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Today's Top Real Estate News
Provided by Inman News
2/7/2012 8:52:01 PM
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Home upgrades that match your lifestyle
Book Review: 'Staying Put: Remodel Your House to Get the Home You Want'
Tara-Nicholle Nelson
Inman News®
Book Review
Title: "Staying Put: Remodel Your House to Get the Home You Want"
Author: Duo Dickinson
Publisher: The Taunton Press, 2011; 272 pages; $24.95 The other day, I said the phrase "doggie bag" and my teenage son looked at me like I was nuts. He had no idea what I meant! These days, in restaurants, we're offered a box to take our food home in. But when I was a kid, waitstaff would proffer a doggie bag, the implication being that the leftovers would make for a special treat of a meal for your family's four-legged friends. Fast-forward a couple of decades, and two realizations -- that restaurant portions are at least double what a human should eat at a sitting, and that human food is terrible for dogs -- have put the phrase out of business. Similarly, the subprime mortgage meltdown and the resulting housing and job market recessions have put the kibosh on that life cycle of American homeownership that went like this: Buy a house, sell it for goo-gobs of cash, buy a bigger house, sell it for even more, etc., and so forth. Many a homeowner these days is either upside down or averse to selling at the bottom of the market and, as a result, has decided to stay put for the duration. But many folks falling into these buckets still have dreams about their homes. Architect Duo Dickinson makes a very vivid case in his new book, "Staying Put: Remodel Your House to Get the Home You Want," that committed homeowners can and should remodel their existing home into their dream home. Dickinson doesn't restrict himself to the potentially dry, if multitudinous, iterations on what a house can become through the wonders of remodeling. He touched on values, too, emphasizing our national value of homes -- beyond their monetary value -- as the "backbone to the arc of a family's history and identity," decrying the "intellectually lazy ... economically unsustainable mass delusion of an ever-expanding American housing market." Dickinson goes on to applaud today's era of "more nimble, nuanced and resourceful" homeowners, millions of whom also happen to be, to use his phrase, "house-bound" in properties lacking 21st-century functionality. Dickinson then moves into the nuts and bolts of what he acknowledges can be a very difficult task: taking an existing home, warts and all, and attempting to transform it into the home of your dreams. He starts out exhorting readers to get their acts together, dealing with some common mindset-based pitfalls and setups for disaster (e.g., "if your family is dysfunctional, a new home will not pull it together"), pre-project planning and education musts, and some considerations to weigh when deciding whether your home is worth renovating or is a money pit in the making. Let me say this: This lengthy first chapter, on its own, makes "Staying Put" an essential resource for every homeowner contemplating a remodel, upside down, house-bound or not. Dickinson puts his years of experience to very effective use, creating decision tools for homeowners to understand the properties of their home and their visions vis-à-vis the most common remodeling disasters, which can involve spiraling costs and unsatisfactory outcomes. He empowers readers to make informed decisions about which projects to take on and whether to remodel at all. From there, Dickinson covers all the most common remodeling dreams of homeowners, from opening up kitchens, to making living rooms more social, to creating spaces that connect to the outdoors, and reconfiguring bedrooms, bathrooms, entryways, mudrooms and workspaces in the home. The decision-guiding chapters for each type of project are riddled with concrete examples and color before-and-after pictures with detailed descriptions and diagrams; the projects were clearly selected to provide a range of scale (small projects to vast), locales (rural to urban) and budgets (Dickinson says they range from $100 to $1,000 per square foot). And if the dozens and dozens of images in the book are not enough, the companion site StayingPut.com offers many more for your inspiration. If you're a home-improvement television buff or are seeking inspiration for your own home, you'll get hours of enjoyment and education out of "Staying Put" and its extensive before-and-after project inventory. But every homeowner (or homebuyer, for that matter) considering whether to take on a major remodel should invest in the book for the first chapter's guidelines on whether it's worth it, and how to pick projects that set you up for success at converting your home into the home of your dreams. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com. Copyright 2012 Tara-Nicholle Nelson
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Roller shades get a bad rap
Who must replace windows after cracks are discovered?
Barry Stone
Inman News®
DEAR BARRY: I am a licensed contractor and recently installed some roller shades above the windows of a new home. About two weeks ago a few of the glass panes started cracking -- some at the top and some at the bottom. The window supplier says this was caused by our shades being closer than 3 inches from the windows. According to the shade manufacturer, the shades could be touching the glass without causing cracks. The manufacturer has been in business for more than 40 years, and they say they've never had this complaint before. But the window company has convinced the homeowners that we are to blame, and they are demanding that we replace the windows. What do you recommend that we do? --Tom DEAR TOM: It is absurd to allege that window shades caused the glass to crack, merely by being too close. If that were a reasonable cause, then cracks would be commonly caused by curtains and venetian blinds that are often installed within 3 inches of the glass. Rather than pass blame, the window manufacturer and the builder should have a qualified expert conduct an independent forensic investigation to determine the actual cause of the cracks. Possibilities are numerous, but a few that come to mind are: - Sagging of the headers above the windows
- Shrinkage of the framing lumber in the walls.
- Temperature changes due to seasonal weather.
- Pressure from the foam insulation in the walls.
The attempt to blame your company for the window damage appears to be a defensive rush to judgment. Good luck fighting this. DEAR BARRY: I hired someone to install a new sprinkler timer in the garage, but he did sloppy work. The wires next to the timer are covered with unsightly black tape. None of this was visible with the old timer. He said nothing is wrong with it, but I am concerned. Is it up to code to just tape wires like this, and will it be a problem when I sell my house? --Ellen DEAR ELLEN: The only problem with the wiring is the unsightliness. Wires from an irrigation timer to sprinkler valves are low voltage. Therefore, they do not violate the electrical code and are not unsafe. It is unlikely that someone buying a home will be concerned about a detail such as this in a garage. However, the person you hired would have shown better workmanship and professionalism by concealing the wire connections behind the timer. It would not be unreasonable to request that he do so now. DEAR BARRY: My home was built in 1910, and I want to know if I have to bring the foundations and the crawl space vents up to code. Is there any such requirement for older homes? --Pam DEAR PAM: With rare exceptions, homes are not required to comply with building codes that came into effect after construction. The first edition of the building code was published in 1927, so your home is definitely grandfathered and not subject to mandatory foundation upgrades. However, it would be wise to have the building professionally inspected so that you will be aware of deficiencies or hazardous conditions that warrant repairs or upgrades, regardless of requirements. To write to Barry Stone, please visit him on the Web at www.housedetective.com. Copyright 2012 Barry Stone
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Is owner's title insurance worth the cost?
Forgo coverage only if you can stomach 'random' risks
Benny Kass
Inman News®
DEAR BENNY: We are getting ready to close on a home and there is a settlement fee of $685 for lender's title insurance and $683 for owner's title insurance. Must we pay both fees? --Phyllis DEAR PHYLLIS: This is a question that has plagued homeowners for many years: "Why do I need to purchase owner's title insurance, especially when I know that my seller has owned and lived in the house I am about to buy for more than 25 years?" I am sympathetic to this issue, especially because many years ago I was successful in winning a class action on behalf of a couple who were required by their lender to purchase the owner's coverage in addition to the lender's title insurance. First, you have to understand that if you want to get a mortgage from a commercial lender, you will have to obtain lender's title insurance. However, in many states, the prevailing custom may require the seller -- and not the buyer -- to pick up this cost. Additionally, many builders will agree to pick up the cost of the title insurance if you, as buyer, agree to use the builder's preferred lender and the preferred settlement (escrow) attorney or company. But owner's insurance is (or should always be) optional. Oversimplified, title insurance insures a homebuyer -- and a mortgage lender -- against loss resulting from title defects, whether these defects are known or unknown at the time of the sale or the refinance. In the language of the title industry, the insurance covers both "on record" and "off record" problems. For example: - A person in bankruptcy who has no authority to sign the deed conveys property to a third party.
- A grandson forges his grandmother's name to a deed and conveys her property to a third party, or to himself.
- A mortgage (deed of trust) is properly recorded on the land records, but there is no legal description identifying the property that is subject to the mortgage. As a result, creditors are not put on notice of the existence of this mortgage lien, and may make another loan, which will not have first-trust priority.
- A deed (or other legal document) is improperly recorded with the wrong legal description.
The list, unfortunately, can go on and on. There are numerous instances where title to real estate has been found to be defective -- either based on substantive grounds or technical, legal procedural reasons (such as improper indexing, misfiling or failure to comply with local recording requirements). It should also be understood that title insurance is quite different from, say, your homeowners or auto insurance policy. With the latter, they cover future incidents -- a fire in your home or an accident in your car. But with title insurance, the coverage is limited to risks (defects) that are already in existence at the time the policy is issued. Thus, when your seller purchased the house several years ago, his title insurance policy covered him -- and his lender -- for all risks (defects) that existed at time he took title; the policy did not cover future defects. Several years have now passed. You and the seller believe that title is clear, subject only to any mortgage that will be paid off at settlement. However, are you really sure there are no title problems affecting title? Did a mechanic place a mechanic's lien against the property? Did a creditor obtain a judgment against the seller and have that judgment recorded? Did the home get sold at a tax sale, without the seller's knowledge? Did someone forge the seller's name to a deed and sell the property to a third party? Or did someone accidentally place a lien against your property (Lot 657) when they really meant to place the lien on Lot 567? Strange as it may sound, these things do happen. Your lender wants assurances that should you not be able to make the monthly mortgage payment, and the lender has to foreclose on your property, that you have clear title. Your new lender probably trusts you, as it is willing to make you a loan. However, since you cannot categorically advise the lender that you have clear title, the lender will insist that you obtain a title insurance policy in favor of the lender. Here is a real, factual situation: Subject A sold property to B in 1982. In 1985, B sold to C, who then sold to D in 1996. B, C and D all obtained owner's title insurance. In 1997, D's neighbor sued D, claiming adverse possession of a small strip of land abutting both properties. Because adverse possession in Maryland requires a 20-year vesting period, D's neighbor had to argue that its right began at least as early as 1977. Thus, after D was sued, D brought C into the suit. Needless to say, C filed a claim against B, who in turn brought A into the litigation. In this litigation, B advised its title insurance carrier of the claim, and the title insurance company picked up the extensive legal fees that were involved in the lawsuit. B was protected, even though he sold his property many years before the lawsuit was brought. (Full disclosure: I represented B). Every homeowner must, however, carefully read the insurance policy. There are numerous coverage exclusions contained in an owner's policy, such as: - Taking of the property by a government (called eminent domain);
- Defects, liens or adverse claims not known to the insurance company but known to the insured and not disclosed in writing to the company prior to inception of the policy; and
- Any law restricting or relating to the use or occupancy of the property based on environmental protection.
All homeowners should discuss these issues with their attorney before going to closing (or refinancing). So do you really need to buy the owner's title insurance policy? That's your call! There are risks, as remote as they may seem. Title insurance is a complex issue. However, it does give some peace of mind to homeowners, especially since we live in a litigious society. DEAR BENNY: Now and then I run across families who have added to their home a comfortable independent living space with a small kitchen for a grandparent. Eventually these grandparents die. What then happens to those nice add-ons? Do you know of any search site for these kinds of living quarters? --Thelma DEAR THELMA: That is perhaps the most interesting question I have ever received, especially since I really never thought of that. No, I do not know of any websites that address your question. However, my guess is that when the grandparents die (or move to a retirement complex) the children will either use the space for their own purposes or consider renting out that space. DEAR BENNY: I bought a Freddie Mac foreclosure for cash and they gave me a special warranty deed instead of a warranty deed. Is this a problem in the future if I want to sell? --Joy DEAR JOY: You need not worry, and if you also obtain owner's title insurance (as discussed above) you have additional protection. Oversimplified, there are three forms of deeds: - quitclaim: If I own the property, you get what I own;
- a general warranty deed: Here, I am warranting (i.e., guaranteeing) that the title I am giving you is good going back to when my state was established, or even earlier; and
- special warranty deed: Here, I warrant that title is good from the day I bought it, but I will not guarantee anything earlier.
I practice law in Maryland and Washington, D.C. From my experience, we use special warranty deeds only. DEAR READERS: Was your loan involved in a foreclosure process between Jan. 1, 2009, and Dec. 31, 2010? If so, you may be eligible for an independent foreclosure review. Two federal agencies, the Federal Reserve Board and the Office of the Comptroller of the Currency, have required that an independent review be made to determine if homeowners have been financially injured due to errors, misrepresentations or other deficiencies in the foreclosure process. Although this review does not involve every mortgage lender, there is a lengthy list of lenders who are required to participate. Eligible homeowners, present or former, should have been mailed a letter by the end of last year explaining the process. A form must be completed and filed no later than April 30, 2012. If you believe you should be a part of this review, go to www.independentforeclosurereview.com. You will find a complete list of cooperating lenders, plus additional information to assist you. Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com. Copyright 2012 Benny L. Kass
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Those brass light fixtures send a message to buyers: C-H-E-A-P
Rooms for Improvement
Mary Umberger
Inman News®
Editor's note: Award-winning columnist and freelance writer Mary Umberger offers some home design and staging advice from the experts in "Rooms for Improvement," a new Inman News column. Let us know what you think in the comments section below. Got a strategy for a thorny problem in staging a home for sale, or want to share a problem you'd like the experts to address? Send your questions, tips and photos via email to press@inman.com, with the subject line: "Rooms for Improvement." Don't get Steve Somogyi wrong. He doesn't hate all brass finishes -- just the really shiny, yellow-toned stuff that he thinks screams "Cheap!" when homebuyers notice it in light fixtures, switch plates, doorknobs, etc. That brass tone was fashionable a couple of decades ago, but its day is done and it has to go if it's in a house you're trying to sell, according to Somogyi, a real estate agent and interior designer. In prepping a small house for the market recently, he switched out every single brass light fixture, switch plate, door hinge and knob for ones with an oil-rubbed bronze finish that's a very dark brown. 
Dark-toned fixtures and hardware may work to deformalize a room. Photo/Sea Gull Lighting. By buying the replacements from a big-box store and a website specializing in closeouts, the homeowner spent $300 to $400 for materials, he estimated, and a contractor/installer made the changes in a day. In a larger home, such changes might be too complex or expensive to do throughout, but at the very least, sellers should take a hard look at the front-door hardware that greets potential buyers, he said. 
Nickel-toned finishes haven't lost their appeal to homebuyers, designers and real estate agents. Photo/Sea Gull Lighting. | "I spent a lot of the money on the door hardware in that house because I do believe that your buyer knows within a few seconds whether they're going to buy," Somogyi said. "When you feel an expensive door handle vs. a cheap handle, you can feel the difference. "I try to sell an emotional experience, that the place has been loved," said Somogyi, an agent for the North Clybourn Group brokerage in Chicago. "That energy comes out." Although he's a fan of dark-toned finishes (and certain antique golds), Somogyi said the general homebuying public continues to accept the recently popular satin-nickel tones as being "up to date" -- though he suspects an appetite is brewing for the next big color. "Lighting fixture (and hardware) finishes have certainly trended away from polished brass over the years," said Jody De Vine, director of marketing for Sea Gull Lighting in Riverside, N.J. We've seen more transitional styling and finishes that cross over between traditional and modern. This became quite evident in the use of polished and brushed nickel." De Vine said chrome finishes have gained popularity as a "clean" style, and that dark browns and iron-blacks come across as cozy and work well in updating traditional styling. Those browns and blacks also seem to be a popular choice when trying to deformalize some rooms, she said. Somogyi said not to overlook hardware details because buyers notice them. "Those switch plates and outlet covers that have crusty paint on them? They only take a minute or two to switch out," he said. And if you have recessed can-lights in ceilings, take a look at the "surround," or collar, around the openings, he said. "Over time they get to be a yellow-y color that stamps them as being dated, dreary or old. I've seen a million of these." Got a strategy for a thorny problem in staging a home for sale? Or got a problem you'd like the experts to address? Send your questions, tips and photos via email to press@inman.com, with the subject line: "Rooms for Improvement." Mary Umberger is a Chicago-area freelance writer.
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Qualify to buy before selling current home
Bridge financing, hybrid loans take stress out of equation
Dian Hymer
Inman News®
Buying a first home is hardly easy, but it pales in comparison to buying your next home. Usually, two transactions are involved: the purchase of the new home and the sale of your current home. In other words, double the complexity. Most homeowners would rather know where they're going to live next before they let go of their current home, particularly if they have small children. However, stringent lender qualifying requirements make it impossible for most buyers to buy before selling. Lenders require enough cash for a down payment and closing costs without having your home sold. You will also need enough income to qualify carrying both homes. If you don't have enough income to qualify but it makes sense financially for you to keep your home as a rental property, the lender will use a portion of the rental income to help you qualify for the mortgage you need to buy the next home. HOUSE HUNTING TIP: Buyers wedded to 30-year fixed-rate financing can make qualifying easier by changing to an adjustable-rate mortgage (ARM). There are ARMs that are fixed for a number of years -- say five, seven or 10 -- before they convert to an adjustable. These loans are available at much lower interest rates than 30-year fixed-rate financing. If you plan to stay in the new home for longer than 10 years and want to take advantage of today's low fixed interest rates, you can refinance after your current home is sold. If you take this route, make sure there isn't a prepayment on the fixed ARM. Also, be aware that the interest rate on a 30-year fixed-rate refinance loan is a bit higher than it would be on an equivalent purchase-money mortgage. In one instance recently, buyers were able to buy before selling, but only with the help of creative financing. The buyers had a generous down payment and applied for a jumbo conforming loan in the amount of $625,500. They hadn't sold their current home, so that mortgage was taken into account for qualification. Their overall debt-to-income ratio was too high. The lender of the mortgage for the new home would qualify the buyers for a conforming loan only in the amount of $417,000. These buyers were able to arrange a short-term interim loan from friends to bridge the gap until the sale of their current home closed. Check with your loan agent or mortgage broker to make sure this will be satisfactory with the lender. All cash for the down payment needs to be carefully documented, and certain restrictions apply. Another buyer who couldn't qualify to buy a new home without selling first was able to secure a private loan. Expect to pay a higher interest rate for such a loan, but you shouldn't have to pay it for long if you're selling a well-located home in good condition and you price it right for the market. In some cases, parents are willing and able to provide bridge financing, and are happy to make more interest than they will on CDs or Treasurys. In some markets that have a surplus of homes for sale, you may be able to buy contingent on the sale of your current home. However, banks selling foreclosure properties (REOs) usually won't accept a contingent-sale offer. Neither will sellers in desirable, low-inventory areas where there is plenty of buyer demand and buyers with a lot of cash who don't need to sell first. In this situation, you will need to sell first to be competitive and have a chance of buying in a choice neighborhood. It could require making a move to an interim rental. THE CLOSING: Although not popular, at least you buy time to find the right house that will suit your long-term needs. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide." Copyright 2012 Dian Hymer
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Pay to prepare your loan mod package
Fee for 'expert' help can streamline process, hasten a decision
Jack Guttentag
Inman News®
Editor's note: This is the third in a three-part series. Read Part 1 and Part 2. Some borrowers, following the guidance provided in last month's article, "6 tips for a successful loan mod," can handle the modification process entirely by themselves. Other borrowers need help. Unfortunately, as with all disasters, scamsters have emerged to feed on the afflicted by collecting fees for services they promise but don't deliver. You are safe from scamsters if you follow my cardinal rule: Select your service provider; don't allow a service provider to select you. This article is about the options from which you can make a selection. Representation by for-profit companies Borrowers who are overwhelmed by the process may want someone to "take over" for them, staying with it until a conclusion. Representation, as distinguished from counseling, is expensive. Fees vary but most are in the $2,500 to $4,000 range. This segment of the market is also where the scamsters hang their hats. There are some good players in this business who know the ropes and work hard to earn their fees. The problem is that it is very difficult to tell the good ones from the bad ones. Law firms and those affiliated with law firms are governed by state ethics and licensing rules, which may limit abuses, but you should not depend on that. If you go this way, look for referrals from other borrowers who have been there, research any recommended companies online, and check your state attorney general's office for any complaints that may have been filed against the firm you are considering. Counseling by nonprofit counselors At the opposite pole in terms of the services you should expect are the free nonprofit counselors who will assist borrowers with loan modifications, as well as with other problems. A list of HUD-approved counselors is available at www.hud.gov/offices/hsg/sfh/hcc/fc/. The quality of counselors varies widely and some will not prepare your loan modification package for you. In particular, the counseling agencies that answer the Homeowners HOPE Hotline (1-888-995-HOPE) -- which is where Treasury refers visitors to its Making Home Affordable website -- do not typically prepare loan modification packages required by the servicers. They will explain the process and provide an "action plan" but leave you to implement the plan. If you want a counselor who will do more, establish that before going ahead. There are two new sources of help now available that I recommend. They are for-profit firms, but I have no financial interest in either. The help they provide is short of representation but goes well beyond what is offered by nonprofit counselors. MyCaal This relatively new site helps borrowers develop a package of required documents for delivery to servicers. The borrower fills out a questionnaire covering all the information servicers require in making a modification decision. Based on the questionnaire, MyCaal provides all the documents the borrower must complete for submission to the servicer. The borrower also receives immediate feedback on the likelihood that the modification request will be granted, which is useful, even though it is only an educated guess. MyCaal charges $98 for its services, which includes personal coaching for those who need it. DMM Portal The DMM Portal (www.dclmwp.com ) is owned and operated by Default Mitigation Management LLC (DMM), which was described in an article last month. A borrower can use the portal free of charge to develop the package of documents required by the servicer, to transmit the package electronically to the servicer, and to communicate with the servicer until such time as a final determination has been made on the borrower's request for a modification. Borrowers who need assistance in completing the forms and compiling the required documents can purchase it for $150. This service is provided through an affiliated nonprofit company DMM Counseling Inc. Summing up As between MyCaal and DMM, I would go with DMM if my servicer was connected to them because the portal provides a superior way to communicate with your servicer. The servicers now connected to DMM are: 21st Mortgage Corp., America's Servicing Co., Bank of America (but only if you are in an active bankruptcy), JP Morgan Chase/EMC, Ocwen Loan Servicing LLC/Litton Loan Servicing, Resurgent Capital Services, Saxon, Select Portfolio Servicing, Washington Mutual, and Wells Fargo Home Mortgage. If your servicer is connected and you go with DMM, spend the $150 to have an expert check your submission. It will save everybody's time and hasten a decision. If your servicer is not connected to DMM, the selection is more of a tossup. DMM charges a little more for expert services, but it has been around much longer than MyCaal. Whichever one you use, please drop me a line and let me know how it went. Thanks to Igor Roitburg. The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com. Copyright 2012 Jack Guttentag
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3 reasons people want to buy homes
Mood of the Market
Tara-Nicholle Nelson
Inman News®
Last week, I ran into a few friends I hadn't seen for awhile. One was all atwitter about a home she was in the process of buying, which caused another to wax reminiscent of her own homebuying odyssey a couple of years back. The latter blurted out, "I love my house, but I have to be honest: I wish I'd never bought it. Too much of a commitment." Mind you, this came from a woman with a husband, two kids and a highly visible executive role at a large company. When I pointed out what seemed to me to be her inconsistent logic regarding her approaches to long-term commitments, she elaborated: "Because of the house, I can't just pack up and move when I want to anymore. I can't just strap my kids on and take them with me wherever I go." I pressed her about how much her tax situation must have improved, and she brushed it off, saying, "I don't pay attention to that sort of thing." Now, I suspect she has a case of "grass is greener" syndrome, as I recall very clearly the days when she wanted nothing more than to stop renting and buy her home. I also think she's a grumbly type, who wanted to fill the conversation gap with something, and a complaint about homeownership was right on topic at the time. It's much more politically correct to complain about the commitment posed by your home than that created by your marriage or your children, although the latter are much more grave, so that's what she picked as her contribution to the chat. However, I've noticed an uptick in conversations about real estate that come up in casual conversation with both friends and strangers, outside of the now-ubiquitous conversations about how "bad" the market is supposed to be. Increasingly, those conversations actually center around people wanting to buy and explaining why to their friends who disagree. Here are a few I've heard lately: 1. I just want to own the place I live. This is probably the No. 1 all-time motivation underlying homebuying: the desire to be a homeowner. It may bundle up a bunch of motivations, like tax considerations, the ability to gain equity over time and eventually own your place free and clear, and even the power to customize the place you live exactly as you see fit. I've also heard this lately from someone who has fallen in love with her neighborhood and wanted to cement her role in the community for the long term. The fact that this is such a popular utterance among homebuyers-to-be, even after the market mess of the last few years, may demonstrate that in the debate about whether a home is an investment or a place to live, the emotions around owning the place you live trump investment considerations (though this is probably exaggerated in markets like today's, where prices and rates are bottoming out so the investment piece is less of a worry). 2. I want to buy now and move later. Warren Buffet's assistant just famously bought a retirement home, years in advance, publicly stating that she did so on her boss's advice to buy now and move later. This is a partially market-based sentiment, of course, as the rationale for buying right now is that prices and interest rates are low. But it's also partially lifestyle-based, as this is a motive for buying that you're much more likely to hear from those who have diligently saved and are currently well-employed, but look forward to moving to a locale with a lower cost of living in the years to come, when they change career paths or retire. 3. I don't want to have to move anymore. A close friend of mine who bought her last home at the top of the market and was forced to sell at the bottom when her husband changed jobs recently said this. Despite paying beaucoup bucks for a rental in a very upscale, recession-proof neighborhood, she's troubled at the prospect of having to move (house and her kids' schools) when her landlord opts to move back into the rental home, which he's indicated he might very well do, and soon. Another contact of mine has been informed that his landlord plans to list the upside-down home he lives in as a short sale later this year. On the flip side, I know several investment property owners also making plans to divest of their rental properties this year (some by short sale, others have given up on waiting for a market rebound and are OK now with locking in their losses on a "regular" equity sale). The quintessential truth that living in a home you don't own may mean moving when you don't want to is a big emotional driver for homebuying these days. It helps that rates and prices are low, and that many of these renters have been saving aggressively over the past few years. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com. Copyright 2012 Tara-Nicholle Nelson
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Tips for replacing air ducts in slab foundation home
Multiple broken joints may require rerouting system overhead
Paul Bianchina
Inman News®
Q: We have recently discovered that the air ducts in our slab are breaking down; and it was recommended that we consider rerouting the air ducts to the attic. What are the advantages/disadvantages of having air ducts in the floor vs. overhead? Also we have heard that there are now several companies that can coat the inside of your air ducts in the floor with a paint-like substance that seals off any breaches in the system, therefore leaving the system in the floor vs. rerouting. Have you heard of this procedure, and, if so, is it something you would recommend? We feel that rerouting the system is very expensive because not only would we have to pay for the new air duct system in the attic, but also we would have to purchase a new heating unit that can be placed horizontally in the attic. The rerouting also would have a "domino" effect in that we would need to consider replacing all of our flooring to cover the old register holes. Another solution that was mentioned is a split system. What exactly is a split system, and what advantages/disadvantages are there in a split system? --Susan C. A: You have a couple of different questions here, so I'll try to answer them in order: 1. Warm air rises and cool air falls through a natural convection process. So, ducts that are in the floor tend to be a little more effective in distributing heated air throughout a room. Ducts that are in a ceiling tend to be a little more effective in distributing cooled air throughout a room. 2. If your ductwork is breaking down under the slab, a coating is not going to do you any good. There are companies that can use thermal imaging cameras to pinpoint "hot spots" in the floor where a duct might be broken, allowing you to cut into the slab at that point and make a repair. But if you have more than one bad joint, that's probably not going to be cost effective. Unfortunately, at this point your best bet is going to be to replace the ducts, and the most cost-effective way to do that is to reroute them overhead. 3. Your heating contractor can advise you on the best way to seal off the old ductwork. As to the holes in the floor, you can simply leave the old registers in place as camouflage until it comes time to replace your flooring. 4. A split system is simply one that has a furnace located somewhere inside the house, and an air conditioning unit located somewhere outside the house. The two share common ductwork, wiring, plumbing and other components, and are controlled by a common thermostat. Split systems are very common for houses requiring both heat and air conditioning, but they do not offer an alternative to replacing your ductwork. There are, however, through-the-wall units that combine both heating and air conditioning components and do not require duct work. These are the type of units commonly seen in hotel rooms. They are intended for individual rooms or zones of the house, and while not as convenient as central heating and air conditioning systems, they might offer you an alternative to a new furnace and duct system. Q: My home, built in 1971, had 6 inches of loose-fill fiberglass insulation installed. This has compressed to about 4 inches. Knowing I needed more insulation in my attic, this past June, I contracted with a local contractor (licensed in Maryland). The workers installed about 1 to 4 inches of loose cellulose in my attic, over the existing fiberglass, totaling 6 inches of insulation, and covered it with a radiant barrier, which they call Attic Mirror. It looks like aluminum foil. In the section of attic that is a storage area, they also installed this radiant barrier on the ceiling of the attic. They told me I needed a total of 12 inches of insulation for the R-38 factor, but they installed only enough to equate to 6 inches of insulation. They owe me 6 more inches of insulation. I didn't like what I saw when I returned home, so I hired an inspector who was shocked at what they had done, and suggested that the radiant barrier be removed due to moisture concerns, and to install batts for the additional 6 inches of insulation. I contacted the contractor, telling the company that the radiant barrier must be removed, and the remaining 6 inches of insulation due me is to be batts. The contractor told me the company does not have batts. I have paid in full for their service, and this problem is still unresolved. Do you have any suggestions as to what I can do here? --Catherine B. A: First, you need to go back to your original contract with this company. They're a licensed contractor so they had a legal obligation to provide you with a written contract. Within that contract there should have been some specifications about what they were going to do. 1. If the company agreed to provide you with insulation to a specific R-value, and they haven't done that, then they're in default of their contract. I don't like the fact that the contractor blew cellulose over fiberglass. Your fiberglass was already compressed, and the weight of the cellulose is going to compress it even more. I would have preferred to see the workers simply blow the proper level of fiberglass and be done with it. But either way, they need to complete the work to the specifications of the contract, and document that they have achieved a full R-38. I like the fact that you have an independent person doing the documentation. 2. If the contract specifies blown-in insulation, and that's what you agreed to, then the contractor is really under no obligation to come out and install batts. The company is, however, required to meet "industry standards" for the installation, and if the workers incorrectly installed the material then they have an obligation to remove it and reinstall it correctly. It sounds like that's the case here, which you've documented with the home inspector. 3. I'm not a fan of foil barriers in the attic, and personally I'm not convinced they're effective. Again, incorrectly installed they can become a vapor barrier that can create moisture problems. 4. I'm sure you know this now, and I hate to give you a hard time about it after the fact, but for the future you should never pay for remodeling and repair services until the job is completely done. You can pay a reasonable deposit before the job starts, as well as in-progress payments as warranted, but now that the contractor has all your money, he has no incentive to come back out and complete the job. All that being said, your first step is always to contact the contractor, which it sounds like you've already done. Since the contractor appears unwilling to make it right, your next step is to file a complaint with the Maryland contractor's board, which has an arbitration service that can step in and work with you and the contractor to help you resolve the matter. Remodeling and repair questions? Email Paul at paulbianchina@inman.com. All product reviews are based on the author's actual testing of free review samples provided by the manufacturers. | Contact Paul Bianchina: |  Email |  | Copyright 2012 Paul Bianchina
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Mortgage help for homeowners with hospitalized child
Bankers group to support charity in 3 new US locations
Steve Bergsman
Inman News®
Last autumn, Mortgage Bankers Association President and CEO David Stevens announced that his organization had created a new, nonprofit entity -- MBA Open Doors Foundation -- to be the umbrella operating unit for all the MBA's philanthropic activities. The first charity the MBA chose to support was Spare Key, a Bloomington, Minn., nonprofit that helps families with critically ill or injured children by making a mortgage payment on their behalf. "Helping families who are current on their mortgage but under incredible financial pressure while dealing with the hardest emotional challenge a parent could ever have is just the right thing to do," said Sarah Tinsley Demarest, executive director of the MBA's new charitable group. "Parents want to be with their child, but they also want to hold on to their home. This gift allows a parent to do that, so they don't fall behind on their mortgage." Demarest added, "It's for parents who are maxed out on taking leave from work. (It allows them to spend more) time with their child in the hospital." Spare Key is a unique program founded in 1997 by Patsy and Robb Keech, whose son was born with a genetic birth defect and endured many hospitalizations during the first two years of his life. The Keeches were torn between wanting to be with their child in the hospital and going to work to maintain financial stability. They chose to be with their son, so family, friends and strangers raised money during this time of crisis to pay the Keeches' mortgage so they wouldn't lose their home. After their son died, the Keeches vowed to help other families in Minnesota who were in the same straits, and that was the start of Spare Key. In 2010, Spare Key made 140 payments; in 2011, it made a record 201 payments. Spare Key makes only one mortgage payment per family in a calendar year. "We know, for families in more dire financial straits, this may not be exactly what they need, but for those families who need a bit more time in the hospital, who need a little bit more money in their pocket, who need that extra support, it's what we do," said Erin Werde, Spare Key's director of development and communications. The one qualification to be eligible for Spare Key is that the a child must be in the hospital at least 21 out of the past 90 days, which means the charity serves kids that are at the more severe end of illness of injury. Of the children assisted, 47 percent had birth defects, 16 percent cancer, 13 percent prematurity, and 10 percent leukemia and accidents. About 75 percent of the Spare Key children are under 5. In October, Werde got a call from a mother who lived in northern Minnesota, in a rural area far from a hospital. Her daughter, 6, had been complaining of headaches, which turned out to be brain tumors. Not only did the mother and daughter have to travel from northern Minnesota to Minneapolis -- they also traveled to Boston for treatments. Spare Key paid for a month's mortgage. As for the girl, she's doing much better. Generally, the initial contacts with families are through hospital social workers. "We've been around the community long enough now that we have been able to form great relationships at the hospitals," Werde said. "When a pediatric social worker sees a child has been in the hospital for an extended period of time, (the worker knows to) refer the families to Spare Key." A family fills out an application, which can be obtained from the social worker or online, and then the Spare Key program director verifies all of the information: whether the family is current on the mortgage; length of hospital stay; and even that the house is actually located in the state of Minnesota. Once those things are in place, a program committee reviews the application to double-check whether it fits Spare Key's criteria. When all that happens, Spare Key will make a mortgage payment with a cap of $1,200 directly to the mortgage company. Perhaps the most controversial part of the Spare Key program is that it makes only one mortgage payment per calendar year. Also, the $1,200 cap may not come close to covering some families' monthly payments. "We have discussed changes, but on our estimation there are about 1,000 families within our program parameters that we could be serving every year," Werde said. "There are other programs out there that will provide other types of support with bills. We highly encourage our families to seek other sources of support, as we are relatively narrow in our focus." The MBA will follow the original Spare Key's formula and it, too, will stick to the "just one mortgage payment" formula. What the MBA intends to do is support three new chapters of Spare Key. The first will be in the Washington, D.C., metro area, and the second two locations have yet to be announced. All should be open sometime in 2012. "Our president, David Stevens, had heard about Spare Key some years ago and has been supporting it personally, as well as some of the other MBA members," Demarest said. "Since the program was announced, we have had incredible outreach from our members wanting to be involved. We are trying to do this so the actual monies raised will go into mortgage grants and assistance, so we are looking where we have need and where we have members who will help us with the fundraising." Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com.
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IRS crackdown on identity theft
Real Estate Tax Talk
Stephen Fishman
Inman News®
Here's an easy way for an identity thief to make money: Use the victim's Social Security number to file a forged tax return and claim a refund. The fake return is usually filed early in the tax season, before the real return is filed. You may be unaware that this has happened until you file your return later in the filing season and discover that two returns have been filed using the same Social Security number. The Internal Revenue Service is well aware of this problem and is trying stop it. Last week, as part of a stepped-up effort against refund fraud and identity theft, the IRS and the U.S. Justice Department conducted a massive national sweep targeting suspected identity thieves. The IRS has also stepped up its internal reviews to spot false tax returns before tax refunds are issued. How do you know if you're an IRS identity theft victim? One way is if you receive an IRS notice or letter stating that: - more than one tax return for you was filed;
- you have a balance due, refund offset or have had collection actions taken against you for a year in which you did not file a tax return; or
- IRS records indicate you received wages from an employer unknown to you.
If you believe someone may have used your Social Security number fraudulently, notify the IRS immediately by responding to the name and number printed on the notice or letter. You will need to fill out the IRS Identity Theft Affidavit: Form 14039. If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Protection Specialized Unit at 800-908-4490. How to reduce the chance of becoming a victim The IRS recommends that you take the following stops to reduce the chance of becoming an identity theft victim: - Don't carry your Social Security card or any document(s) with your Social Security number on it.
- Don't give a business your Social Security number just because they ask. Give it only when required.
- Protect your financial information.
- Check your credit report every 12 months.
- Secure personal information in your home.
- Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.
- Don't give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.
Stephen Fishman is a tax expert, attorney and author who has published 18 books, including "Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors." He welcomes your questions for this weekly column.
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Don't expect rent refund for 'illegal' lease
Rent it Right
Janet Portman
Inman News®
Q: If my landlord is required by the city to obtain a business license in order to have rental properties, but chooses not to, is the lease agreement that I signed with her a legal and binding contract? It seems to me that if she is running an illegal business, she can't enter into contracts that bind her business. --Steven D. A: The gist of your theory is that failing to get the legally required business license means she is running an illegal business, which means her business contracts are unenforceable. I don't think you would likely prevail with this argument. A court will void a contract if it is illegal, or the parties were defrauded. Let's take the first possibility: An illegal contract is one: - with an illegal purpose (such as a contract for the purchase of cocaine)
- in which the consideration, or payment, is illegal (for example, paying with stolen merchandise or funds); or
- both, like an extortion agreement (obtaining money or property by threat to a victim's property or loved ones, intimidation, or false claim of a right, such as pretending to be an IRS agent).
A fraudulent contract is one in which an important term has been deliberately misrepresented or a party has been deliberately misled. For example, a landlord who rents a house for immediate occupancy, but fails to mention that the current tenants have refused to move and have forced the landlord to file for eviction, has seriously misled his would-be tenants. They could probably walk away from the lease without owing any money, no matter what the lease says or doesn't say about the landlord's obligations. Your landlord's lease doesn't fit into any of these scenarios. There are other reasons for courts to invalidate contracts, however. If the contract violates public policy, particularly if it's a policy intended to protect one of the contracting parties, it won't be enforced. The best example of this is a usurious loan agreement (one that charges exorbitant interest). Your issue doesn't seem to fit into this category either. Perhaps the better way to think about the validity of your lease is to consider why cities have imposed license requirements. For some cities, the requirement is purely a revenue-generating scheme, with licenses granted to every landlord who applies for one, regardless of the quality of that landlord's business practices or the suitability of the rental properties. Other ordinances couple the fee with oversight, requiring landlords to submit to inspections and attend classes on how to comply with landlord-tenant laws before they're granted the license. Let's suppose that the licensing scheme in your city is of the first type, just a way to generate income for the city. Because the license isn't tied to protecting any tenant rights or encouraging good landlord behavior, a landlord's failure to get one is rather a non-event, as far as the tenant is concerned, and I doubt that a lease would be voided for this reason. In other words, by failing to get the license, the landlord has simply violated a local ordinance. If she failed to file tax returns, a federal requirement, she'd also be a "lawbreaker," but that would not invalidate the leases she had created. But if getting a license requires passing inspections and getting educated, sidestepping a licensing requirement might be significant as far as the tenant is concerned. Even if a landlord doesn't falsely represent that she's obtained a license, a tenant might be justified in assuming that she has done so. When the tenant learns that there's been no inspection, particularly if the property is substandard, the tenant might have grounds to not only complain about the conditions (he can always do that), but also to treat the contract as void. Keep in mind that even if the lease is voided, a court would not allow "unjust enrichment." For example, a tenant would not normally be entitled to the return of rent already paid for time the tenant spent living in the rental. Q: Our lease included a clause in which we agreed to a separation fee of two months' rent, after 60 days' notice, if we moved out early. We bought a house in October, gave notice (and paid rent) on Nov. 1, and moved on Nov. 15. The landlord re-rented the apartment almost immediately, with a new tenant set to move in on Jan. 10. While we're certainly prepared to pay rent through Jan. 10, we bristle at the thought that the landlord will be collecting double rent for the period of Jan. 10 to March 1 (when our separation fee runs out). Is this legal? --Alex H. A: In most states, landlords are required to "mitigate damages" when tenants break a lease with no legal justification. This means that they must make reasonable efforts to re-rent the unit, and once they find a new tenant, the original tenant's responsibility for the balance of the rent ends. The majority of these states have announced their rule in a statute, which may include a statement advising landlords and tenants that any attempt to contract away this duty will not be enforced by the courts. You can see why legislators would add this protection: It hardly does a tenant any good if a landlord can present the tenant with a lease that waives an important right the legislature sought to establish, especially because landlords are so often in the driver's seat when negotiating leases and rental agreements. The contract you signed requires that you pay four months' rent after giving notice, regardless of the landlord's success in finding a new tenant. In some states, however, including New Jersey, Ohio and Utah, the mitigation rule is a common law rule: one that is contained in a court opinion, fashioned by judges after they have studied their state's historical treatment of the issue. These states are less likely to have a companion "you can't waive this" rule, because unless the question of waiver was part of the case, a court will usually not go out of its way to pass judgment on issues not before it. When courts reach the waiver issue, they may invalidate the waiver on the grounds that depriving a tenant of the benefit of the mitigation requirement is against public policy. Let's assume for now that you're in the latter category: You've got the protection of the mitigation rule, but no clear legislative or judicial prohibition against waiving it. You may be in for some creative lawyering -- calling upon your state's consumer protection laws, for example -- to invalidate this contract. You might find some help in similar cases. You may learn, for example, that a court in your state has ruled that waiver is not allowable in a commercial leasing context. By extension, the same rule ought to apply to residential leases, you'd argue. In fact, you can make a pretty strong case for extension, pointing out that residential tenants are likely to have less opportunity to negotiate their leases and get such a clause taken out. When parties to a contract (including a lease) have no meaningful way to negotiate its terms, the contract becomes one of "adhesion," which many courts are loath to enforce. One way to impress upon your judge the inadvisability of allowing landlords to avoid the mitigation rule by contract would be to point to Florida, which also has a mitigation rule. Several years ago, Florida passed legislation allowing landlords and tenants to agree to a lease-breaking fee of two months' rent, but only when the issue has been clearly presented to the applicant as an option that can be declined without fear of being rejected on that basis. You might argue that if landlords in your state are to be allowed to sidestep the mitigation rule, that ability should be decided by legislators who can build in safeguards to protect tenants who don't want to waive their rights. Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com. Copyright 2012 Janet Portman
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4 steps to buying a house in 2012
REThink Real Estate
Tara-Nicholle Nelson
Inman News®
Q: I am on a mission to buy a home. I've wanted to own a home my entire life, and thought I would miss the opportunity to buy while the market was down, because I had no real savings when the market crashed. I think I'm ready, though, and prices still seem low. What should I be doing now to make this happen in 2012? A: Let me count the ways -- I mean, the things -- you can and should be doing now if you want to buy this year. The recession has done lots of favors for buyers-to-be, including dropping prices and interest rates to bargain levels. But it has also created a lending and housing market climate in which loans are tough to get, tensions about buying into a down market run high, and transactions are harder and longer to close than they have ever been. If I were talking to a friend who wanted to throw a New Year's 2013 party in her new home, here are the things I'd tell her to do, stat: 1. Fix credit problems. More deals than ever are dying on the vine, and credit problems are a top reason home-sale transactions fall out of escrow. Detect and correct errors on your credit report now by reviewing the federally mandated free reports you can get at AnnualCreditReport.com. 2. Study up. Do some research, both online and offline, into things like: Areas: Start your online research into decision points like tax rates, school districts, neighborhood character and even prices in various areas. Check out NabeWise.com for some local insight into neighborhood flavor and personality. When you start connecting with local agents, ask them to brief you on neighborhood market dynamics. They can give you a deeper view into need-to-knows like how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search vis-à-vis what you have to spend. Agents: This is the perfect time to ask your family and friends for a referral to an agent they know, have used and love. Then, follow up by doing an online search for the agent's name and seeing what sort of online reviews and activities you find. When you've narrowed the field down to a few, call them up and set up a meeting to find out if you're a good fit. Distressed properties: In some areas, more than 40 percent of the homes on the market are short sales and foreclosures, and they involve a very different timeline and set of facts than traditional home sales. Read up and talk with the agent candidates you interview about what you should expect from these types of listings, to minimize surprise and manage your expectations way in advance. 3. Save even more. Sounds like you've worked hard for a number of years to save enough cash that you think you're in the clear when it comes to funding your down payment and closing costs. Studies show that after months of saving, people often let up and relax into a spending season. Even at your early stage in the process, it's easy to start noticing and buying the furnishings and touches you want to install in your new home. While I don't want you to feel deprived or forgo amazing and affordable deals on things you know you're going to need, I assure you that no matter what amount of cash you have on hand, when you start house hunting, making offers, closing your transaction or moving in, the time will definitely come when you'll wish you had more. You might want to ratchet up your offer a bit to best another buyer, or you might just end up with a place that needs a little sprucing up. It might be months before you know exactly what you'll need extra cash for, but now is not the time to press the gas pedal when it comes to your monthly spending. 4. Purge. Now's the time to sell, donate or give away as much of your junk or, excuse me, precious personal possessions as you can. Use the proceeds to pad your cash cushion, or tuck the donation receipts away for your tax records next year. Start here, and chances are good that your house hunt -- and purchase -- will be in full swing by spring, if not sooner. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com. Copyright 2012 Tara-Nicholle Nelson
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5 tools and 12 weeks to prosperity
Book Review: 'The Prosperous Heart: Creating a Life of "Enough" '
Tara-Nicholle Nelson
Inman News®
Book Review
Title: "The Prosperous Heart: Creating a Life of 'Enough' "
Author: Julia Cameron and Emma Lively
Publisher: Tarcher/Penguin, 2012; 240 pages; $25.95 I read a lot of books -- over 200 just in the last three years. I bring up that number by way of pointing out the scope and significance of this statement: one of my top 10 favorite books of my entire lifetime is "The Artist's Way." It might sound artsy-you-know-whatsy, but since its 1992 publication this masterwork has served over 3 million artists and others who need to be -- or simply want to be -- creative, with its powerful tools and insights for getting and staying unblocked. While it has served that role in my own life in my work as a writer and creator of digital content, "The Artist's Way" has been at least equally as impactful in my entrepreneurial, personal, financial, and career endeavors. The ability to think flexibly and innovatively in crafting original solutions to problems has been of great, great value (and has probably saved my bacon more than a few times). But I have long thought of my personal non-artistic uses of the book as rogue, or off-label, specifically when it comes to matters of finance and business. "The Artist's Way" was intended for artists, after all -- it's not called the "Businesswoman's Way" or the "Money Maven's Way." So imagine my delight and surprise to learn that the creator of "The Artists' Way," Julia Cameron, was releasing a title on that topic nearest and dearest to my heart: prosperity. In her new book, "The Prosperous Heart: Creating a Life of 'Enough' " (Tarcher Penguin, 2011),Cameron and co-author Emma Lively aim to first reset readers' understanding of prosperity as a spiritual matter, not a monetary one. They carve out a new definition of prosperity as having faith, satisfaction and "enough" -- "having a life beyond need and worry." Financial healing, they make sure to point out, is included, but is only one element of true prosperity. After dealing with definitions, Cameron and Lively provide a set of five tools to help readers generate this expanded sense of prosperity. The first two, dubbed "Morning Pages" (three pages written longhand, stream of consciousness, first thing every morning) and "Walking" (literally, taking a 20-minute walk two or more times a week) are tools used in "The Artist's Way" to unleash creative flow. In "The Prosperous Heart," Cameron slightly repositions them as tools for cultivating emotional and financial clarity, especially when it comes to understanding where your values and your actions are not in alignment, and healing that disconnect. The next two tools are much more financial in nature, but are still uber-simple: "Counting" (tracking every dollar and cent that flows in or out of your hands and accounts) and "Abstinence" (refraining from creating new debt, with exceptions for car and home loans that are affordable vis-a-vis your monthly income). The last tool, "Time-Outs," are like micro-meditations -- 5-minute a.m. and p.m. quiet times that we can use as check-ins with ourselves, our feelings and our choices (about finances or otherwise) or to pray, meditate, or otherwise get "in touch with a deeper, kinder, wiser part of ourselves." Beyond their utility for their intended purposes, all the tools can also be used to help detect where the bulk of your own personal challenges in the prosperity realm may lie. The more resistance you feel to the idea of practicing any given tool, the authors say, the more valuable that tool will be in creating the prosperity you seek. (This mirrors precisely the lesson I learned long ago from an old yogi from India, who brusquely overruled my protests that I'd been too tired to come to class one evening by declaring that the times when I most feel like staying at home are the times I stand to gain the most by coming to class and practicing, anyway. How true that has proven to be in the years since. When I'm too tired to worry about whether I'll be able to balance on one foot, I've found that it is much easier to do so.) After introducing readers to these tools and making the case for incorporating them into our daily routines, Cameron and Lively provide a 12-week course in prosperity, touching on everything from: - inventorying and examining your spending habits, money fears, relationships and past losses;
- trusting in a higher power and in yourself to provide for your wants and needs; and
- practicing kindness, forgiveness and velocity: the authors' term for not too little and not too much action.
If spiritual matters or references, of even a nonspecific, nondenominational nature, tend to frustrate or offend you, "The Prosperous Heart" might not be for you. One of its core premises is that a higher power exists that wants to and will provide for you. While the authors carve out an extremely broad realm of how individual readers might conceive of that spiritual force, some might find that to be a turnoff. If, on the other hand, you do believe that some sort of higher power does exist in the universe, and you have been plagued by money problems or worries, have experienced hard times, or simply crave to feel at ease and abundant in the financial realm of your life, it would be a serious strategic error to omit "The Prosperous Heart" from your library. It should sit side by side on your bookshelf or in your e-book reader with other authoritative titles about organizing, saving and investing your money. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com. Copyright 2012 Tara-Nicholle Nelson
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Bracing for the 'Big One'
Tips to secure structural panels in seismic zones
Bill and Kevin Burnett
Inman News®
Q: I'm an architect who has also done my fair share of swinging a hammer. Recently, you recommended fastening shear ply with screws. The California Building Code and other U.S. building codes have always had schedules for shear wall nailing (although they do permit other types of fasteners). My structural engineers have always said that the shear value of nails is far better than the shear value of screws. The screws are far more brittle. This has been borne out in my own construction, where screws have snapped off while being driven. Because the person writing is in a high-risk seismic area, you were right to recommend plywood and to fasten it to the bottom plate. But he also needs to have the best fasteners for the job: nails. A: You reference a recent column where a reader asked for clarification about diagonal bracing ("Don't expect miracle from diagonal bracing," Dec. 28, 2011). He lives in a high-risk seismic zone. We explained how the bracing is constructed but suggested that for a better job he consider installing structural plywood shear panels instead. Although we proposed screws as alternative fasteners, we agree that nailing the panels according to a code-specified nailing schedule is the tried-and-true method. Shear panels refer to structural panels that make up exterior walls. They provide protection from the lateral forces of earthquakes. They are normally constructed by nailing 1/2-inch plywood to all framing members running from the mudsill (the piece of wood bolted to the foundation) to the top plate. Plywood can be placed either horizontally or vertically and must be nailed on all edges and in the field to framing members. This creates a rigid diaphragm. If an edge falls in the middle of a stud bay, blocking must be installed to provide a complete nailing surface. Our reader wanted to provide protection from the inside. To accomplish this, 1/2-inch plywood is installed vertically and nailed to all studs, the top plate and bottom plate. Understand that this only provides partial protection. It will eliminate cracks in the plaster or visible seams in drywall, but because it doesn't tie the mudsill and cripple wall (which are below floor level) to the stud wall, lateral forces in an earthquake may cause the building to move. There are a couple of other things to consider while the studs are exposed. Whether the job is attacked from the inside or from the outside, this is a great time to insulate and inspect and upgrade the electrical wiring. We consulted a cousin, Dan Smith, who is a retired master electrician. He recommended that if the wiring in the wall is ungrounded knob and tube or old sheathed cable, consider replacing it. It's quite possible that the insulation around the wires has deteriorated, creating a hazard. If the wiring is grounded three-wire Romex, you can add outlets or lights provided that the circuit is not already maxed out. Dan's rule of thumb for a 15-amp circuit serving living areas (not kitchens or other high-load areas) is 10 outlets. This assumes a normal electrical load and provides a little "fudge factor" if the homeowner occasionally plugs in an appliance with a heavier draw. Of course, as always, get a permit and have the work inspected whether you do it or hire it out. Insulation is pretty straightforward. If there is none, add it. Consider using spray-foam insulation if it's not too costly, or use faced insulation batts and turn the kraft paper vapor barrier toward the home's interior. In either case, insulate after the new electrical work is completed. If replacing interior lath-and-plaster walls, we suggest using unfaced batt insulation and a vapor barrier of plastic sheeting, known as Visqueen. Seal all cuts and seams in the plastic with the appropriate tape. Install the sheeting and then the drywall, tape, texture and paint.
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Second-home market on the rise in Sayulita, Mexico
Region rides the wave after discovery as south-of-the-border surf destination
Tom Kelly
Inman News®
SAYULITA, Mexico -- While violence and crime are foremost topics when discussing Mexico in the U.S., they are rarely mentioned here. Crime? What crime? The struggling U.S. economy remains the primary concern in most of the country's popular tourist areas, but in this once sleepy town just north of Puerto Vallarta everyone seems to be betting on the uptick. "There has been so much interest in this type of housing project from family and friends alone that I decided to break ground as soon as I could," said Paul Berger, the part-time Seattleite and the money behind Sayulita Preserve, a 26-acre development just within the town's southeast limits. Located between Tepic and Manzanillo this area has been popular with Mexican nationals for generations, especially visitors from Guadalajara, the country's second-largest city. The Sayulita Preserve, which is the largest piece of undeveloped land in town, will include 198 units priced from $216,000 to $425,000 aimed at North American and Mexican second-home buyers and retirees. "I think proposing a similar project in Puerto Vallarta would be a far greater risk," Berger said. "There are still a lot of units on the market there but this is a completely different situation. People are drawn to Sayulita rather than Vallarta for different reasons. A couple of the reasons ... it is not Vallarta, and our (lower) price point." Like many previously undiscovered or remote places in Mexico, Sayulita was first made popular by nomad surfers checking the Mexican mainland for terrific waves. Word spread quickly through the West Coast surf community, and the once-quiet fishing village evolved into a "must-have" wave experience and then to its present international getaway with cobblestone streets and charming cafes. Most of the crime here is petty theft -- laptops, cameras and the occasional wallet -- but the concept of stabbings and heavy drug-dealing seems only to be talked about north of the border, in the cities from which most of the visitors come. "Residents know that the petty stuff can be annoying, so there's a lot we are doing about it," Berger said. "There's a greater police presence, especially at night. Like anywhere, we remind them that it's best to tuck any valuables away." Directly adjacent to Berger's property is the upscale Punta Sayulita development, wiith 62 lots on a 33-acre jungle and beach peninsula just south of town. A four-bedroom, 5.5-bath Casona (with 6,148 interior square feet) averages about $4 million. The lower-end Casitas (at $1.7 million) have three bedrooms, three to 4.5 bathrooms, and 2,928 interior square feet. All homes feature huge exterior decks about the same size as the interior space. The stampede to Sayulita did not take everyone by surprise. The writing probably was on the wall when the Vallarta Airport underwent a significant uplift and expansion. More planes brought more visitors willing to look farther away from Vallarta for deserted beaches and fewer "gringos" seeking late-night margaritas. Nearly 10 years ago, the rising numbers flocking to Sayulita pushed Oregonian Glen Triplett even further north of Vallarta. The former commercial real estate broker and investor and his wife, Deborah, decided not to build on their lot in Sayulita, but rather to remodel an existing home half a block from the beach in Rincon de Guyabitos, a 25-minute drive from Sayulita and 45 miles north of Puerto Vallarta. Now a popular bed-and-breakfast, Casa de los Pelicanos is open for nine months of the year. Deborah does the cooking -- including weekly classes in Mexican cuisine with a local woman -- and Glen keeps the books. Since Mexicans rarely measure contents in the kitchen, Deborah's main focus in the class is to determine and translate amounts. Sarah Walker, "a former Midwest farm girl" who now runs an airport shuttle service between the Vallarta airport and the three small towns in the Guyabitos area, said she knows of no incidents of drug violence or assaults on any visitor in the area. "I've been here for seven years and all you hear about is the occasional break-in where kids come in and take money," Walker said. "I walk alone in the evenings everywhere yet am careful like I would be anywhere. I'm sure you would be more aware of your surroundings in downtown Seattle in the middle of the night than you would be on a sunny afternoon." Glen said, "People who come and stay (here) already know things are OK and that there's nothing to worry about. It's only the people back in the States who are asking the questions about safety." Tom Kelly's book "Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border" was written with Mitch Creekmore, senior vice president of Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com.
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