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Stay Out of 'Condo Jail'

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | March 27th, 2015

Don DeBat has been writing about real estate long enough in his native Chicago that he knows a thing or two about condos.

Not as much as his former wife, Sara Benson, though.

Benson, who has owned several apartments over the years, as well as a real estate company that bears her name, bugged her former husband for several years about writing a tell-all book about condos. With her knowledge and his writing skills, she reasoned, the two could produce something that was both readable and informative.

The result is a 624-page tome entitled "Escaping Condo Jail" (Sarandon Publishing), a book the authors bill as "a long-overdue wake-up call" that tells the truth about so-called carefree condos and homeowners' association living. The book examines the myths about how condos work -- or don't work.

This column normally does not do book reviews. But there's a first time for everything, so we'd like to call your attention to three books that have crossed this desk in recent months.

First, the book by DeBat -- a former real estate editor at the Chicago Sun-Times and the late, great Chicago Daily News before that -- and Benson, who operates Benson Stanley Realty.

The essential section for would-be buyers of condos, or of houses where homeowners' associations control the community, is the 10-point checklist that's found deep in the 22nd chapter.

Don't leave home without it.

Space does not allow for listing all 10 points, but here are a few that are usually overlooked:

-- Spend some time in the community you are considering and try to get to know your potential neighbors. If possible, request a meeting with a member of the board to see if he or she will openly answer your questions about the association.

-- Make your purchasing contract subject to your attorney's review. "The building's budget, balance sheets, by-laws, special assessment history, rules and regulations, and any pending legislation should be carefully considered," the book says.

-- Ask how often owners have been hit with special assessments over the previous seven years, and the amount of each. "This history will typically serve as a good indicator of the likelihood of future special assessments," DeBat and Benson write.

Another volume homebuyers might find worth their time is "The Home Book" published by the Building Standards Institute in Washington, D.C. This 274-page guide to owner and builder responsibilities has three authors: California homebuilder David MacLellan, architect George Wolfson and Douglas Hansen, author of the Code Check series of industry field guides.

"The Home Book" is based largely on the more than 500 cases alleging defective construction in which the authors were called as expert witnesses. Of particular interest to buyers, especially rookies, is a section on the most common mistakes they make. Here are a few of the bigger gaffes:

-- Storing household goods on garage or attic ceiling trusses, which are designed to support the weight of the roof above and the ceilings below -- and nothing else.

-- Altering finished grades so that they no longer carry rainwater away from the foundation. They slope away for a reason.

-- Failing to use bathroom and laundry vent fans. They should always be turned on to carry out humidity. If they are not used, water vapor can seep into the drywall, electrical outlets and even the framing members.

-- Overloading upper cabinets. If loaded beyond capacity, they can pull away from the wall. "Heavy china and cookware should always be placed in lower cabinets," the book advises.

Book No. 3 is the latest edition of the "Consumer Action Handbook," which is free courtesy of Uncle Sam (USA.gov). Here, the section on housing offers unbiased insight into tenant rights, choosing a home improvement or repair contractor, dealing with moving companies, buying a home and choosing a mortgage.

But the part every consumer could find informative is about how to complain. "Even the savviest consumer has problems with a good service at one time or another," the section starts out.

There is a proper way to complain, and it doesn't involve screaming at the person on the other end of the phone, or sending nasty letters. Consumers need to remain calm and collected or they will get nowhere.

In the proper order, here's what to do if you have a legitimate dispute with a builder, landlord, contractor or any other business:

-- Start a file with all pertinent paperwork and a log to record all contacts, including the name, title and identification number of the person with whom you spoke, as well as the time and day of the contact.

-- Contact the seller, if the dispute involves a consumer product. If you're not satisfied, call the manufacturer. And if you still don't get anywhere, ask the industry trade association for assistance.

-- Next, call in the big guns. Contact the consumer protection agency in the state where the company is located. Also try the regulatory and licensing offices, which may have jurisdiction over the company.

-- Contact the local Better Business Bureau.

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Plans Mix Unseen Renters, Owners

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | March 20th, 2015

(PHOTO CAPTION for sic150320.jpg: In this Group Privacy Housing plan, owners occupy the first-floor space. Their homes have two-car garages, and occupants have exclusive access to the front yards and private side yard patios. Renters occupy two or three units on the second floor of each home, with exclusive access to the rear yards. They enter via a set of individual stairways and balconies. Apartment parking is to the outside of the homes, closed off from the owner-occupied units.)

Apartment people and homeowners tend not to like each other.

Renters think owners look down their noses at them. And owners? Well, they often believe tenants aren't nearly as invested in their communities as they are, or that renters are one or two rungs below them on the economic ladder.

But what if there was a way in which the two could mutually co-exist? A way in which they could live side-by-side, on the same parcel of land, but without ever bumping into each other?

Doug Webb, 51, of Group Privacy Housing in Columbus, Ohio, believes he has an answer to those questions. He's come up with innovative, patent-pending plans that allow apartments and houses to be built on the same property without their residents ever crossing paths -- a development where renters and owners never encounter each other, or even each other's automobiles.

In one design, the owner units occupy the first floor of a group of two-story buildings, and the apartments occupy the second floor. The owner units feature front and side yards, while the apartments above have backyards. Each element has its own parking areas, and the driveways of each never intersect with the other. A tall courtyard wall provides a physical barrier between the apartment yards and owner-unit balconies and side yards, providing the owners with privacy not only from their apartment neighbors, but also from their fellow owners.

Hence the name Group Privacy Housing.

In another design, the owner units occupy either one or two floors and have full front, rear and side yards. The apartments are built under the owner units, below grade, and use below-grade corridors to reach their parked cars. Again, the owners and renters never encounter each other.

In yet another arrangement, the plan is flipped, with three apartments on the second floor above the owner units. Here, all the renters are connected to a corridor that exits to the parking area. And as in the first design, each community -- the owners and the renters -- has its own entrances.

In still another configuration, the owners have two floors, one below grade and the other on-grade, while the apartments occupy the second floor. The owner units have front patios and backyards, while the second-story apartments use either interior or exterior stairs to reach their parking spaces. Again, complete privacy.

Altogether, Webb says he has seven or eight basic variations of his Group Privacy concept, each with three main elements: an egress, or discharge, system; separate parking lots; and windows arranged so that renters can't view their owner neighbors.

"It took a long time to come up with the first embodiment," says the designer, who joined his father's homebuilding company in 2007, after selling his pontoon-building company.

It wasn't long before he realized that the cost to build a single-story ranch house was a lot higher per square foot than two-story plans. "When you add a second floor, you don't have any more land development, roof or foundation costs," the fledgling builder soon learned. "The most inefficient product we build is a ranch."

So Webb set about trying to come up with a better mousetrap.

Webb says his designs work with practically any type of housing, from duplexes to fourplexes, from townhouses to four-story buildings. Some have full yards, some have just front and backyards, and others have only front yards.

Another unusual facet of GPH's plans is that they are sold as single-family homes. In other words, the buyers of the owner units would also own the rental units above or below their living space.

More expensive than buying just a normal single-family home? Certainly. But Webb claims the income from one rental unit is likely to cover most of the owner's principal and interest payments. And with two or three apartments, the rent may even be enough to cover property taxes, insurance and owner association fees -- with something left over to put in your pocket.

"Our arrangements generate substantial income for homeowners without altering their living experiences," he says.

Webb also maintains that thanks to the rental income, the all-in-one purchases are easier to finance than a standalone house. "Typically, 70 percent of the appraised rental revenue is added to the buyer's personal income for qualifying for financing," he says.

Only time will tell whether the former boat-builder is on to something. But he won't be building any of GPH's plans himself. Rather, he intends to license them to a single builder in a market.

No takers so far. But under the licensing agreement Webb is offering, builders who share his vision will have a type of monopoly in their respective markets. "No one else will be able to use our plans," he promises.

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Staging Can Help Sell Faster, for More Money

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | March 13th, 2015

Sellers who have balked at their agents' suggestions to "stage" their homes and make them more attractive to would-be buyers should listen to Ruvell Martin, an ex-NFL football player and now a real estate agent in Charlotte, South Carolina.

Martin and his wife, Michelle, sold an investment property on the very same day it was staged. They had three offers, each above the couple's asking price.

The Martins bought the property with the intention of flipping it soon after renovations were complete. But the empty house sat on the market for more than 60 days, and nothing. The most common feedback from visitors was that the bedrooms were too small.

They were going round and round about lowering their asking price when Joan Inglis, a real estate agent who also owns professional staging company Carolina Spaces, suggested they try to bring the place back to life before taking that step.

The Martins agreed, and Inglis furnished several key rooms in the house. In the aforementioned bedrooms, she added king and queen beds, nightstands, dressers and chairs to show they were plenty large. Inglis brought in the furniture on a Saturday morning, and by that evening, the sellers had a contract. The deal closed 30 days later.

"We went from no offers to three," says Martin, an agent with Costello Real Estate. "It was a real good experience and now I recommend it to my clients."

He says he was "a little skeptical" of claims about how quickly staged houses usually sell. But now, he's sold himself. "Furnishing the house gave visitors a place to sit down and relax, so they could spend more time in it," he says.

The Martins' experience with staging is now backed by new research from the National Association of Realtors, which found that sellers who opt to help potential buyers visualize themselves in their homes sell at higher prices than the competition.

Staging is the art of putting your home's best foot forward. It goes beyond freshening the paint, decluttering and throwing open the curtains for daytime showings (or turning on all the lights for nighttime ones). Done right -- usually by a professional stager or sometimes a savvy agent -- the process allows you to emphasize your home's best features and minimize its worst. It might involve furnishing a house or condo you've already moved out of so that it's not sitting empty, or removing furniture in a property that's still occupied to make the place look more spacious.

Sometimes, the house needs to be updated with new flooring, countertops, light fixtures and landscaping that will make it more appealing to today's buyers. Or perhaps all that's needed is to rearrange your furniture or supplement it with additional pieces.

According to NAR's findings, 37 percent of sellers' agents surveyed said staging raises the value of the property by 1 to 5 percent. But nearly a quarter -- 22 percent -- put the gain somewhere in the 6-10 percent range. And 12 percent said the dollar value of a staged home jumps from 11 to 20 percent.

The percentages concerning higher sales prices were somewhat lower among agents who represent buyers. Whatever the increase, though, just 4 percent of the respondents believe staging has no impact whatsoever on the home's ultimate selling price.

Other key findings: Almost half the agents -- 46 percent -- said buyers who see a house online are more likely to visit it if it is staged. And 28 percent said buyers are more likely to overlook a staged property's faults.

The survey did not say whether staged properties sold any faster, but anecdotes like Martin's abound. Ann Waters, an accredited stager who owns Naples Home Staging in Southwest Florida, says a $4.5 million condo she staged sold within two days after she worked her magic. Ditto for a $200,000 house.

According to Accredited Home Staging, which teaches staging courses, 95 percent of staged houses sell in 11 days or less (on average), compared to 90 days for non-staged properties. AHS also says professionally staged houses sell for 17 percent more than other places.

The median cost of home staging, according to the NAR survey, is $675. Generally, 4 in 10 sellers pay stagers before the house officially goes on the market. But 10 percent are allowed to pay after the house is sold, and 3 percent of the agents' realty firms pay for the service, leaving no cost for the seller.

Inglis says to plan on spending 1 to 3 percent of the home's list price on professional staging -- at least $3,500 for a $350,000 property, for example. If you want to do the work yourself, a consulation can be much cheaper: Inglis' rates start at $250 for such a meeting, depending on the size of the property.

Waters' fees vary with the clients' needs. If the house is empty, she charges anywhere from $5,000 to $30,000. The rate is lower if the home only needs a few key furniture replacements or edits. For each new client, she compiles a detailed report on how to use their existing furnishings to appeal to the most buyers. The clients are then free to implement her recommendations as they see fit.

Inglis, on the other hand, maintains that the job is best left to professionals.

"It is rare for owners with an emotional attachment to their home to complete their own staging project without professional assistance," she says. "You want a professional stager, not someone who watches HGTV for ideas."

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