home

Quick Takes: Parental Loans; Tiny Resorts; Avoiding HOAs

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 22nd, 2017

Parents who want to help their offspring buy their first houses should make sure the kids fully understand what Mom and Dad expect in return. According to a poll this spring, parents and kids don’t always see eye-to-eye on the subject.

Consumer lending company loanDepot conducted the online survey, which queried 1,000 millennial adults (aged 18 to 38) and 1,000 of their parents. According to the survey, 68 percent of the parents view their financial support as purely a gift, but only 29 percent of the children see the money as a no-strings-attached present.

Thirty-six percent of the children see the money as a loan that they intend to repay. But just 11 percent of their parents expect to be repaid, ever. They even differ as to whether the endowment is part of the kids’ future inheritance: 11 percent of the parents believe it is, compared with just 7 percent of the children.

All of this could lead to clashes, as the kids attempt to repay, but the parents will have none of it. If the two sides can’t come to an agreement, a family breach could be in the offing. That’s why it’s important for parents to sit down with adult children before advancing any money on their behalf, making sure they understand and agree to the terms of Mom and Dad’s largesse.

Another interesting finding: Parents are shifting their financial support from the down payment to other options. In the past, 65 percent of parents chipped in on the down payment, with 20 percent putting up 90 percent or more of the payment. But in the future, those percentages are expected to drop significantly.

Going forward, 30 percent of the parents said they would pay some of the kids’ other expenses, including student loans, so the kids can save to buy a house. Twenty percent will help with closing costs, and 20 percent more will co-sign on the mortgage.

That last option comes with its own can of worms. Another potentially tricky situation: A third of the parents questioned said the kids can continue living in their basements to save money for a house.

On the flip side, millennial children don’t want to continue living with their parents to save for a house, nor are they interested in getting a second job or asking for money to help offset the cost of a house or a wedding. Rather, they expect to cut back on entertainment and eating out to save money.

Fewer of the parents surveyed will use their personal savings to finance these gifts and loans going forward. More are expecting to refinance their own homes to help out the kids, to take out a loan of their own, or sell their personal residence and use the proceeds to help.

The tiny house movement has taken another step toward legitimacy with the opening of a resort in South Cairo, New York.

Called Think BIG!, the 28-acre property in the Hudson Valley features homes designed by Wisconsin-based tiny home builder ESCAPE Homes. The houses are situated on a cliff that overlooks Catskill Creek in a scenic area with waterfalls and swimming holes.

Despite their small stature, the houses feature flexible floor plans and generous windows. They have queen-sized beds, full-sized appliances and luxurious bathrooms, plus private patios with a dining table, grill and fireplace.

A personal raw food chef prepares meals for visitors using produce grown at the resort. In addition, the resort is dog-friendly, featuring a dog park and outdoor dog wash dubbed the “Laundromutt.”

Speaking of little houses, Amazon is now selling a variety of tiny home kits with prices ranging from $3,500 to about $60,000 -- and it’s doing it all online.

The concept takes inspiration from past decades, when customers once ordered prefabricated housing kits through catalogs from places like Sears Roebuck. Now, the process requires a few clicks of the mouse before the new house is purchased online and ready to be delivered.

Of course, the houses -- ranging from a 75-square-foot cabin to a 725-square-foot timber-frame cabin with a loft -- don’t come with land on which to build them.

If you are against homeowners’ associations, you might want to stick with older houses. More often than not, new homes are built in communities ruled by these groups.

According to data from the Census Bureau’s Survey of Construction, 59.8 percent of all homes started in 2016 were built within properties governed by “formal legal entities created to maintain common areas of a development and to enforce private deed restrictions.” If you live in such a place, membership is mandatory.

The share of all new homes built within a community or homeowners’ association has been increasing for years. In 2009, the share was 47.6 percent; in 2010, 48 percent. Since 2011, more than 50 percent of all homes have been built in properties run by an association. In the Bureau’s Mountain Division, 82.3 percent of all new houses were built in association-run communities. But in the New England Division, the share was a mere 29.5 percent.

home

Discard and Donate Before Moving

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 15th, 2017

Folks who are moving often hold garage sales to get rid of their unwanted stuff. But after that, they’re usually in a quandary: What do we do with the rest of the things we no longer want or need?

Often, there are people in town who will haul away your leftovers for free, or for a small stipend. Typically, these are professional dealers who will comb through what they take away to find a hidden gem or two that is worth more than you ever realized.

But there are lots of other choices. For example, you could skip the yard sale altogether and hire a “discard and donate” firm to help you whittle down your stuff. These companies help you evaluate what to keep. Then they take what you want to discard, donating it on your behalf to local and national charities. This will reduce your packing and transportation costs -- so much so, the outfits maintain, that it will save you money even after paying their fees. Not only do they help cut moving costs, they tend to make the old place more marketable by removing the clutter.

One such firm is Relocation Remedies of Pittsburgh; another is Home Sweet Home in Palos Verdes, California. Both work primarily with corporate relocation clients, but will also work with individual homeowners -- the former nationally, and the latter in and around Los Angeles.

Neither company would offer an example of a typical mover’s savings, saying that there are simply too many variables involved.

How much you save, says Home Sweet Home’s Jeff Heisler, depends on whether you are moving across the street or across the country, and which carrier you choose. Daniel O’Neill of Relocation Remedies adds that savings also depend on family size and the size of the house you are moving from.

Heisler says people who have a tough time deciding what to get rid of benefit the most from firms like his. Otherwise, people tend to take it all with them in the hope that they’ll find the time to sort and discard things after unpacking -- which, of course, they rarely do.

“Sometimes it’s just too hard, so getting a pro to come out is very helpful,” he says. “It’s less overwhelming.”

If you’re sorting through things yourself, the first step is to determine what you want to keep. These questions can help: Do you use the item regularly? Does it have sentimental value? Are you saving it “just in case”? Do you have more than one? Can something else replace it?

Your next step is to call local and national charities and ask about donating. “The cost is low to get a charity to come out and pick up your unwanted items, you are giving back to your community, and you get a tax deduction,” Heisler explains.

Likely, many local charities would be glad to help solve your moving dilemma. As one example, A Wider Circle in the Washington, D.C., area, collects furniture and household items and gives them to families and individuals transitioning from homelessness.

There also are many national charities you could call, including Goodwill, the Salvation Army, the Purple Heart Foundation and Habitat for Humanity, which backs locally owned and operated ReStores.

Here are a few other options:

-- Working through Vietnam Veterans of America (VVA), Pickup Please (pickupplease.org) helps all veterans by taking almost everything you want to give away. The group will collect your donations within 24 hours of your call; all you have to do is bag or box your items and leave them at the curb. If requested, they’ll leave a tax receipt. Collected items are sold to private companies, with the proceeds used to support VVA’s local, state and national programs. (All veterans are served, not just those from the Vietnam era.)

-- Dress for Success (dressforsuccess.org) passes on new and gently used business clothing to women looking for a new start in the workforce. It looks for business-appropriate attire such as suits, shoes, handbags and unused cosmetics and jewelry. Local affiliates accept donations only once or twice a month, so do your research.

-- Are there some extra coats in your “discard” pile? Use them to jump-start a neighborhood coat drive. One Warm Coat (onewarmcoat.org) provides tools and resources to hold a successful coat drive. Coats are distributed to children and adults in need in the communities where they were collected, without charge, discrimination or obligation. Since the charity’s inception in 1992, it has helped volunteers hold more than 27,000 coat drives, resulting in 5 million coats given away.

-- Cell Phones for Soldiers (cellphonesforsoldiers.com) collects used phones and tablets, sells then to a refurbisher or recycler, and uses the proceeds to purchase prepaid calling cards. The cards are distributed to active-duty personnel and veterans.

-- The Lupus Foundation (lupus.org) operates in only a few cities, but is growing. The group will take clothing, shoes, bedding, curtains, housewares, jewelry, toys, small appliances and tools, but no furniture. Donated items are sold to for-profit wholesalers, with the proceeds used to support programs for individuals with lupus and their families.

home

Beware Last-minute Damage

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 8th, 2017

It doesn’t happen often, but when it does, it can cause a seller and buyer big headaches.

We’re talking about damage done to a property after a contract is signed but prior to closing.

Perhaps the moving company broke the stair spindles when they were carrying the seller’s large dresser down. Or maybe there was a small kitchen fire -- or worse, damage from a major storm. Or perchance a final walkthrough prior to closing revealed damage that wasn’t noticeable when the house was full of the seller’s belongings.

Most standard state and local contracts address this issue. Unfortunately, says National Association of Realtors’ (NAR) General Counsel Katie Johnson, all contracts are different in how they handle the situation. The next steps depend on the language of your specific deal.

In Florida, according to Meredith Caruso of state trade association Florida Realtors, standard contracts contain a risk-of-loss clause which states that if the cost of restoration does not exceed 1.5 percent of the purchase price, the seller must restore the property and closing should proceed as per the contract.

If the cost of repairs exceeds 1.5 percent of the price, then the buyer has the choice of taking the property as-is along with a 1.5 percent reduction in price, or having their deposit returned. If they take the latter option, all parties are released from the contract.

In Colorado, on the other hand, the standard contract says the seller is liable for the repair or replacement of the damage with items of similar size, age and quality. Either that, or the seller can offer the buyer an equivalent credit. If the work is not finished on or before closing, the buyer has the right to terminate the deal or take a credit, not exceeding the purchase price, for the cost.

These are known as force majeure clauses, provisions in the contract that allow a party to suspend or terminate their obligations when certain circumstances beyond their control arise, making performance inadvisable, illegal or impossible.

Sometimes a list of possible events is included with these clauses: war, riots, fire, flood, hurricane, typhoon, earthquake, lightning, explosion, strikes, lockouts, slowdowns and government acts that prohibit or impede any party from performing their respective obligations under the contract.

Both buyers and sellers would be wise to look for a force majeure clause in the contract they are signing, NAR’s Johnson advises. It may or may not be labeled as such -- in the Florida contract, it’s called “risk of loss”; in Colorado, “damages, inclusions and services”; in Texas, “casualty loss” -- but it’s important to find it.

If it’s not there, the attorney suggests, you should negotiate up-front how these situations should be handled and include the agreed-upon details in the contract. In the absence of such an agreement, you’ll be left to the mercy of narrow common-law contract doctrines, which often leave one party or the other highly dissatisfied.

Your state’s Uniform Vendor and Purchaser Risk Act may also come into play, according to Johnson. These laws spell out who bears the risk for damages: the buyer, the seller or both, and at what percentage.

Of course, you can always renegotiate after the fact. Remember, everything in real estate is negotiable, right up until the moment you sign your name on all those documents at closing.

A force majeure clause should address a list of events the buyer and seller want covered, what happens when an event occurs, which party can suspend performance, and what happens if a listed event continues outside a specific time frame.

If the air conditioning fails, the seller should be responsible since they still own the property, says Patricia Beck of RE/MAX Properties in Colorado Springs. But if the house is damaged by flood or fire, the parties might want to make the buyer obligated to close if the damage is less than, say, 10 percent of the purchase price. If they want to bail despite such a clause, they could lose their earnest money deposit.

If the damage is greater and repairs cannot be made promptly, the buyer should be able to terminate the deal, Beck adds. But if they decide to proceed, the seller should be required to transfer any insurance proceeds to the buyer at closing.

Unfortunately, not every event can be foreseen. Take this possibility described by Dale Ross of the Dale Ross Realty Group in Katy, Texas:

If the house floods for any reason -- broken pipe, failed water heater or rising water -- and the insurance claim is substantial, the house might fall into a high-risk insurance situation. That means the buyer might have to pay up to four times the normal amount for homeowner’s insurance “for about two years or until the insurance policy returns to a normal price,” Ross says.

This fact alone could cause a buyer to want to back out. So could a reappraisal by the buyer’s mortgage company, if not because of a possible delay in closing, then because the new value ascribed to the house is so much lower than the original appraisal that the lender will no longer be willing to finance the place.

No financing, no deal.

Next up: More trusted advice from...

  • Lifelong Income From a QCD?
  • How To Handle a Late Tax Payment
  • Are You a 'Great Investor'?
  • Claw Down
  • Placebo Effect?
  • Mysterious Felines
  • Footprints
  • Too Old
  • Lukewarm Water
UExpressLifeParentingHomePetsHealthAstrologyOdditiesA-Z
AboutContactSubmissionsTerms of ServicePrivacy Policy
©2023 Andrews McMeel Universal