How to avoid buying the wrong house

NEW YORK – July 28, 2017 – Competition for affordable entry-level homes in desirable neighborhoods remains intense, due to a shortage of available property. This has many first-time buyers very frustrated.
What’s worse is there’s no end in sight to the problem, says Svenja Gudell, the chief economist for Zillow, the real estate database company. “Simple demographic change is contributing to incredibly high demand, as millennials reach their prime home-buying years and begin to enter the market in droves,” Gudell says.
Competition among rival buyers is prompting some young home-buying hopefuls to consider properties they would otherwise have ruled out – like homes in rundown condition or those in neighborhoods not to their liking. But real estate experts fear this could one day lead to disappointment if they compromise too much.
“What’s the point of winning in a multiple bidding situation if you end up owning the wrong house? Errors in selection can be costly both emotionally and financially,” says Mark Nash, a longtime real estate broker and author of “1001 Tips for Buying & Selling a Home.”
Nash tells the story of one of his clients, a single man in his mid-30s, who bought a ranch-style house in the suburbs, against his inclinations.
The man was miserable with his choice. A property that would have been perfect for a family proved a poor pick for a man still on the dating circuit. Eating out, theater-going and sports bars had given way to home upkeep and garden weeding.
In despair, the bank manager phoned Nash, announcing his decision to sell the suburban house just two years after buying it.
Fortunately, the upswing in value on the suburban house allowed the bachelor to invest his equity in a condo-apartment back in the city. But he still regrets the two dull years he spent in the suburbs.
Nash urges novice buyers, or anyone considering a radical shift in housing style, to be especially cautious in selecting a property.
“Buyers operating outside their comfort zone can easily make a mistaken choice,” he says.
Here are a few pointers on finding the right property, despite competitive pressures:
Clear the air with family members about their expectations
Many novice purchasers, especially those in their 20s and early 30s, accept parental gifts to help realize their homeownership goal.
“Often, there are a lot of strings attached when the family steps in. There are big control issues, and parental influence can lead to bad decisions,” Nash says.
He’s noticed that some parents, eager to boast that their children live in a prestigious neighborhood, will encourage them to buy beyond their self-imposed limits, which can put pressure on their marriages.
Before you accept family help, you need to know if your parents think this gives them veto rights over your home choice, Nash asserts. “A heart-to-heart talk can really help you avert this problem before it arises,” he says.
Show your inquisitive side before choosing a property
Buying a home is much different from buying a car. New Honda CR-Vs, for example, are all basically alike – no matter where you buy one.
But each home is likely to have unique qualities. Even in brand-new subdivisions, floor plans and lot settings vary. And the disparities are still greater in older communities, where properties may have changed hands several times. Upkeep differs from owner to owner.
Of course, you’ll want to find a reputable home inspector to scrutinize any property you plan to buy. But even before you reach that stage, you should pose plenty of questions about the home and the community where it’s situated, says Merrill Ottwein, a real estate broker and past president of the National Association of Exclusive Buyer Agents.
“I always tell folks to walk the community before deciding whether you’d like to live there,” Ottwein says.
Local residents can forewarn you about the annoying freight trains that pass through or the jets with flight paths overhead. They can also tell you about unpleasant traffic problems and issues facing the local schools.
“Information is power, and that’s especially true when you’re selecting a home,” Ottwein says.
Don’t rush into property selection
Some longtime renters get so keyed up at the idea of homeownership that they rush into the wrong purchase, according to Nash.
“With all this excitement and newness around their plans, they stop thinking straight,” he says.
To help guard against the tendency to plunge headlong into a purchase – a temptation that’s especially strong in highly competitive markets – Nash suggests that first-time buyers look at multiple properties during a shopping tour, even if they fall in love with the first place they see.
“And don’t work with any agent who pressures you into thinking that every house you see is a ‘home run.’ Think for yourself when choosing a place,” he says.
© Copyright 2017 Breeze Publications Inc., Ellen James Martin All Rights Reserved.

Study: In Fla., owning beats renting

LOS ANGELES – July 27, 2017 – Arizona, Nevada and Washington, D.C. are among the 11 states where it’s more affordable to rent than it is to buy a home. But owning a home still beats renting in Florida, according to a study by website GOBankingRates.
GoBankingRates surveyed all 50 states and the District of Columbia, and identified which states are best for buying a home and which are better suited for renting. The study, based on rental data on Zillow, was sourced to June 28, 2017. For the cost of owning, the study assumed a 20-percent downpayment on a 30-year fixed loan.
In Florida, homeowners have the advantage. They GOBankingRates study found that the average monthly rent of $1,543 is $167 higher than the cost of an average monthly mortgage of $1,376. The difference amounts to about $2,000 per year that the average Florida family would save by owning rather than renting, though actual savings would differ by metro area and other variables.
The 11 states where renting a home is less expensive than buying one include Arizona, Colorado, Washington, D.C., Hawaii, Idaho, Montana, Nevada, North Carolina, Oregon, Utah and Wyoming.

Some green homes could be toxic

WASHINGTON – July 18, 2017 – A tightly sealed home can reduce heating/cooling costs and minimize its environmental impact, but stale recirculated air can also cause health problems, some experts say. A few are now warning homeowners to avoid any potential health impact.
“Many homeowners are now having trouble with their more tightly built houses because the homes lack the ventilation necessary to get the stale inside air to the outside of the house and bring fresh air inside,” Remodeling writes.
Bryan Henson, president of Allen Construction in Santa Barbara, Calif., says a house that’s sealed up completely would become a toxic environment to humans.
The World Health Organization estimates that 4.3 million people worldwide die each year from indoor air pollution. Cases of asthma are on the rise, and asthma can be triggered by indoor contaminants such as mold, dust and dander.
More homeowners are questioning their indoor air quality and its impact on their health, sparking a growing interest in the “healthy home” concept. Healthy home systems tend to focus greatly on indoor air quality by providing filtered fresh air into the home.
For healthier air, homeowners need to consider their home’s air flow. In some homes, the air may be pushed down through the attic into the home or come out from a crawlspace through the living area and out the attic. The problem with crawlspaces, building experts note, is that they often contain moisture, soil gases and even rodents and their droppings.
Indoor air space needs to be properly sealed off from the crawlspace and attic, and older homes may need more sealing off because of toxicity, such as lead paint, says Henson.
To help gauge how healthy a home is and find areas worth improvement, homeowners can take a quiz made by Hayward Healthy Home. The Pharos Project lists different products and includes their chemical ingredients and potential hazards to homeowners’ health.
More resources for improving a home’s health and indoor quality include The Healthy Building Network, the Environmental Protection Agency, and the Indoor Air Quality Association.
Source: “Breathing Easy: An Introduction to Healthy Homes,” Remodeling
© Copyright 2017 INFORMATION INC., Bethesda, MD (301) 215-4688

How to get an insurer to pay your claims

CHICAGO – July 13, 2017 – Manuel Pulido returned to his townhouse in Chicago’s Gold Coast neighborhood one evening last December to find water spewing from the chandelier in his dining room. A pipe had burst in the second-floor bathroom, and the explosion of water quickly made its way into the master bedroom and leaked through to the dining room on the floor below. The ceilings, floors, walls, carpets, furniture (including some antiques) and light fixtures were drenched.
Pulido turned off the water and electricity and called his agent, who contacted Chubb, his insurance company. A water-remediation service arrived within 1½ hours to start drying out the damaged areas. The service spent five days in his house with giant fans and wet/dry vacuums to prevent further damage.
When Pulido and his wife, Rena, were shopping for insurance several years ago, they met with independent agent Rebecca Korach Woan, who gave them price quotes and discussed the pros and cons of several companies. They chose to pay extra for the Chubb policy because the company had a reputation for handling claims efficiently and taking care in repairing or replacing special items, such as antiques and artwork. The company had sent an appraiser to the house to itemize valuable property and take pictures of the items in every room.
When the pipe burst, Chubb’s claims rep was able to access those “before” pictures. An adjuster came to see the damage and returned a few times with experts to check on special items, such as an antique table. By February, the Pulidos had received more than $200,000 from Chubb to cover the damage to their home and possessions. “I made one phone call and everyone followed up with me,” Pulido says.
Most insurance claims take more phone calls – sometimes many more. If you have a homeowners or an auto claim, here’s what you need to know to avoid hassles and get a fair payment from your insurance company.
Homeowners insurance
Andrea Johnson went for years without filing a homeowners insurance claim. Then on the afternoon of May 20, 2013, the sky went dark and a tornado with 200-mile-per-hour winds ripped through her town of Moore, Okla.
The tornado wiped out so many houses that she had a hard time finding her street when she returned. “The neighborhood behind ours was totally destroyed and was just debris,” she says. Only a few houses on her block were still standing. One side of her house was completely gone, “and my neighbor’s house was in my house.”
• Act fast. When you file a claim that involves damage to your home, an adjuster usually comes within 24 to 48 hours, but it can take longer after a catastrophic event. Johnson contacted her State Farm agent after the tornado, and she met with the adjuster three days later to determine the extent of the damage. Johnson also contacted a builder who came to the site with an engineer and sent the insurer a report explaining why the house was unfixable. “The insurer finally decided it was a total loss,” she says.
Your insurer or agent may be able to help you find contractors, water-remediation services and other experts to help make the repairs, or you can use your own contractors. It can help to have your contractor at your house when you meet with the adjuster. “They can walk through together, and we can assure they’re both seeing the damage from the same perspective,” says Patrick Gee, senior vice president for auto and property claims at Travelers. The insurer may adjust the payout if the contractor finds more problems after starting the work.
• Take inventory. Filing the claim for the contents of Johnson’s home ended up being complicated. By the time the adjuster arrived, she had little evidence of her missing possessions; many items had been scattered by the tornado, and some had been tossed by well-meaning volunteers who came to Moore to help homeowners remove debris. “They asked for page after page of information to tell them about everything – how many pairs of shoes, how long you had them, how much they cost. Who remembers that?” she says. Johnson wishes she had kept a home inventory or had taken pictures before the items were removed.
Keeping an updated inventory isn’t the tedious hassle that it used to be. Many insurers have home inventory apps you can use. “Take pictures of your rooms, closets, attic and your backyard,” says John Doak, Oklahoma’s insurance commissioner. Open drawers and cupboards so that the photos show all your possessions. Keep the photos and copies of receipts for valuable items outside of your home, with your insurance agent or online. If possible, have your insurance agent visit your home, take pictures and let you know if you’ve reached your policy limits, says Doak.
• Know what’s covered. Most homeowners policies pay for additional living expenses – including rent, food and other costs – for up to a year while you’re unable to live in your home. Keep the receipts for reimbursement; some insurers provide debit cards for these expenses. State Farm paid Johnson’s rent for a small apartment while she waited for her claim to be settled.
In a disaster area, you may be out of your house a long time because of a shortage of contractors. “You could potentially be paid more for the additional living expenses than for the home if you’re out of your home for a year or more,” says Doak. Johnson decided to take the insurance money and move to Oklahoma City rather than rebuild her house.
Periodically review your policy or ask your agent what is and isn’t covered and how to fill the gaps. Flooding isn’t covered by homeowners insurance, but you can get a policy from the National Flood Insurance Program; your home-insurance agent may sell those policies. Sewage and drain backups usually aren’t covered automatically, but it may cost just $50 to add about $10,000 in coverage, says Rene Hernandez, an independent agent in Oklahoma City.
Most policies cover only about $5,000 worth of jewelry, but you can add a rider to provide coverage at the items’ appraised value.
• How to fight back. If your insurer drags its feet or you don’t think you’re getting adequate reimbursement, you can get help from your state insurance department. “If there’s an impasse, the insurance department can step in and speed things up,” says Doak, whose office fielded about 30,000 calls to help policyholders last year. The Oklahoma Insurance Department, like departments in many states, sets up a mobile office to answer consumers’ questions about their coverage and rights after a major disaster. It also offers a mediation program to help resolve disputes between homeowners and their insurance companies, an option that several state insurance departments offer.
Auto insurance
The steps you take immediately after a car accident can make a huge difference in how quickly and smoothly the claims process goes.
• Gather evidence. You’re likely to have a smartphone camera with you when you drive; if not, keep a camera in the glove compartment. If you’re in an accident, start taking pictures as soon as it’s safe – of your car, the other car, the intersection, and the other driver’s license and insurance card. You may even want to take a photo of the other driver. Also keep a notebook and pen by the driver’s seat so you can jot down a license plate number quickly, says Sharon Jansma, who owns a Farmers Insurance agency in Visalia, Calif.
If there are witnesses, get their contact information. Having a police report can help, especially if there’s a question of who’s at fault. “Don’t tell anyone the accident was your fault, even if you think it was,” says Kip Diggs, a State Farm spokesman. “Don’t sign any document unless it’s for the police or your insurance agent.”
Some insurers, including State Farm and Travelers, have mobile apps that make it easy to submit photos and walk you through the next steps. Or you can call your insurance company or agent.
• Find the right shop. You can usually use any body shop, but most insurers have preferred shops that work directly with the adjusters and guarantee their work. This can speed up the claims process, but it can help to have a second opinion. “I always tell my insureds to get a few estimates to make sure there’s consistency,” says Hernandez. If you have rental-car coverage, your insurer will pay for at least a portion of the cost of a rental car while yours is in the shop.
If the car is a total loss, the insurer will generally pay the car’s “actual cash value” (the market value for a car of its age and condition). Ask how the insurer came up with the number. Farmers compares the cost of cars selling in the area that are the same make and model, with similar mileage and upkeep, then adjusts the figure for your specific details. “I like to see a sample size of five to 10 cars selling in your area,” says Jansma. If you think the number is too low, gather your own list of similar cars for sale locally. The insurer will either send you a check for that value (minus your deductible) or pay the financing company and send you any additional money, if you have a loan.
Claims can get complicated – and take longer – when another car is involved. It usually takes 60 days or less, says Jana Schellin Foster, who owns an independent insurance agency in Carson City, Nev. “Anything beyond that, somebody is dropping the ball.” In that case, Foster will generally have a conference call with the agent, the insurer and the customer. “That way there is no miscommunication,” she says.
The final payment can be delayed while the two insurers decide who is at fault. A typical scenario: Your insurer pays the claim while you pay your deductible, even if there’s a good chance you weren’t at fault. Your deductible could be returned to you months later, after the insurance companies determine who is to blame. That process, called subrogation, can take anywhere from 10 days to a year, says Jansma.
• How to fight back. If the insurer seems to be lowballing the repair costs, ask your body shop to provide a detailed estimate of what needs to be fixed. If that doesn’t help, find out if you have an “appraisal clause” in the policy, under which a third party reviews your body shop’s appraisal and the insurer’s and settles on a number.
Your agent may be able to help with stalled claims. “You may have one claim in a lifetime, but we do this every day,” says Sarah Brown, of Keller-Brown Insurance Services, in Shrewsbury, Pa. As an independent agent, she often has contacts at the other driver’s insurance company as well as at her client’s and can find out what’s causing the delay. The state insurance department can also explain your rights and get the insurance companies moving.
Check an insurer’s complaint record
One way to minimize the chances of having claims problems is to avoid insurers that have a history of hassling people at claim time. You can look up the insurer’s complaint record with the National Association of Insurance Commissioners’ Consumer Information Source.
Type in the company’s name, then click on “property/casualty” for the business type for auto and homeowners insurers. When you see the list of companies, click on “closed complaints,” then select “closed complaint ratio report.”
You’ll see a ratio of the insurer’s market share of resolved complaints to the company’s market share of premiums for that type of insurance (so larger insurers aren’t penalized for having more complaints). The national median is 1.00; companies with ratios below that median have a better track record than those above the median.
You can also contact your state insurance department to learn about any actions taken against the insurer.
Copyright © 2017 The Kiplinger Washington Editors, Kimberly Lankford, contributing editor, Kiplinger’s Personal Finance.

HUD awards Fla. $822K in housing counseling grants

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) awarded more than $50 million in housing counseling grants to hundreds of national, regional and local organizations to help with housing needs and prevent future foreclosures.
Of that money $822,814 is going to 24 Florida-based home counseling organizations. Additional money should come to Florida by way of grants to nationally based counseling organizations headquartered in other states.
“This is a smart investment in helping families find and keep their homes,” said HUD Secretary Ben Carson. “Quite simply, knowledge is power. We know that armed with the information they need, those who receive counseling services are far more successful in buying, renting or avoiding foreclosure.”
More than $47 million of the grants will directly support counseling services provided by 31 national and regional organizations, six multi-state organizations, 19 State Housing Finance Agencies (SHFAs) and 199 local housing counseling agencies. In addition, HUD awarded $3.5 million to four national organizations to train housing counselors.
Grant recipients address multiple housing counseling needs, including helping homebuyers evaluate their readiness for a purchase. It helps them understand financing and downpayment options, and navigate what can be a confusing and difficult process. The organizations also help households find affordable rental housing and offer financial literacy training for those struggling to repair credit problems.
In addition, many of the organizations assist homeless persons in finding the transitional housing they need to move toward a permanent place to live. Many also assist senior citizens seeking reverse mortgages.
Florida groups receiving HUD counseling funds
Affordable Homeownership Foundation Inc., Fort Myers
$20,953.00 –
The Agricultural and Labor Program Inc., Lake Alfred
$17,527.00 –
All American Foreclosure Solutions Inc., Cape Coral
$20,132.00 –
Bright Community Trust, Clearwater
$21,094.00 –
Broward County Housing Authority, Lauderdale Lakes
$23,415.00 –
Crisis Housing Solutions (Adopt a Hurricane Family Inc.), Davie
$20,146.00 –
Community Enterprise Investments Inc., Pensacola
$22,453.00 –
Community Housing Initiative Inc., Melbourne
$23,147.00 –
Comprehensive Housing Resources Inc., Port Charlotte
$20,825.00 –
Consolidated Credit Solutions, Ft. Lauderdale
$46,737.00 –
Credit Card Management Services DBA, West Palm Beach
$198,435.00 –
Debt Management Credit Counseling Corp., Lighthouse Point
$124,970.00 –
Habitat for Humanity of Jacksonville Inc., Jacksonville
$19,042.00 –
Home Ownership Resource Center of Lee County Inc., Fort Myers
$18,900.00 –
Jacksonville Area Legal Aid Inc., Jacksonville
$22,736.00 –
Lee County Housing Development Corporation, Fort Myers
$18,079.00 –
Manatee Community Action Agency Inc., Bradenton
$20,811.00 –
Miami Beach Community Development Corporation, Miami Beach
$14,655.00 –
Mid-Florida Housing Partnership Inc., Daytona Beach
$22,736.00 –
Ocala Housing Authority, Ocala
$28,370.00 –
Opa-locka Community Development Corporation, Opa-locka
$23,005.00 –
Solita’s House Inc., Tampa
$26,161.00 –
Tampa Bay Community Development Corporation, Clearwater
$25,340.00 –
West Palm Beach Housing Authority, West Palm Beach
$23,415.00 –
© 2017 Florida Realtors

Childcare costs undermine middle-class housing aspirations

NEW YORK – July 5, 2017 – According to the Zillow Housing Aspirations Report, 40 percent of upper-middle class parents surveyed rely on extended family for childcare, compared to only 29 percent of low-income parents and 33 percent of high-income parents.
As a result, commercial childcare costs make it difficult for some families to achieve homeownership, especially given that incomes rose only 2.6 percent over the past year and home values climbed more than 7 percent.
Commercial childcare costs up to $21,000 annually, but some families may not earn enough at a full- or part-time job to cover the costs of childcare, and it makes financial sense to have a stay-at-home parent. However, families in the middle – often with two working parents making moderate incomes – can can’t afford to send their kids to childcare and can’t afford to have one parent to stay home.
“Housing costs and child care are among the two largest budget items for working families, costing as much $43,000 a year in urban areas and over $34,000 a year in the suburbs,” says Zillow chief economist Dr. Svenja Gudell. “While many Americans are tied to the places they live for a variety of personal and financial reasons, it’s necessary for some households to live near family in order to make ends meet. Sometimes extended family might move together to provide childcare, or grandparents might even follow their children when they move to a new city to help care for their grandkids.”
According to the survey, around 26 percent of those polled said proximity to family drives their decision about where to live.
Source: RealtyBizNews (06/19/17) Wheatley, Mike

Many consumers don’t understand credit scores

NEW YORK – June 30, 2017 – Consumers’ knowledge of credit scores eroded over the past year, according to the seventh annual credit score survey, released by the Consumer Federation of America (CFA) and VantageScore Solutions, LLC.
For example, fewer people knew that credit scores may be used by companies that aren’t in the money-lending business. For cell phone companies, this awareness was down from 68 percent to 59 percent; for electric utilities, this awareness was down from 53 percent to 44 percent.
Given that the margin of error for a national survey of 1,000 representative adult Americans is plus or minus three percentage points, the declines are too large to reflect sampling bias.
At the same time, the percentage of people who said they obtained at least one credit score in the past year rose steadily – from 49 percent in 2014, to 51 percent in 2015, 54 percent in 2016 and 56 percent in 2017.
“One would think that increasing access to one’s credit scores would help increase knowledge about these scores,” says Stephen Brobeck, CFA’s Executive Director. “But that apparently has not been the case, to the detriment of consumers. Low credit scores can cost consumers hundreds and sometimes thousands of dollars a year in higher loan and service costs.”
“The greater availability of credit scores and credit reports is certainly a net positive for consumers, however the data demonstrates that we collectively have work to do to help consumers understand that credit scores are used by more than just lenders,” said Barrett Burns, president & CEO of VantageScore Solutions. “Credit scores can have an impact on everything from your loan terms to the size of the deposit required to acquire a mobile phone.”
The good news from the survey is that a large majority of consumers correctly identified key factors influencing scores – missed loan payments (91%), high credit card balances (86%) and personal bankruptcy (85%) – and also two important ways to raise their credit scores or maintain high scores – making loan payments on time (96%) and keeping credit card balances low (80%).
Other declines in consumer understanding over the past 14 months
A low credit score on a typical auto loan would increase loan charges by more than $5,000 (down from 25% to 18%)
Credit scores represent the risk of not repaying a loan (from 43% to 38%),
Individuals have more than one credit score (from 69% to 64%)
It’s very important to check the accuracy of one’s credit reports at the three main credit bureaus (from 73% to 68%)
Credit repair companies are never or only occasionally helpful in improving one’s credit scores (from 54% to 47%).
Men incorrectly think they know more than women
Only 54 percent of female respondents, compared to 61 percent of male respondents, said they considered their knowledge of credit scores to be good or excellent. Yet, on a wide range of questions, women knew more:
A higher percentage of men than women incorrectly indicated that a person’s age (47% v. 41%), marital status (48% v. 38%), and ethnic origin (17% v. 13%) were among factors used to calculate a credit score.
A higher percentage of women (66%) than men (59%) correctly identified three actions that help a consumer raise a low credit score or maintain a high one.
A higher percentage of women (72%) than men (64%) understand the importance of checking the accuracy of one’s credit reports at the three main credit bureaus. That difference may reflect, in part, the fact that a higher percentage of women (67%) than men (63%) said they had obtained a free copy of their credit reports at least once.
Higher income consumers know more
The largest demographic difference in credit score knowledge reflected income. For example, only 55 percent of those with household incomes under $25,000 correctly identified three ways to raise a low credit score compared to 73 percent of those in households with incomes $100,000 and over.
“Certainly one reason for the knowledge gap is that low-income consumers have much less experience with credit than do high-income consumers,” says Brobeck. “Yet, understanding credit scores is absolutely essential to lower-income consumers who can ill-afford to pay high loan rates and service fees.”
How consumers can raise credit scores
Consistently make loan payments on time every month. A late payment can lower a credit scores by dozens of points
Use only a small portion of the credit available on a credit card
Pay down credit card debt rather than shift it to another credit card or home equity loan
Regularly check credit reports to make sure they’re error-free. That can be done by contacting or calling (800) 322-8228.
To help consumers better understand credit scores, CFA and VantageScore maintain an interactive credit score quiz website,, that allows consumers to test their credit score knowledge by answering 12 questions. It’s also available in Spanish.