAYBACK: $100 to $250 per year

Use Compact Fluorescent Bulbs

If you replace conventional incandescent light bulbs with CFLs, you can slash as much as 15 percent off your household electricity bills. “The first CFLs had a greenish cast to them,” says Mark Loeffler, director of New Haven, CT based environmental design firm Atelier Ten, “but a high-quality bulb you buy today works well for general ‘ambient’ lighting.” Still, stick to incandescents for task lighting (because they’re less diffuse) and in bathrooms, where CFLs can be unflattering. Look for bulbs with the highest Color Rendering Index you can find—generally in the low- to mid-80s, compared with early CFLs, which scored about 70, and incandescents, which have a CRI of 100.

COST: about $3 each; $60 to replace 20 bulbs, two-thirds of the bulbs in a typical house.
PAYBACK: As much as $10 a year for one high-use bulb; $150 to $170 a year for 20 CFLs

Projects With Short-Term Payback (1 to 3 years)

Install Ceiling Fans

Thanks to the wind-chill factor, a ceiling fan makes you feel cooler by evaporating the moisture from your skin. So if you install one over your bed, for example, you should be able to raise the thermostat setting on the air conditioner by a couple of degrees and still feel just as comfortable. And because the fan uses no more energy than a 100-watt bulb, that’s a far more economical way to keep cool. You can reverse the fan’s direction in the winter and it will help push down heated air that gets trapped at the ceiling, reducing the amount of work your heating system has to do.

COST: $60 to $700
PAYBACK: $120 a year in electricity bills for air conditioning and $100 to $250 in heating fuel savings

Beef Up Attic Insulation

“Heat rises, so adding insulation to the attic floor is one of the best energy retrofits you can do,” says physicist Max Sherman, who leads the Energy Performance of Buildings group at the Lawrence Berkeley National Laboratory. If the insulation on (or in) your attic floor is less than 10 inches thick, bring it to at least that depth by rolling out additional batts over what’s there, and you’ll shave 15 to 30 percent off your heating bills.

COST: $300 (to add 3 inches of fiberglass insulation to a 1,000-square-foot attic floor) * some insulation products are eligible for 30 percent tax credit under the American Recovery and Reinvestment Act of 2009 (link)
PAYBACK: $150 to $300 a year for the average home heated with natural gas; $350 to $700 for oil heat.

TIP:

If your wall cavities are uninsulated, you can cut another 20 percent off your heating bills by blowing cellulose insulation into them ($1,000 to $2,000, plus the cost of minor repairs to siding where the contractor drills his access holes).

Projects with Long-Term Payback (5 or more years)

Plant a Tree

Putting a deciduous tree (or several) on the south or west side of your house will shade the building in the summer, reducing the strain on your air conditioning system and cutting costs by about 25 percent. And when the tree drops its leaves in the winter, the sun’s warming rays will penetrate, helping to keep heating bills in check.

COST: shade trees start as low as $50 each.
PAYBACK: $100 to $200 a year, once the tree is mature.

Upgrade to Energy-Efficient Appliances

Energy Star appliances consume 10 to 50 percent less electricity than standard appliances sold today, and if you’re replacing equipment that is older than 10 years, the energy savings will be even greater. Refrigerators and clothes washers are two of the biggest household energy guzzlers. A new Energy Star fridge uses half the energy of a machine made a decade ago; a front-load washer uses 35 percent less electricity than an old top-mount, plus it consumes less hot water and spins the clothes so effectively that you save money on dryer operating costs, too.

COST: $600 to $1,400 for a front-load clothes washer; $1,000 to $3,000 for an Energy Star refrigerator
PAYBACK: $145 a year in electricity savings for the washer, plus gallons of water saved on every load; $60 a year for the refrigerator.

Replace Your Aging Heating or Cooling System

The life expectancy of a furnace is 15 to 20 years, and for air conditioning equipment, it’s only 10 to 15. Even if your old system is still chugging along, you can reap dramatic benefits by upgrading to newer, more efficient technology. If you live in the frost belt, replacing a 20-year-old furnace or boiler with a new one will pay for itself in 7 years, then start putting money in your pocket. In the sun belt, replacing central air conditioners that are just a decade old can have an even bigger return.

COST: $3,000 to $8,000 for an efficient furnace, boiler, or air conditioning unit *super-efficient equipment may be eligible for 30 percent tax credit under the American Recovery and Reinvestment Act of 2009 (link)
PAYBACK: $500 to $1,800 per year

TIP:

To determine what energy retrofits will yield the biggest payback in your house, fill out the Home Energy Calculator worksheet at hes.lbl.gov.

And Don’t Forget These Freebies

Not every energy upgrade costs money or requires making an alteration to your house. Take these three, for example.

Turn down the temperature on your water heater by 10 degrees, and you’ll save 3 to 5 percent on operating costs. Many heaters are set at 140 degrees, but in most cases, 120 or even 115 degrees is plenty. Your shower won’t feel any different, because you’ll just mix in less cold water. And today’s dishwashers have their own heating units that boost the water temperature to sanitizing levels.

COST: free
PAYBACK: $15 or more per year

Adjust your normal day and night-time thermostat temperatures slightly higher in the summer and slightly lower in the winter. For each degree of change, you’ll save 3 to 5 percent on operating costs.

COST: free
PAYBACK: $150 to $300 per year for every 2-degree drop in the winter and increase in the summer.

Shorten your family’s normal shower lengths by 5 minutes. You can do this by using a kitchen timer or watch alarm to get everyone out of the habit of lingering endlessly under the spray.

COST: free
PAYBACK: $100 per year for each family member who shaves 5 minutes off their average shower time.

By Josh Garskof

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Copyright 2010 NATIONAL ASSOCIATION OF REALTORS®

Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®."