Should Sellers Have Warned About Neighbors’ Holiday Lights Display?

holiday lightsHow would you feel as a new homeowner if, with Halloween barely over, you watch your neighbors get out ladders and start gearing up for a massive  holiday display — complete with lights by the thousands, inflatable snowglobes, an open garage full of displays, and music?

That might be cute for the first five minutes. Or if it were a mile away. But then your cat starts coughing at the fumes from the lines of visiting cars, the blinking lights create a horror-show strobe effect on your bedroom wall, and the tune to a certain carol takes up permanent residence in your ear.

So why is it that I’ve met scads of homeowners who say they weren’t advised of such neighborhood holiday shows by their home seller? In one case, it was the seller himself who was the local manic decorator — and didn’t warn the buyer to expect kids knocking at the door in December, wondering when the “Santa’s Workshop” in the garage would open.

Most states in the U.S. require sellers to warn buyers of not just physical issues with the home, but environmental or neighbor-related issues that could have a material effect on its value. In California, for instance, the Transfer Disclosure Statement asks about “neighborhood noise problems or other nuisances.” Not every light show is a nuisance, of course — but at close range, or when a house attracts unprecedented traffic levels, it’s no stretch to say the seller should warn the buyer. (Of course, most homes are sold in summer — and who’s thinking about holiday lights then?)

Oddly, I can’t find any record of U.S. lawsuits against sellers for failure to disclose local holiday light displays. It’s not as though buyers are shy about suing home sellers for nondisclosure, of everything from past crimes on the property to neighbors’ regular loud arguments and late-night parties.

And neighbors have brought lawsuits against the owners of homes with overwhelming displays alleging nuisance. (Perhaps that’s the more relevant path to getting results, given that a few bucks from the home seller isn’t ever going to fully compensate a homeowners for the lost sleep from those blinking red lights.) Some have even explored even more creative approaches — check out attorney Rich Stim’s blog on, “Can We Report Neighbor for Blasting Copyrighted Christmas Music?

Or could it be that homeowners feel just too Scrooge-like suing over what’s meant to be a bit of holiday fun? In any case, if you’re a home seller, you can avert some future bad feelings by telling your home buyer what’s ahead — or at least leaving them your Santa costume.

You’ll Scream When You See How Much Americans Spend on Halloween

basketHold on, a yawning gap has been revealed in Nolo’s accounting for likely first-time homeowner expenses: Halloweeeeen!

You think I’m kidding. But that’s because, back when you lived in Apartment A on the 14th floor, you didn’t have to worry about lining your front lawn with styrofoam gravestones or filling your candy bowl in preparation for hordes of little princesses or,  God forbid, Miley Cyruses.

Take a look at your neighbor. He’s probably already affixing a giant fuzzy spider to his front entryway. Americans currently spend a collective $1.96 billion on outfitting their home for this holiday. I’ll leave the “per-household” calculation to someone whose math brain wasn’t apparently eaten by zombies, but given that my household accounts for about $10 of that sum, you’ve got some serious slack to  pick up.

And beware: If you live in one of the zip codes identified by ZipRealty as the “best places to trick-or-treat,” your bowl of candy had better be cauldron sized. Here in the Bay Area, San Francisco’s “West of Twin Peaks” neighborhood made the list.

For more (and more serious) tips on budgeting for home ownership, see “The Essential Guide for First-Time Homeowners.”

Knowing Your Home Inspector’s Background May Change Everything

roofAs a reader of Nolo’s books and articles on real estate, you probably know that we recommend that home buyers ALWAYS include an inspection contingency in their purchase contract. That allows you to hire one or more licensed home inspectors to do a full report on the house, and to close the deal only if satisfied with (or able to negotiate around) whatever problems the report turns up.

But Patricia Wangsness, a broker with Coldwell Banker in Washington State, adds some important cautions to this advice: “Realize that inspectors are not all alike! Even if you hire an inspector who is fully licensed, you might find that one who is a former electrician will tell you a great deal about faulty wiring and sockets and deemphasize some other issues, while one who’s a former plumber will look hardest at drains and pipes.”

What’s going on here? Aren’t you hiring the person to conduct a “general” inspection of your home?

“Yes,” explains Patricia, “but inspectors arrive at this career in different ways. Some came from the building industry during the downturn, when they lost their jobs. Others simply decided that inspection was easier than what they were doing before. I’ve even heard media ads for inspector training courses, with taglines like, ‘Make your own hours! Work only three days a week!’”

This can be a serious issue, given the breadth of a standard home inspection. The inspector needs sufficient knowledge to evaluate most of the home’s features and systems. He or she should walk through the entire house, examining or testing for defects or malfunctions in its structure, systems, and physical components, such as the roof, plumbing, foundation, fireplace, doors and windows, electrical and heating/cooling systems, and so forth. The inspector will also check the exterior of the house for grading and drainage issues, problems with retaining walls, and more. (See the “Home Disclosures, Inspections, and Appraisals” section of  Nolo’s website for more information.)

As a buyer, you can understand why this makes it especially important that you do your research before choosing an inspector. Even if you find one whom you’re confident is highly trained and regarded, finding out details concerning his or her background might help you understand various related issues in the transaction – such why the inspector is focusing more on some problems than others, or perhaps why the seller responds to a request for repairs with, “But we did a pre-sale inspection and that never came up as an issue!”

If you’re a home seller, this insight might even weigh against getting a pre-inspection with the hopes of fixing up problems before putting the house on the market. As Patricia explains, “You might repair all the problems the inspector tells you about, only to have the buyer’s inspector come up with a list of new defects!”

Nolo Mourns the Loss of Real Estate Writer Broderick Perkins

BJBPerkinsA man of immense talents and creativity, Broderick Perkins was perhaps best known professionally for his real estate writing with the San Jose Mercury News and on his website, DeadlineNews.com.

Here at Nolo, however, we felt lucky that he lent his talents to various projects, including writing online articles (tackling tough topics such as “Seller Financing: How It Works in Home Sales” and “Mortgage Rate Locks: How They Work“) and acting as an adviser/reviewer for the writing of Nolo’s Essential Guide to Buying Your First Home (which turned into a company bestseller).

Broderick Perkins passed away on September 29 of this year. It’s both a professional and personal loss for all who knew him. We will miss his warmth, humor, and insight.

Let’s conclude with an excerpt from Nolo’s homebuying book, in which Broderick explained what he liked best about his work: “Aside from the fact that I don’t have to go into an office every day, I appreciate the learning aspect of it. Every story is education for me. I used to get kidded a lot at the San Jose Mercury News when I didn’t own a home and was working on a real estate story–people from the realty industry would say, ‘How can you write about home ownership when you don’t even own a home?’ I’d say, ‘Do I have to rob a bank to write about crime?’ Now that I’ve been writing about real estate for years, I realize there’s no end to learning the details of mortgages, appraisals, the physical structure of homes, unique homebuying and selling experiences, and much more.”

Floodwaters May Not Be Rising Yet, But Flood Insurance Rates Are!

floodNo one can say FEMA didn’t warn us. Its website offers pages of information about how flood insurance rates might go up in 2013 due to the Biggert-Waters Flood Insurance Reform Act of 2012. Every homeowner’s case is different, but in extreme cases, FEMA projected that individual premiums could go up to $20,000.

(By the way, could you get a more perfectly ironic name for a flood-related law? It’s named after its Congressional co-sponsors, Rep. Judy Biggert, a Republican from Illinois who is no longer in Congress, and Rep. Maxine Waters, a Democrat from California.)

Until recently, this law attracted little public attention. But October 1, 2013 marked its first actual effective date.

The results aren’t pretty. Nor are they surprising, given that the purpose of the law was to put the National Flood Insurance Program (NFIP) on a firmer financial footing by, among other things, raising insurance rates to reflect true flood risk levels. For example, homes whose lowest floor elevation is below the Base Flood Elevation (BFE) will no longer receive subsidized rates, and homeowners who were grandfathered in under old flood maps will no longer be able to take advantage of this.

Now we’re hearing that even Congresspeople who voted for the law are worried about how it will impact some homeowners. Homeowners themselves are complaining; The New York Times reports “rallies, petitions and concern among state governors.” And real estate agents report home deals falling through when the new owners get a look at the new price tag for insurance.

Some members of Congress are, in fact, looking into ameliorative or delay measures. (If there’s anything Congress is capable of doing effectively, it’s delay!)

In the meantime, if you’re buying a home, you might want to add an insurance contingency to your contract, specifying that closing be made conditional on obtaining acceptable insurance coverage. See Nolo’s Essential Guide to Buying Your First Home for details on contract clauses,  insurance and other aspects of home buying.

Yes, It’s THAT Shiller Who Just Won a Nobel in Economics

Macro of sparkling champagne against black backgroundAnyone who follows the real estate market has probably heard of the “Case-Shiller Index,” known for “tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions.” Its findings are widely reported on, as are the thoughts and conclusions of Robert Shiller himself, who warned the U.S. of the pre-2008 housing bubble many times over. (Well, at least he was wrong about that. Oh.)

So yes, this is the very same Robert Shiller who was recently named as one of three co-winners of the 2013 Nobel Prize in Economics. When you hear blurbs about his study of when “assets are overvalued,” real estate is one of the assets being referred to.

Now that his credibility just got gold-plating, what does Dr. Shiller have to say about where the housing market is going next? Actually, he’s worried that prices in some markets have risen unrealistically high — creating a “bubbly” situation, according to a Reuters report. Let’s hope that’s just the celebratory champagne talking.

Or, You Could Paint Your Kitchen in Downton Abbey Colors

engravDon’t say I never brought you any useful information here. True, it’s not exactly in line with Nolo’s mission of putting the law into plain English, but how about painting your walls in plain English? Specifically, Amber Grey or Empire Grey, the colors created by the British company Mylands specifically for Downton Abbey based on century-plus-old recipes — and available to the public for online orders.

The Brits themselves will make fun of such obsessive adherence to tradition, of course, but they’ve got so much history all around them, they can take it for granted. Oh, but if you’re a devoted fan of the series, avoid reading about it in the British press — it’s already well into the next season, so spoilers abound.

 

Getting a Mortgage During the Shutdown? Expect Delays

This isn’t speculation anymore. I talked to an excited new homebuyer just yesterday, whose offer had been accepted from among multiple bids on a home in Berkeley, but whose mortgage broker had warned him that the closing could be delayed.

IRS wall_0Why? Because the lender will need to get his tax transcript from the IRS, and as part of the federal government shutdown, the IRS tax-transcript department has been furloughed. Even if the entire IRS were to reopen tomorrow, chances are their inboxes are already overflowing with backed-up requests.

So now, our new homebuyer waits. And he’s not even applying for a loan that specifically involves approval by the federal government, such as a FHA loan, USDA loan, or VA loan.

Fortunately, most every standard home purchase contract in California is written with a contract contingency stating that if the buyer can’t get a mortgage, he doesn’t have to go through with the sale. Unfortunately, the homebuyer is expected to take care of this and remove the financing contingency by a date even earlier than the closing, or face the possibility of the deal falling through.

In unusual circumstances such as these, however, it’s worth remembering that contracts are nothing more than an expression of the mutual interests of the parties involved. In this case, I would think both seller and buyer would be amenable to negotiating a delay of the contingency and closing dates so that the sale can go through as planned, and everyone can get back to watching CNN to find out when the folks in Washington, DC are going to end this nonsensensical shutdown.

Your Home’s Value: Who Wants to Know?

Paper house attached to yellow blank price tag on blue backgroundI normally don’t push syndicated content produced by nameless writers at marketing companies, but this article, “What’s your home’s price tag now?” makes some good points. (Despite an inappropriate title.) ((Could I be any more grudging in my praise?))

The idea is that, accustomed though we might be to thinking of a home’s worth as its likely sale price, there are actually three ways of looking at a home’s value. It depends on who’s doing the looking. These include:

  1. Market value (the likely sale price).
  2. Replacement value (costs of reconstruction, for insurance purposes, after a total loss).
  3. Property tax value (how much the government says it’s worth before sending you a property tax bill for several thousand dollars).

Understanding what each of these figures means, and how each is arrived at, will help you to both avoid confusion and know whether you’re paying an appropriate amount in taxes, covered adequately by insurance, and can sell your house for your hoped-for amount. The article itself explains these details well.

About that inappropriate title, however. Did you notice that none of these three figures would necessarily be the “price tag” that you’d place on your house if you were to put it up for sale?

Savvy home sellers do enough research (and get a Comparable Market Analysis or CMA from their real estate agent) to help them understand their property’s likely market value, but they then set a list price based on what will most likely reel buyers in.

Many sellers adjust the list price downward from the apparent market value, hoping to incite a bidding war that will ultimately take the price higher than they could have dreamed of listing it for. Then again, a seller may not want to set the list price too low, for fear that people won’t view the house as high-quality, or will wonder what’s wrong with it. See “Listing Your House: What List Price Should You Set?” for more on this topic.

There’s also one more measure of value that could have been added to this list: What amount the home appraises for. Before closing on a sale, the lender will doubtless require that a professional appraiser visit and attach a value to the property, as a way of reassuring the lender that it can foreclose for the amount it’s lending out. That appraised amount is supposed to be the “true” market value — but it’s sometimes less than buyers are actually willing to pay for the house, which can be a problem in some transactions. See “Low Home Appraisal: What to Do” for more on this.

Condo Association Takes on Doggie Doo-Doo Dilemma

pup snowTradeoffs are inevitable when buying a home within a development that’s overseen by a homeowner’s association (HOA) or condo association. Your life is made easier by knowing that the association will take care of maintenance of the common areas and landscaping, and potentially even of parts of your own property, such as your roof.

But you give up some control — such as, according to recent reports, Fido’s genetic privacy, and your right to sneak off and hope that no one notices that your dog just left a deposit on their lawn.

Fox News tells us that The Grand at Riverdale, in New Jersey, has announced to its residents that they must have their dogs’ mouths swabbed for DNA analysis. Thenceforth, any stray droppings will be tested for a match. Owners will be fined $250 for the first offense, with subsequent fines ranging up to $1,000.

It’s a colorful (or smelly) news item, but probably not surprising to anyone who’s lived within a condo association. Their community rules can cover all sorts of issues: in the dog realm alone, whether you can own dogs, how many, how big they can be (by weight), and so on. (Oh, and by the way, Fido doesn’t really have any right to genetic privacy, in legal terms. Though while you’re at it, maybe you can check his ancestry!)

See Nolo’s articles, “Homeowners’ Associations (HOAs) and CC&Rs: Know What You’re Getting Into.”