home

Odd Lots: Records, Staying, Leaving

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 27th, 2019

Homeowners who lose their homes to wildfire, flood, tornado or another national disaster often lose the records needed to prove their losses -- for tax purposes, obtaining federal assistance or reimbursement from their insurance companies.

Fortunately, you can reconstruct your destroyed records or obtain copies of key documents.

For starters, ask the Internal Revenue Service for copies of previous tax returns. They’re free at IRS.gov by clicking on “Get Your Tax Record.” Or order them by calling 800-908-9946.

Your credit card companies and banks can provide copies of past statements, either hard copies or digital. This should help put a value on items that were lost.

To reconstruct property records, contact the title company or attorney who handled the closing on your house. If you’ve made improvements to the place, call the contractor who did the work to request a statement verifying the job and its cost. Otherwise, written statements from anyone who saw the house before and after the project may suffice, at least according to the IRS.

When no records of any kind are available, owners should check with their county assessor’s office for any old records that may address value or cost.

Homeowners aren’t moving on, at least not nearly as fast as they did just nine years ago.

According to a recent Redfin report, typical American homeowners had spent eight years in their homes in 2010. This year, they’ve spent 13 years and counting.

The reason isn’t hard to decipher: There aren’t enough affordable houses on the market. Plus moving is stressful, to put it mildly.

That people are staying put longer actually exacerbates the housing shortage. Take seniors age 67 to 85: Because they’re not moving on like they used to, there are 1.6 million fewer houses on the market, according to a report from Freddie Mac. If elders need cash, they can always tap into their equity by any number of means.

Even as they bemoan the lack of affordable housing, some state and local jurisdictions are aiding and abetting the inventory problem by putting policies in place to help reduce seniors’ property taxes, making it less burdensome for them to remain in their homes. In Texas, for example -- where Redfin found owners tend to stay the longest -- those over 65 can defer their taxes until they sell.

Speaking of moving, there are some things your moving company won’t or can’t take. Leftover fireworks, for example, are a definite no-no. So are outdoor plants, which are barred from being taken across state lines by Uncle Sam for pest control purposes, among other reasons.

OCD Moving Services in Northern California has a long list of hazardous materials it won’t carry, including acids, ammonia, car batteries, gasoline, pesticides, propane tanks, SCUBA tanks and cleaning solvents. Perishable foods are verboten, too, because they can spoil and attract rodents.

It’s always wise to keep personal valuables, sentimental items and sensitive electronics with you when you move. Ditto for animals.

OCD advises that every moving company will have a list of items it won’t transport. Ask for it so you won’t be surprised.

Here’s the latest version of a scam involving liens against our homes and other property: It arrives in the mail, in an envelope designed to look like it came from a legitimate government entity. But it didn’t. The nonexistent agency will boast a legitimate-sounding name like the “Bureau of Tax Enforcement.”

Inside is a letter threatening to seize your property or place a lien on it based on overdue taxes. This scam may reference the IRS to confuse potential victims.

If you receive such a letter, the IRS says you should contact the Treasury Inspector General for Tax Administration to report it using the IRS Impersonation Scam Reporting webpage. When reporting the scheme, include the keywords “IRS Lien.”

To cover all the bases, also scan or copy the document and send it to phishing@irs.gov. Report it to the Federal Trade Commission using the FTC Complaint Assistant on FTC.gov, and also to the FBI’s Internet Crime Complaint Center -- also known as IC3 -- at ic3.gov.

If you plan to buy a newly constructed house next year, figure it will take the builder a little more time than they tell you. Such is the nature of the labor shortage hampering the business. Access to skilled workers remains the top business challenge for builders, and the predicted modest growth in new-home sales in 2020 is likely to worsen the problem.

The deficit affects a broad set of trades. Four out of five builders report shortages of framing crews and carpenters, but a majority of builders also are having a tough time finding qualified bricklayers, concrete workers, plumbers, electricians, roofers, painters and HVAC specialists.

Half of all building sites sold at a new record high of $49,500 or more in 2018, according to Census Bureau data. But when adjusted for inflation, lot values are still below the peak registered prior to the housing boom.

Given that lots are smaller these days and housing production is still below par, it might seem surprising that costs keep rising. But Natalia Siniavskaia, an economist at the National Association of Home Builders, says the trend is “consistent with persistent record lot shortages, (and) significant and rising regulatory costs that ultimately increase development costs.”

home

Odd Lots: Traveling, Moms, Bigger

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 20th, 2019

If you are an active buyer or seller planning to travel over the holidays -- or anytime, for that matter -- make sure your agent can still reach you. If you can’t be found, you could lose your deal.

Just ask Andrea Bedard, an agent in Silver Spring, Maryland. She couldn’t get in touch with a seller while he was traveling, and he failed to initial a key contract clause within the allotted time frame.

“Thankfully, the buyer wanted the house, and was understanding,” she says. But folks “can’t take this kind of a response for granted,” Bedard posted on ActiveRain recently.

Indeed, an offer can easily disappear if a seller isn’t around to accept or counter it. If you are totally out-of-pocket for days at a time, your wannabe buyer might just move on.

And if you’re a buyer who can’t be located, another buyer can swoop in and take the house right out from under you. “Time,” says agent Amanda Davidson in Alexandria, Virginia, “opens the opportunity for another buyer to tour the home and write an offer.”

Agent Dorie Dillard in Austin, Texas, agrees. “Time is of the essence,” she says. “Until all the initials and documents are obtained and the contract is dated, you don’t have a binding contract.”

So let your agent know how to get in touch -- and your lender, too. Gene Mundt, a loan broker in New Lenox, Illinois, says many applicants seem to go MIA these days during the approval process. Whether for business, pleasure or even illness, he says, taking yourself out of action “can definitely put a kink in the mortgage process.”

Beverly Goldberg, the domineering mother on the popular sitcom “The Goldbergs,” would be pleased with recent research from ApartmentList. It found that 26-year-olds are now more likely to be living with their parents than with spouses.

Fifty years ago, 3 out of every 4 26-year-olds resided with their spouses. Now, that share has plummeted to just 1 in 4. So rejoice, Beverly, and all mothers like her.

On the other hand: Moms may not like it, but ApartmentList also found that, compared with data from 2007, today’s young adults are 32% more likely to live with a partner before tying the knot.

The big keep getting bigger.

According to the trade journal BUILDER, the nation’s 20 largest builders constructed 29 percent of all new houses in 2018. That’s up significantly from 26.8 percent the year before.

Twenty years ago, these national and regional giants produced just 16.6% of all the new houses.

These behemoths, which are able to leverage their size to access credit directly from Wall Street and achieve economies of scale in purchasing building materials, have been growing by moving into smaller markets, often by buying their smaller-scale competitors and their land. Last month, for example, Taylor Morrison Home Corp. agreed to buy William Lyon Homes, making the resulting entity the fifth-largest homebuilder in the land.

There’s no question a foreclosure can be devastating. But it doesn’t stay on your credit record forever, and it doesn’t mean you’ll never be able to own a home again.

Credit scores can decline by 150 points or more when a lender forecloses, according to an analysis by LendingTree. But the event falls away after seven years, and many buyers maintain a relatively high score regardless of their housing woes.

More than 30% of those with a foreclosure in their files have a score of 640 or better within a year of foreclosure, LendingTree found. That’s more than enough to qualify for a mortgage. Moreover, credit scores tend to increase by about 10 points each year after foreclosure.

Time and again, this column has addressed the importance of down payment assistance (DPA), which is accepted in one form or another by most lenders. Now comes a survey that finds 9 out of 10 homebuyers who used the help would not have been able to purchase their homes without it.

The poll by the CBC Mortgage Agency in Cedar City, Utah, found that for many single-parent buyers, acquiring a home would have been impossible without assistance.

“The findings are compelling,” said CBC President Richard Ferguson. “Without DPA, millions of Americans would be shut out of the homebuying market.”

According to Down Payment Resource, an information clearinghouse, there are more than 2,500 active DPA programs nationally. They are offered through state and local housing finance agencies like CBC, nonprofits, city and county administrators and even some employers.

Most programs take one of several forms: grants that need not be paid back; low- or no-cost second mortgages; affordable first mortgages; and mortgage credit certificates, which provide tax benefits to help offset mortgage interest costs. Sometimes assistance programs can be combined or used in conjunction with low-down-payment, high-debt-to-income ratio loans.

Zumper, an apartment search engine, says its latest survey found that 1 in 3 apartment-dwellers do not believe the American Dream involves homeownership, and 1 in 5 say they never want to buy a house.

Furthermore, the percentage of respondents who plan to take the plunge within the next two years has declined from 44% last year to 30% this year.

home

Fewer Appraisals Mandated, But They’re Still a Good Idea

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 13th, 2019

Some homebuyers are about to catch a break, courtesy of the Federal Reserve Board and other banking regulators.

As long as the price tag on their new homes is below $400,000, these lucky purchasers will no longer have to pay for a mandatory appraisal. But the other side of the coin isn’t as positive: How will buyers know if they’ve overpaid?

After all, if the appraisal comes in below the agreed-upon price, you can back out of the deal or ask the seller to lower the price. But without an appraisal, you’ll never know whether you paid too much -- or, on the other hand, whether you nailed the deal of a lifetime.

In raising the appraisal threshold, the Fed, acting in concert with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, notes that the ceiling hasn’t risen since 1994, though the price of real estate certainly has.

“Given price appreciation in residential real estate transactions ... the change will provide regulatory burden relief without posing a threat to the safety and soundness of financial institutions,” the central bank said in the Federal Register.

The Consumer Financial Protection Bureau has also signed off on the higher limit, which takes full effect on Jan. 1, citing the savings to the homebuyer of not having to pay for the appraisal.

The federal watchdog agency also noted the tendency of financial institutions to order appraisals, even in cases when they are not obligated to. This, too, tends to decrease the risk to the nation’s financial system that the change in the limit may have.

Some appraisers agree with the CFPB’s assessment. “We don’t even know what the impact will be. Most banks still want an appraisal, and I don’t think that’s going to change,” says Thomas Hoff, vice president of marketing and communications at Pro Teck Valuation Services, a Massachusetts appraisal company. “I don’t know of any banks that have changed their policies.”

Hoff’s colleague at Pro Teck, Chief Compliance Officer Jeff Dickstein, agrees. “In my conversations with our lender clients, most have not changed their rules,” he says. “And we see no movement to change, at least not anytime in the near future.

Dickstein points out that lenders have just as keen an interest in the value of the house as their borrowers do. “There’s still risk associated with every single loan, and the house is the collateral for that loan,” he says. “So lenders still need to validate the collateral.”

Federal regulators weren’t thinking only about consumers when they proposed the change of rules. The industry has also been experiencing a shortage of appraisers, especially in rural areas, making a lighter load welcome.

How much will an appraisal set you back? Figure around $400 to $600, though it varies based on location and other factors. Hoff said he recently saw a $1,500 charge for an appraisal on a $1.5 million house in Los Angeles.

Lenders have a number of options they can use to estimate a property’s worth. Besides a hands-on, personal appraisal, they can opt for an automated valuation model, a desktop appraisal or an electronic valuation. But in some states, even if lenders use an AVM or e-valuation, they still have to engage an appraiser.

In addition, the quoted price may not be what you wind up paying. Lenders quote a price to consumers, but the law allows them to raise it if circumstances change. Houses in rural areas can often present appraisal challenges, for instance.

Potentially, the new exemption limit could have a big effect. The FDIC looked at 2017 real estate transactions, the latest for which data was available, and estimated 214,000 more would have been exempted under the higher limit. That’s about 16 percent of the more than 1.5 million deals that year.

And since 56 percent of 2017 sales were under the $250,000 threshold, the total number of exemptions would have equaled 72 percent of the market, or nearly 1 million transactions.

(The new appraisal threshold does not apply to loans insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs, the U.S. Department of Agriculture or loans purchased by mortgage agencies Fannie Mae and Freddie Mac. It doesn’t apply to credit union mortgages, either.)

One potential benefit that could stem from the new appraisal landscape is less fraud.

Back in the bad old days (about a dozen years ago), many faulty -- and perhaps fraudulent -- appraisals inflated the value of many properties far above what they were actually worth. The result was disaster for real estate, mortgage lending and then the general economy. Fewer appraisals might mean less of an opportunity for the industry to get in trouble.

But if the lender does not require an appraisal and you still want an unbiased view of the house’s value, there’s nothing to prevent you from hiring your own appraiser -- not your agent, who may or may not be working strictly on your behalf and is not necessarily a valuation expert, but a professional who looks beyond comparable properties and makes adjustments to bring the property you’re buying in line with others.

Ask yourself this: Is it a good investment to spend an extra $500 for some peace of mind on what may well be the most expensive purchase you’ll ever make?

-- Freelance writer Mark Fogarty contributed to this report.

Next up: More trusted advice from...

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