Category: real estate

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Mold in your home

by Dan Krell © 2012

DanKrell.com

moldy houseEnvironmental issues in the home are a concern.  Although there are linked health concerns, mold is an environmental issue that is often misunderstood because it can be found almost everywhere and its indoor growth may be managed.

Mold is a fungus; and because there are thousands of types of molds (the exact number is unknown), it is often referred to in the plural.  Molds are essentially found everywhere.  Molds typically grow outdoors in moist areas and live in soil, on plants, wood, and decaying plant matter; however, mold can also grow indoors if the humidity is high enough, or if there is an unrepaired water leak.  Molds are useful in digesting dead plant matter as well as for other purposes; however, exposure to molds can also be a health risk.

Molds reproduce via spores; mold spores are found outdoors and indoors surfaces, and can remain dormant for years before they grow.  Mold spores enter the home through doorways, windows, and outdoor vents; as well as hitching a ride into the home by attaching themselves on clothing, pets, and other items that are carried into the home.  If the spores land on a damp surface (such as where leaks or flooding may occur in the home) they begin to grow and digest the material.  Wet building materials can offer a perfect meal for molds.  Molds can thrive on materials made from paper products, cardboard, ceiling tiles, and wood products; however, molds can also grow on many other materials, such as dust, paint, insulation, drywall, carpet, and fabric.

The most common indoor molds are Cladosporium, Penicillium, Aspergillus, and Alternaria.  Mold problems in the home can usually be seen and/or smelled.  If unimpeded, molds can, over time, eventually destroy the materials where they grow.  For this reason, prevention and/or elimination of mold growth in the home can prevent damage to your home and possessions, as well as save you money.

moldy houseLimiting excess moisture is fundamental to controlling indoor mold growth.  Common areas where mold may grow include bathrooms, basements, anywhere condensation and leaks may be found.  A common cause for mold growth in the home is uncontrolled humidity.  To limit mold in the home, experts recommend: indoor humidity levels should not exceed 50%; use air conditioning and dehumidifier to assist in humidity control; ensure exhaust fans are operational and the home is properly ventilated; carpets should not be used in areas that are susceptible to excess moisture (such as bathrooms); remove/replace previously water logged carpets; and repair any leaks.

Although controlling humidity levels and properly ventilating the home may inhibit mold growth in the home, a problem can still exist.  To determine and/or repair a mold issue, a certified mold inspector and/or licensed mold remediation professional should be consulted.

Many people are sensitive to molds and sever reactions may occur; the Institute of Medicine linked indoor mold exposure to upper respiratory symptoms.  However, according to the Centers for Disease Control (CDC.gov), the presence of mold isn’t always an indoor health issue.  Obviously, a physician should be consulted immediately when symptoms from mold exposure are experienced.

Information for this article was obtained from the Centers for Disease Control (cdc.gov) and the Environmental Protection Agency (epa.gov).  Additional information on mold in the home and health implications can be found on their corresponding websites (www.cdc.gov/mold/) and (www.epa.gov/mold/).

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of October 1, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Home sellers may encouter surprises

by Dan Krell © 2012
DanKrell.com

money to close on homeSo you’re planning to list your home in the spring, or maybe your home is already listed for sale…

In an effort to avoid surprises, you consult with your real estate agent and ask many questions. Your agent, also looking forward to a transaction without incident, tries to prepare you for the ups and downs of home selling. No matter how much preparation you and your agent do for the sale, there still can be surprises; here are the three often encountered surprises:

The home buyer failed to qualify for their mortgage:

Real estate agents often do not discuss the truth about lender pre-approval letters (lender pre-approval letters are not all the same). When you receive an offer on your home, there is usually a “pre-approval” letter from a mortgage lender indicating that the buyer is qualified to obtain a mortgage to purchase your home.

Although the pre-approval process typically checks the buyer’s credit, the process sometimes varies when it comes to verifying the buyer’s income and assets. Although many loan officers exercise due diligence and collect income and asset documentation prior to issuing a pre-approval letter; some loan officers feel confident to issue a pre-approval letter solely on the basis of the buyer’s verbal accounting of their income and assets. Make sure your agent is in contact with the buyer’s loan officer; and ask if all the necessary documents have been reviewed before the pre-approval letter was issued.

Unanticipated withholding tax at closing:

Besides negotiating closing costs, your agent will explain that there are additional fees and costs that you should expect to pay at closing. A surprise often awaiting the unsuspecting home seller is a withholding tax; such as the Maryland non-resident seller withholding tax, the Foreign Investment in Real Property Tax Act, and beginning in 2013- the unearned income tax outlined in the Patient Protection and Affordable Care Act of 2010. Additional information can be obtained from the Comptroller of Maryland, and the Internal Revenue Service, and your tax preparer or CPA. Before listing your home for sale, consult your tax preparer or CPA to determine your tax liability for any additional real estate related withholding tax.

Your home does not appraise at contract price:

One of the outcomes of the financial crisis was the Home Valuation Code of Conduct (HVCC). The HVCC was devised to establish increased accountability and independence in the appraisal industry. You might think that since placing additional regulation on the appraisal industry, appraisals should be more consistent. However, there has been much criticism about the inconsistency among appraisals and difficulty in understanding the standards and methodology used in determining a home’s value. The issue may partly stem from appraisal management companies that are sometimes used by lenders to comply with the HVCC, while the issue may also partly stem from lenders imposing specific underwriting guidelines on various loan products. In preparation, your agent should gather valid sales comparables that can be given to the appraiser as rationale for the contract price.

No one like surprises, so hopefully you’re prepared for the ups and downs of selling your home in today’s market. Although some real estate agents may pride themselves on how they handle surprises to put out the “fires;” the truly skilled agent can anticipate most situations to minimize the surprises that can occur during a real estate transaction.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of September 24, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Need to know when buying a new home that is built in Maryland

by Dan Krell © 2012
DanKrell.com

New HomesIn today’s housing market, chances are that you may looking to buy a new home rather than a resale;

be prepared and know what you can reasonably expect from the home builder, as well as understanding how to resolve problems with the builder.  Whether or not you have a licensed real estate agent representing you in the transaction; the Maryland Office of the Attorney General Consumer Protection Division provides consumers guidance, pertinent information and other resources to dealing with a home builder and buying a new home built in Maryland.

Unfortunately, many home buyers believe they do not need representation when buying a new home.  Because the new home builder reps are often friendly, helpful and may appear to be on your side in the transaction; it is understandable how a home buyer may misconstrue the home builder’s sales persons’ loyalties.  However, home buyers must recognize that the builder’s sales people represent the home builder.

Before engaging a home builder and their sales people, you should check out whether or not the home builder is registered with the Home Builder Registration Unit.  Additionally, unless the home builder hires a licensed real estate agent to represent them, the home builder’s sales reps must also be registered with the Home Builder Registration Unit.

Before entering into a contract with a home builder,

you might consider reading the consumer information booklet that home builders are required to provide consumers before entering into a new home sales contract.  The booklet is provided by the Home Builder Registration Unit of the Maryland OAG Consumer Protection Division and discusses: choosing a builder, the contract, how your deposit is protected, custom home contracts, construction of your home, and resolving problems.

The Maryland OAG Consumer Protection Division oversees a Home Builder Guaranty Fund “that allows consumers to seek compensation for losses resulting from an act or omission by a registered builder who constructs a new home for a consumer.”  You may seek compensation from the guaranty fund if your home builder is registered with the Home Builder Registration Unit and you entered into a contract for a new home built in Maryland after January 1, 2009.

New HomesPayments from the Home Builder Guaranty Fund are to cover actual loss that result from “an act or omission by a registered builder as determined by the Consumer Protection Division or a court of competent jurisdiction…”  The Guaranty Fund is not meant to cover such items as: attorney fees, punitive damages, interest, court costs, personal injury, or subsequent damages.  The “actual loss” that is covered refers to “the costs of restoration, repair, replacement or completion that results from the incomplete construction of a new home, a breach of an express or implied warranty, or a failure of the builder to meet certain construction standards or guidelines.”

Guaranty Fund claims must be made “within 2 years after the consumer discovered or should have discovered the loss or damage or within 2 years after the new home warranty expires, whichever comes first. If the consumer files a claim against the home warranty plan, he or she must file the claim against the Guaranty Fund within 4 months after that claims process is exhausted.”

For further information on the Home Builder Registration Unit, consumer information booklet, and the Home Builder Guaranty Fund – visit the Maryland OAG Consumer Protection Division website on home builders (www.oag.state.md.us/Homebuilder/index.htm).

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of September 17, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Homeseller turned landlord

Dan Krell, Realtor®
DanKrell.com
© 2012

Reluctant home sellers turn to renting their homes.

home for saleHanding over the keys of your most expensive investment to another person is not how you think you would have moved on with your life.  But, because the housing market threw a wrench in many peoples’ plans, many home owners who could not sell their homes decided to rent it instead.  Unfortunately, some didn’t know what to expect from their tenants, while others didn’t realize that they had obligations as a landlord.  And as you might imagine some rental arrangements did not turn out so well.

Although the home owner turned landlord may feel kinship to the hard core real estate investor, there are some differences.  Unlike the genuine real estate investor, most people are not accustomed to leaving their home in another’s care (often the person is a total stranger).  Another difference is that the home owner may decide to rent their home to ride out the housing market, while the hard core investor has made a commitment to the real estate investment as a vehicle for accumulating wealth; many investors will hold property for many years looking forward to the future payoff of appreciation when the property is sold.

Of course there is a commonality too; the desire for positive cash flow.  The positive cash flow is the perpetual incoming of cash so the mortgages and other real estate related expenses (such as property taxes, HOA/condo dues, maintenance, insurance, etc.) can be paid. Although a positive cash flow is a good thing, some are content just to break even and have no net proceeds from the rental.  Expenses can add up quickly and turn the rental into a negative cash flow situation (when the rent does not cover all the home expenses); which can became the source of serious financial issues.

home for saleSo, you decided to rent your home (or maybe you were talked into it) so you could move on with your life, what now?  Finding tenants and maintaining the property can be an issue for the novice and experienced alike.  Although seasoned real estate investors have systems in place for various aspects of their business (from finding tenants to collecting rent); you might consider hiring a licensed professional to manage your rental property.  For a fee, professional property managers take care of your rental property: which can include finding tenants, collect rents, and maintain the property.

And since rental agreements can be rather legally complex, consulting with an attorney prior to entering into the agreement would be prudent; as well as consulting with an attorney when issues arise between you and your tenant.

Consider getting additional information about rental properties before embarking on your new journey.   Some municipalities and local governments offer resources to inform you of your obligations and provide additional resources.  For example, the local government of Montgomery County MD offers resources for landlords and tenants.  Besides the “Commission on Landlord – Tenant Affairs,” which hears landlord – tenant disputes; other resources are available including a description of “ordinary wear and tear,” and links to the District Court of Maryland listing actions a landlord can take against a tenant (and vise verse).

What seems to be a comprehensive guide is the “Landlord – Tenant Handbook,” which is offered as a manual to renting for both the landlord and tenant.  The handbook describes: the obligations of the landlord and tenant; property licensing requirements; rental application and lease; security deposits; property maintenance; complaints; terminating the lease; and “survival tips.” The handbook and other landlord – tenant resources can be found at montgomerycountymd.gov/dhca (click the “Landlord & Tenant” link).

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(if this article appears anywhere other than a feed originating from, or directly on DanKrell.com, the article has been re-posted without permission).
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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of September 10 , 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Has the housing market improved in the last four years

Dan Krell, Realtor®
DanKrell.com
© 2012

HousingIn retrospect, the beginning of the global recession in late 2007 was the end of the housing boom and may have spawned the foreclosures crisis and the financial crisis of 2008.  And although this period of time will undoubtedly become the basis of many future dissertations examining the “Great Recession;” you might ask “how much has the state of housing improved since 2008?”

If you recall, the Housing and Economic Recovery Act of 2008 (HERA) was anticipated to have wide reaching changes in the mortgage and housing industries as well as supposed to have assisted struggling home owners.  This multifaceted piece of legislation consolidated many individual bills addressing issues that were thought to either be the cause or the result of the financial crisis.  Besides raising mortgage loan limits to increase home buyer activity, the historic legislation was the beginning of changes meant to “fix” Fannie Mae and Freddie Mac, as well as “modernizing” FHA to make the mortgage process easier for home buyers and refinancing easier for struggling home owners. Additionally, this law was the origination of the Hope for Homeowners program to assist home owners facing foreclosure (www.govtrack.us/congress/bills/110/hr3221).

The Federal Housing Finance Agency (FHFA), originated from HERA, has been the “conservator” of the then sinking Fannie Mae and Freddie Mac. Since the FHFA took control, there has been conjecture as to what would become of the mortgage giants: some talked about closing their doors, while some talked about changing their role in the mortgage industry. Since FHFA became the oversight agency, Fannie Mae and Freddie Mac has strengthened their role in maintaining liquidity in the housing market by helping struggling home owners with their mortgages as well as freeing up lender capital by the continued purchases of loans (fhfa.gov)

The inception of Hope for Homeowners was the beginning of a string of government programs designed to assist home owners facing foreclosure, or assist underwater home owners refinance their mortgage.  Although there have been individual success stories, there has been criticism that these programs did not assist the expected numbers of home owners.  A January 24th CNNMoney article by Tami Luhby (money.cnn.com) reported that “…the HAMP program, which was designed to lower troubled borrowers’ mortgage rates to no more than 31% of their monthly income, ran into problems almost immediately. Many lenders lost documents, and many borrowers didn’t qualify. Three years later, it has helped a scant 910,000 homeowners — a far cry from the promised 4 million…” and “HARP, which was intended to reach 5 million borrowers, has yielded about the same results. Through October, when it was revamped and expanded, the program had assisted 962,000…” (money.cnn.com/2012/01/24/news/economy/Obama_housing/index.htm).

HousingDespite the recent slowdown in foreclosure activity, there is disagreement about the projected number of foreclosures going into 2013.  A March 29th Corelogic news release (www.corelogic.com/about-us/news/corelogic-reports-almost-65,000-completed-foreclosures-nationally-in-february.aspx) reported that there have been about 3.4 million completed foreclosures since 2008 (corelogic.com).  And although an August 9th RealtyTrac® (www.realtytrac.com/content/foreclosure-market-report/july-2012-us-foreclosure-market-report-7332) report indicated a 3% decrease from June to July and a 10% decrease from the previous year in foreclosure filings; July’s 6% year over year increase in foreclosure starts (initial foreclosure filings) was the third straight month of increases in foreclosure starts.

So, if you’re wondering if housing is better off today than it was four years ago, the answer may be a resounding “maybe;” It all depends on your situation.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of September 3 , 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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