Category Archives: Homeownership Tips

Lower Home Values Aren’t Translating Into Lower Property Taxes

Property tax bills were never tied precisely to the market. Because they are usually calculated as a portion of the home’s value, and allowed to rise at only a certain percentage per year, many homeowners’ property values still have not caught up to their home’s value of several years ago — which may, despite recent drops, still be higher than the current value.

But as Alyssa Abkowitz reveals in the February issue of SmartMoney magazine, there’s a new reason that you aren’t likely to see your property tax bill go down this year — even if you take the time to file an appeal. (See “Reassessing Property Taxes.”) County tax assessors are apparently looking for ways to keep the assessments (and therefore tax revenues) high. They are taking advantage of the very slowness of the market and lack of sales to say, in effect, “Gee, we don’t see any recent comparables that show your house has dropped in value.”

What’s more, says Abkowitz, homeowners are complaining that tax assessors’ offices are making the appeal process difficult to navigate, for example by forcing homeowners to file online appeals with fill-in-the-box spaces that don’t allow for a full explanation of your argument.

This article struck a chord with me. I had considered filing an appeal to my own property tax assessment this year, having observed home prices dropping and homes sitting unsold all around my neighborhood. But after spending hours poring over the actual comparable sales, I sadly concluded that I didn’t have anything close to a slam-dunk argument for reducing my bill. Maybe next year?

Traveling for the Holidays? How to Keep Your Home Safe From Thieves

It’s hard enough making sure you’ve got all the gifts packed without worrying about whether you’ve leaving any unintended “gifts” behind.

But too often, the holidays are prime time for thieves — both those looking to steal your possessions, and those content to grab a letter from your mailbox containing key information about, say, your bank account.

For tips on how to avoid such troubles, see Nolo’s recently published article, “Securing Your Home From Thieves (and Identity Thieves) While You Travel.”

Homeowners Staying Put and Remodeling

Check out the chart from BuildFax on how many homebuyers are remodeling these days. I don’t quite grok what the index on the left means, but the line moving steadily upward gives a pretty clear picture of the trend.

I may even be part of the trend, if you count our current landscaping project, and the fact that we’re on our favorite contractor’s waiting list to tile the bathroom floor. (It’s been months. I guess good contractors are being kept busy.)

So, this seems like a good time for a couple of reminders from your legally minded friends at Nolo:

1) Sign agreements with whoever you hire. These really, truly don’t have to be anything fancy. It’s not the end of the world if you leave out the arbitration and choice of law clauses. But unless you get the basics down in writing — like who the contractor is and his or her official business address, what he or she is going to do for you, by when the job should be finished, and what you’re going to pay for, on what schedule — there’s guaranteed trouble ahead. For further advice on drafting a solid agreement, see The Essential Guide for First-Time Homeowners, by Ilona Bray and Alayna Schroeder (Nolo).

2) Keep records of repairs and improvements. These will be especially important if you ever sell the house. Your buyers will want every detail of what work was done, so that they can be assured that the appropriate permits were obtained, understand the house’s history, and know who to call (or not) for follow-up work. You’ll also want to be able to add up everything you spent on home improvements, to reduce your cost basis in the event that you profit on the sale of your home and face any capital gains tax. For more on those issues, see Easy Ways to Lower Your Taxes, by Sandra Block, personal finance columnist, USA TODAY, and Stephen Fishman, J.D.



Hollywood Celebs Sue Home Sellers

Spending millions of dollars on a home is, apparently, no guarantee that it won’t come with defects.  Just ask recording artist Rihanna, who bought a $6.9 million Hollywood property only to discover that it flooded during rains; or MGM-Studios head Roger Birnbaum, who bought a $16.5 million mansion which, he says, “began to leak like a sieve” during winter. Both have recently filed suit against their sellers, asking for monetary damages to cover repairs.

(And we thought it didn’t rain much in Los Angeles!)

Any lessons here for us non-celebrity buyers of non-mansions? How about:

  • No matter how famous the seller, ask lots of questions before the sale. Birnbaum bought his home from a big-name Hollywood talent agent turned house flipper named  Sandy Gallin. The house sure looks nice — in fact, you can peep at its current listing, because Birnbaum is trying to sell the place for $16 million. (Does he really want to claim it’s made of “the finest materials and accoutrements?”) But if what Birnbaum is alleging is true, Gallin’s fame doesn’t translate into a leak-proof roof.
  • Filing suit makes people mad. Witness the TMZ reports about Gallin’s response to Birnbaum’s lawsuit, in which he calls it a reflection of Birnbaum’s ” well-known miserly and parsimonious behavior. ” That’s why I recommend trying a demand letter and mediation before marching into court, as described in this free Nolo article, “Home Defects: Sue the Seller?”
  • Not only should buyers get a home inspection done before buying (duh), but be alert to any signs that the inspector isn’t exhibiting Sherlock-Holmes-like vigilance. In Rihanna’s case, she claims that the inspector initially reported that an improperly sloped exterior door potentially allowed for water intrusion; but when the seller then argued that the area was fully protected by a seven-foot overhang, the inspector basically rolled over (my words, not hers) and said it was fine. No surprise, Rihanna is also suing her home inspector.
  • Litigation is expensive, regardless of the size of your home. Legal experts estimate that Rihanna, for example, may have to spend six-figure amounts for legal fees, hiring teams of experts to demonstrate that the inspector’s conduct fell below the expected standard of care in the industry, getting estimates of repair costs, and more. (This according to the article, “Why high-end buyers of real estate need to be cautious,” by Bradley P. Boyer and Saundra K. Wootton, in the Daily Journal, a legal trade publication.) None of those costs are tied to square footage!
  • Moisture problems lead to big repair costs. (No wonder insurance companies raise your premiums when they hear about them.) When buying a home, look hard for any evidence of staining, dampness, or rot, and don’t rest until you’ve made sure the house has no history of leakage (or that any such history has been dealt with appropriately). You may need to ask for repair reports, or go to your city building department and get records of permits for repairs and improvements.

Here’s some more free info for home buyers: Nolo’s article, “Get a Home Inspection,” which describes how to find a good inspector, what inspections are needed, and more.

Neighbor’s Yard a Blight? Maybe They Need Help

Whether you’re selling a house or just trying to enjoy living in one, making your own house clean and inviting isn’t always enough. A neighbor whose house is littered, unpainted, or overgrown can reduce your property values, not to mention make you want to keep your curtains drawn against the unpleasant view.

But before jumping to conclusions about their lack of care or responsibility, see whether you can find out if there’s a deeper issue at work.

Let’s face it, homeownership is demanding, in terms of both time and money.  If age, disability, or poverty are contributing to your neighbors’ inability to keep up the property, you may be able to advise them about nonprofit resources that can help.

One possibility is Habitat for Humanity’s “A Brush With Kindness” group, which helps low-income homeowners in various U.S. cities who are impacted by age, disability, and family circumstances,  to maintain the exterior of their homes. The group offers painting, landscaping, weather stripping, and minor repair services.

With a little online searching, you might also find smaller, local groups providing similar services, or handyman/repair outfits that offer free work (most likely via local nonprofits).

And if there’s a major, easy-to-remove eyesore, the easiest thing might be to offer to remove it yourself.

Reverse Mortgages: Not Just for the Cash-Poor

When reverse mortgages first came out, they were mostly discussed as the answer to elderly homeowners’ cash problems  in cases where much of their net worth was locked up in a house that they weren’t ready to sell.

By way of a quick review, a reverse mortgage is one that’s available to homeowners who are at least age 62 and have substantial equity in their home. It allows you to receive regular payments from your lender, which you’ll repay when you leave your home, perhaps due to death, a home sale, or entering a nursing home.

In the June 2011 issue of Kiplinger‘s, however, Patricia Mertz Esswein points out in the article “Homemade Money” (which has a different title online; “New Lower Cost Reverse Mortgage Option“) that even affluent homeowners might have some good reasons to take out a reverse mortgage, for example to:

  • allow you to delay taking Social Security until you either qualify for full benefits at your normal retirement age or even greater benefits at a later age — the important thing to remember here being that once you start drawing on your Social Security benefits, you lock in your benefit rate, or
  • avoid drawing money out of investments that offer higher returns, such as a 401(k) or traditional IRA.

And new reverse mortgage options described in the article offer reduced upfront costs — unfortunately, while also reducing the amount you can borrow. The bottom line message: You’d better sh0p around.

Houses With No Fix-Up Responsibilities Don’t Exist!

The decision of where to live in retirement is tough enough by itself. But when you’ve got two spouses who disagree on priorities, the stress levels can shoot through the roof.

This was exemplified by a conversation I recently overheard (couldn’t help but overhear, really) in which a man was describing how his wife not only wants to downsize for retirement, but dreams of buying a home that doesn’t need any more fix-ups — a newly built home, perhaps.

What’s more, she has apparently been protesting whenever her husband fixes up their current home, on grounds that they’ll soon be selling it and moving to that mythical “house that won’t need fixing.” The man doesn’t agree with any of her arguments, but felt like protesting would risk their marriage.

I had to bite my tongue — though it’s the wife I’d really like to give some commonsense advice to (assuming hubby is telling the straight story).

d9b.JPG First off, a house that doesn’t need fixing? It doesn’t exist. Older houses, though in many cases well built at the time, will inevitably need attention to combat the effects of aging. A new roof, new foundation, structural changes if you want to remodel and need to bring other aspects of the place up to code in order to get a permit, are all on the list of likely home fix-ups.

Newer houses, meanwhile, though fresh and up to code, can be a nightmare. Hurried and often shoddy construction — basic stuff, like windows installed wrong way out — by developers trying to make a buck in a tough economy are typical complaints . (For more on that, see Nolo’s article, “Newly Built Houses: Pros and Cons of Buying.”)

As for putting off maintenance because you think you’re about to sell? Bad idea, unless you want to sell for far less than you could have. Deferred maintenance leads potential buyers to wonder what deeper problems you’ve also been ignoring, and to lower their offer price accordingly — or just pass on the house altogether. Just what shape the house should be in is covered in Nolo’s FAQ, “How much should I fix up the house before selling it?”

Sad to say, I’ll probably never find out the end of this story. But I imagine it’s playing out among numerous couples around this country, with numerous endings.     

Not Even Bail Bond Agents Want Houses as Collateral!

Planning to commit a crime? Wait, that’s not a very good way to start a blog entry.

But let’s just say you were — and that you’d foreseen the possibility of getting caught and having a judge set an amount of bail that you’d need to post in order to get yourself out of jail while awaiting trial. (Actually, real criminals never seem to have that much foresight.)

Okay, let’s cut to the chase here: A bail bond agent (the one who fronts you the cash to pay your bail) might accept your jewelry, laptop, or boat as collateral, but is likely to turn up his or her nose at your offer of your house. That’s according to a recent report in the Wall Street Journal, “Bail Bond Agents Feel Pain of Housing Crash,” by Dawn Wotapka.

Not a real good sign for the housing market, is it?