Complaint Says Zillow's Estimates Are Misleading

A national nonprofit group claims that Zillow.com's home valuations are wrong more than 67 percent of the time.
By: John Cook: REALTOR® Magazine Online
The National Community Reinvestment Coalition, a Washington, D.C.-based nonprofit that promotes equal access to credit and capital for underserved communities, is taking aim at real estate Web site Zillow.com.

In a 12-page complaint filed with the Federal Trade Commission, NCRC insists that Zillow's home-valuation tool is inaccurate and misleading. An audit by NCRC reveals that Zillow's so-called "Zestimates" are wrong over 67 percent of the time, and many home owners have expressed concerns about valuations that are too high or too low.

NCRC Executive Vice President David Berenbaum says the complaint is in no way tied to NCRC's close relationship with the Center for Responsible Appraisals & Valuations; he says the coalition is worried about low-income home owners falling prey to unscrupulous lenders that use inaccurate valuations from Zillow.

However, Don Kelly of the Appraisal Institute notes that no bank he knows of uses Zillow's Zestimates when writing mortgages.
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8 Real Estate Deals that Save Taxes

The end of 2006 is almost here, but it's not too late to cut taxes by putting money in real estate. Here are 8 tax-saving opportunities.
By: Robert Bruss: REALTOR® Magazine Online
1. Sell a principal residence before the end of the year. If it was owner occupied for at least 24 of the last 60 months before its sale, the sellers can claim up to $250,000 tax-free and $500,000 if they are a married couple filing a joint return.

2. Buy a principal residence before year-end. A typical home acquisition loan fee of 1 or 2 percent of the mortgage amount is tax-deductible as itemized interest. Mortgage interest paid in 2006 is also tax deductible.

3. Refinance a home mortgage and deduct previously nondeductible loan fees. In the year of paying off a mortgage, whether by refinancing or selling, those fees become fully tax-deductible as itemized interest.

4. Get a home equity loan, whose interest is usually fully deductible, and use the money to pay off nondeductible interest from credit card debt or a personal loan.

5. Prepay the January 2007 mortgage payment in 2006.

6. If the local tax collector will allow it, prepay 2007 property taxes and deduct them in 2006.

7. If you moved more than 50 miles and changed jobs, deduct those moving costs.

8. Deduct uninsured casualty or theft loss. Only losses that are more than 10 percent of your 2006 adjusted gross income qualify.
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Buy worst house in good neighborhood for big profits

How serial investing can become a tax-free business
By: Robert J. Bruss: Inman News
Do you have any friends who sell their homes and move approximately every two years? I know several of those very smart folks. You may wonder why they change homes so often. No, they are not in the federal witness protection program. But they have a very profitable reason.

They are "serial home sellers." There is nothing illegal or immoral about that. In fact, it is extremely smart to sell your personal residence every two years or so, especially if there is no tax to pay on your resale profit.

TAX LAW ENCOURAGES PROFITABLE TAX-FREE HOME SALES. Just in case you have no clue what this is all about, every homeowner needs to know that Internal Revenue Code 121 permits tax-free principal residence sales profits up to $250,000 (up to $500,000 for a married couple filing a joint tax return).

To qualify, the home seller(s) must own and occupy their principal residence at least 24 of the last 60 months before its sale. But IRC 121 can only be used every 24 months. If you want to maximize your tax-free sale profits, there are five easy steps:

1. Buy a sound, well-located house or condominium below market value needing cosmetic fix-up work.

2. Move in and make it your principal residence.

3. Make profitable improvements to the residence that cost less than the market value they add.

4. Profitably sell the house at a tax-free profit not exceeding $250,000 (up to $500,000 if husband and wife occupied the home 24 or more of the 60 months before sale and they file a joint tax return).

5. Repeat every 24 months to become known as a tax-free "serial home seller."

HOW TO MAKE PROFITABLE HOME IMPROVEMENTS. If creating tax-free profits, while enjoying your home is appealing, especially if you are a handyperson or in the construction field, serial home selling can be the perfect business opportunity. The only skill required is to recognize a house or condo with "the right things wrong."

Most older houses qualify, as virtually every house more than 10 years old needs paint inside and outside. Paint is the most profitable improvement homeowners can make. Spending $1,000 on painting often adds $5,000 to $10,000 in market value.

Other examples of homes with the "right things wrong" include the need for new light fixtures, fresh landscaping, new carpets and flooring, and overall cleaning and repairs. An especially profitable home improvement is adding a second bathroom to a one-bathroom house.

However, the "wrong things wrong" with a house are necessary but unprofitable work that doesn't add more market value than it costs. Unprofitable examples include a new roof, foundation repairs, new wiring, replacement of galvanized pipes with copper pipes, siding replacement, and window replacement.

Many home improvements are "nice to have," but they don't add more market value than their cost. Examples include bedroom and family-room additions, kitchen remodeling, and bathroom upgrades. Such work may make your home more desirable while you live there, but is unlikely to add more than the cost to the market value.

THE MAJOR DRAWBACK OF BEING A SERIAL HOME IMPROVER. If you think buying a run-down house, making profitable improvements while living in it, and selling it for up to $250,000 (or $500,000) tax-free profit sounds like fun, think again. It's hard work.

While you and your family are living in the house as it undergoes major renovation, that can be what TV's Dr. Phil calls "a life-changing experience." The disruption of not having a kitchen to cook in, or only one working bathroom for a large family, and the daily disruption of having strangers working in your home can't be fully described.

A few summers ago my neighbors went through such an experience. They wisely decided to take the kids to Europe so by the time they got back their remodeled home was almost finished. Yes, the marriage survived.

Because major home improvements can be traumatic, the smartest serial home sellers renovate their homes before moving in. Then they get to enjoy their fixed-up home for at least two years without the hassle and inconvenience of work in progress.

DON'T MAKE THESE COSTLY MISTAKES. Earning up to $250,000 tax-free (or $500,000 for a married couple) every two years excites most people. But there are some pitfalls to avoid:

1. Don't buy a house in excellent condition (it lacks fix-up profit potential). Instead, buy the worst house in a good neighborhood.

2. Avoid most condominiums and townhouses. The reason is no matter how nice you fix up your unit, its maximum resale market value will be held down by the recent sales prices of other units in the same complex. For example, if you fix up a condo penthouse but the other units in the building and the common areas are "ho-hum average," you won't earn much profit.

3. Stay away from "extreme makeover" houses, which need to be torn down (called a "scraper") or renovated by moving walls and rebuilding the interior. Profiting from such houses is extremely difficult.

4. No matter how much potential a fixer-upper house has, stay away if it is in a bad location, high-crime area, or the public-school quality is poor. These three criteria will hold down resale value no matter how well the house is upgraded.

WORK WITH A SAVVY BUYER'S AGENT TO FIND FIXER-UPPERS. Buyers of fixer-upper houses have a major advantage. Most other home buyers don't want these fix-up houses. They prefer to buy a house, turn the key in the door, and move in. That's the way to profitably sell your house.

A sharp buyer's agent will alert you when a fixer-upper house with "the right things wrong" comes on the market, whether it be in the local MLS (multiple listing service) or a "for sale by owner" FSBO. In the current "buyer's market" in most cities, there is little demand for these run-down houses offering profit potential.

Additional sources of profitable home purchases, which most buyer's agents don't follow, include foreclosures, probate and bankruptcy sales. Vacation or second homes can also be profitable, but they have special risks such as fickle buyer demand, which is often seasonal and volatile.

HOW TO PAY FOR THE IMPROVEMENTS. Fortunately, most "right things wrong" fix-up houses don't require costly improvements. To pay for the improvements, because the house will become your principal residence for at least 24 months, many major lenders now offer combination mortgages to pay for both the purchase and the improvements.

The lender's appraiser will evaluate both the home's current "as is" market value and the upgraded market value after the improvements are completed. The lender pays out the improvement portion of the loan as the work is completed.

Another finance method is to buy the house with mortgage financing and then obtain a home equity credit line secured by a second mortgage to pay for the improvements.

However, this method is difficult if the home buyer doesn't have much initial equity.
More details are in my special report, "How to Earn Up to $250,000 (or $500,000) Tax-Free Profits Every 24 Months Buying and Selling Houses," available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.
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Is buying a second home a wise tax strategy?

Homeowners aim to save big on sale of first home
By: Robert J. Bruss: Inman News
DEAR BOB: My wife and I bought a house in 1995 for $180,000. Since then, we have taken out home-improvement loans and now owe $320,000. Similar nearby houses sell for $600,000. In 2004, we bought our current home for $640,000 and rented out our former home. We have been told if we sell our first home within three years after buying our second home we won't owe any capital gains tax. Or should we try to sell it now although the local home sale market is a bit slow? -Manuel A.

DEAR MANUEL: You received incorrect tax information. Buying a replacement home is irrelevant. Also, the mortgage balance on your old home doesn't matter.

To qualify for the Internal Revenue Code 121 principal-residence-sale tax exemption up to $250,000 for a single person (up to $500,000 for a qualified married couple filing a joint tax return), you must have owned and occupied the home at least 24 of the last 60 months before its sale.

That means you have up to 36 months after moving out of your principal residence to claim your tax-free sale profits. If you rent it longer than 36 months, you lose your exemption.

However, since you rented the house after vacating, the depreciation you deducted on your tax returns will be taxed at the special 25 percent federal tax rate for recaptured depreciation. For full details, please consult your tax adviser.

WHAT IF 81-YEAR-OLD MOM STOPS PAYING DAUGHTER'S MORTGAGE?

DEAR BOB: My 81-year-old mom recently co-signed a 40-year mortgage for my "derelict" sister. The loan is in my mom's name but the house deed has both her name and my sister's name on it. My sister has really bad credit. Although she can afford it, she refuses to pay the mortgage monthly payment to my mom, so mom makes the payment. My dad, age 79, is worried about his credit rating. I say, at their ages, does it really matter? My mother also has dementia so my sister and the bank took advantage of her. What should she do? -Dee G.

DEAR DEE: If your mom stops paying the mortgage payments, the bank will foreclose on the house. Should it not sell for enough to pay off the mortgage, the bank could come after your mom for any deficiency loss (although that is highly unlikely).

Of course, if that happens, your mom's credit will be ruined. But, as you say, at age 81, who cares?

This extreme situation shows why an individual should not co-sign for credit to primarily benefit another person, especially a "derelict."

If you and your father knew this was going on, you should have stepped in to stop your mother from co-signing for your sister.

AFTER YOU QUITCLAIM TITLE, YOU CAN'T GET IT BACK

DEAR BOB: A few weeks ago you had a question from a man who wanted to add his girlfriend to the title to his house. You suggested use of a quitclaim deed to convey a half interest. My question is after quitclaiming your title, how can you get it back again? I'm asking because in two years I plan to add my boyfriend's name to the title of my home we will share as our primary residence before selling it two years later -Jeanne S.

DEAR JEANNE: When a property owner signs a quitclaim deed, he conveys whatever interest is desired, such as 50 percent or 100 percent, has his signature notarized, and the deed is recorded to complete the conveyance. After title is transferred, the grantor can't get that title back again.

Before you transfer a partial interest in your property to your boyfriend, please consult a local real estate attorney to determine the best way to hold title. Also consult your tax adviser to discuss the tax consequences.

NO WAY TO GET YOUR NAME OFF MORTGAGE AFTER A DIVORCE

DEAR BOB: As part of my divorce settlement two years ago, I signed a quitclaim deed on the house that was in both our names. The mortgage is still in both our names. He has since remarried and is still living in the house. He says he can't refinance and isn't sure when he is going to sell the house. If something were to happen to him, it is my understanding I will still be responsible for the mortgage payments. Would I get the house? Or would it go to his wife? Can I make him refinance? I really want my name off the mortgage and the house -Teresa B.

DEAR TERESA: If you had a decent divorce attorney, he or she would have resolved these issues in your divorce agreement. Because you signed that quitclaim deed, your ex-husband now owns the house in his name alone.

But your name will always remain on the mortgage obligation. The lender is 99 percent certain to never release you from liability, and you can't force your ex-husband to refinance. It's a shame this wasn't handled as part of the divorce.

If your husband dies, his living trust or will determines who receives title to his house. By signing that quitclaim deed, you are out of the picture to receive the house unless he wills it to you (very unlikely).

Sorry to be the bearer of bad news. But there is nothing you can do to force your ex-husband to refinance or sell the house to get your name off the mortgage.

WHAT IS BEST TAX STRATEGY TO RECEIVE RENTAL HOUSE?

DEAR BOB: What is the best tax strategy for my mother to give me her rental house? Initially, we bought it together, but when it was refinanced my name was taken off the title -Jan B.

DEAR JAN: The best way for you to obtain title to that rental house is to inherit it after your mother dies. Then you get a new stepped-up basis of market value on the date of her death.

If she gifts the house to you now, then you take over her presumably low depreciated adjusted cost basis for the rental property. Also, she must file a federal gift tax return. But no gift tax will be due unless she has given away over $1 million in lifetime nonexempt gifts exceeding $12,000 each. For full details, please consult your tax adviser.

SHOULD HOMEOWNER SWITCH FROM ADJUSTABLE TO FIXED MORTGAGE?

DEAR BOB: I am 64, single, and retired. I have a $125,000 mortgage with an adjustable interest rate currently at 6.3 percent (it can go up to 11 percent). My home is worth about $550,000. I am not planning to sell, but am thinking of refinancing at a 6.375 percent fixed interest rate. It would cost me $2,000 in fees ($1,000 in lender fees and $1,000 in title and escrow charges). Do I really need to spend $2,000 to avoid any future interest-rate increases? -Richard L.

DEAR RICHARD: It's up to you to decide if spending $2,000 to lock in your interest rate at 6.375 percent is worth the $2,000 expense and hassle. I can't give you a payback analysis because you won't be saving anything. But you won't have to worry about rising interest rates.

NO LIABILITY IF TREES AREN'T DAMAGING NEIGHBOR'S PROPERTY

DEAR BOB: After I moved into my home, the neighbor insisted my trees are cracking her patio foundation. The seller knew about this but didn't tell me. I then hired an arborist. According to his report, my trees are not directly affecting the neighbor's home. I do not want to remove my three trees because they make my home secluded. There is a PUD (planned-unit development) association. What are my rights as a homeowner? -Lori K.

DEAR LORI: Depending on the exact facts, it sounds like you have no liability if your trees are not damaging the neighbor's house or patio. The PUD association probably has no involvement because the homeowner's association just manages the common areas, not the individual homeowner lots. For more details, please consult a local real estate attorney.

The new Robert Bruss special report, "The 20 Essential Questions Smart Home Buyers Must Ask to Avoid Overpaying in a Buyer's Market," is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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Fed Leaves Key Rate Unchanged

Barring an increase in inflation, analysts expect the Fed to hold its key rate at 5.25 percent until the middle of next year.
By: David Leonhardt: REALTOR® Magazine Online
The Federal Reserve Board left its key short-term interest rate alone yesterday at 5.25 percent.

No rate hikes are expected soon. Federal Reserve Board Chairman Ben S. Bernanke has vowed to fight inflation, which is up 3.4 percent for the year. Barring an increase in inflation, many analysts expect the Fed to hold its key rate at 5.25 percent until the middle of next year.

The goal is to bring the economy to a 3 percent growth rate with inflation at 1 percent to 2 percent, economists say.

“'I think the Fed is feeling very good about the way the economy is developing,” says Stuart Schweitzer, a strategist at J. P. Morgan Asset and Wealth Management. “The housing slowdown is proceeding, but it’s not spiraling downward, and the rest of the economy is doing O.K.”'
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The Weekend Guide! October 26 - October 29, 2006

The Weekend Guide for October 26 - October 29, 2006.
Full Article:
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The More Things Change, the More They Remain the Same

Emerging Trends proposes that the real estate market is ever-changing. Consumers don't seem to be as certain.
By: Al Heavens: Realty Times
The Urban Land Institute sent me its Emerging Trends report for 2007 last week, and three words immediately caught my eye: "Nothing lasts forever."

The report was referring specifically to the U.S. commercial and multifamily real estate investment market, which will slow down in 2007 after reaching a 10-year peak in 2006, comfortably producing average to slightly above-average investment returns.

"Nothing lasts forever."

It's amazing how the average person is reacting to the end of the boom and the return to the normal market. Despite all of the dire predictions about bubbles and deflating prices, a recent AP-AOL News poll found at least half of all American believe their houses will increase in value in the next two years.

Real estate agents report that sellers still don't get that it is now a buyer's market in most areas of the country. They are still trying to get 10 percent more than the house down the street brought last year; its a, "And my house is much better than theirs, right down to the white shag carpets" mentality.

Listing agents are still doing big business, even though the experts suggest that if people don't have to sell right now, they shouldn't, because it just adds to inventory and - I heard this from a veteran real estate agent the other day - "buyers have so many choices they are having a harder time deciding."

The housing economists are assuring me that the residential market will be climbing back to some sort of equilibrium soon. The economists outside of housing aren't so confident, but let me say one thing: The current market isn't as dire as the one we had to endure between the late 1980s and mid-1990s, when we were truly experiencing a reaction to overbuilding - especially in the suburban condo market in non-resort areas - historically high interest rates and inflated prices of the early and mid-1980s.

Allan Domb, the "Condo King" of downtown Philadelphia and a nationally known condominium expert, says that in his market, housing prices actually declined between 1987 and 1990 and did not start to increase until 1997.

Philadelphia is one of the residential real estate bright spots in the country: The median price continues to rise - predictions of 3.5 to 5 percent in the next two years are common - because the region's housing stock was so undervalued for so long that it will take years to catch up to other older big cities, such as Boston and New York.

Anyway, from the AP-AOL poll results, from anecdotal evidence from real estate agents, and from my own observations, at least half of us don't care what the economists say and will continue to do what we want with our houses.

While I don't believe one tiny street in a town of 11,000 qualifies as a microcosm, of the 14 single-family detached houses on mine, four are for sale for prices ranging from $374,000 to $404,900.

One seller moved when his house went on the market eight months ago, and there are still no buyers, and no one coming for open houses. Another seller has bought a house closer to his job (a three-hour commute); a third seller has lost her job and is concerned that she cannot afford the taxes; and the fourth is going through a mid-life crisis and wants a change.

The "crisis" seller decided to look around the area to see what other sellers were doing to market their properties. She went to a Sunday open house in a neighboring town, where the owner had decided to remain against the listing agent's wishes and accompanied my neighbor through the house.

"It smelled of mold and dog poop," the neighbor said, but the clincher was when she asked what was behind the closed door on the second floor.

"Oh, that's the master bedroom," the owner said, and opened the door, where his wife was still asleep. "Want to see the master bathroom?" he asked.

"If I can do everything just the opposite of that guy, I may have a chance selling mine," my neighbor said.

My readers who are listing their houses look to me for reassurance that they are doing the right thing, and other than reminding them that the price has to be right, I can't offer any. Most people have their own ideas, so my counsel would go unheeded anyway.

For instance, should you bury a statue of St. Joseph upside down to sell your house?

I was dozing on the train home last evening. Behind me was a 30ish woman on her cellphone.

"I bought the statue of St. Joseph and I think you have to bury him," she said. "It came with instructions, and I think that if I follow them, the house will sell quickly."

The side of the conversation I could hear continued:

"My friend's father came over to look at the furnace, but he couldn't hear the noise," she said. "He said it probably was the motor and he'd replace it for $200. But if he didn't, I don't think the home inspector would find it so I won't say anything."

Failure to disclose. Some things do last forever.
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New reverse mortgage debuts in high-cost markets

Product lets borrowers tap more home equity
By: Tom Kelly: Inman News
Reverse Mortgage of America, a subsidiary of Seattle Mortgage and the third-largest producer and servicer of reverse mortgages in the country, plans to roll out the first new reverse product in nearly a decade when its privately funded jumbo program - The Lifestyle Plan - hits the market in the next few weeks.

The new product initially will be available in Washington, Oregon and California. It will be marketed to the remainder of the country early next year.

Designed for owners of higher-value homes, The Lifestyle Plan product is similar to Financial Freedom's Cash Account and allows for a higher percentage of available home equity to borrowers, exceeding the federal loan limit placed on reverse mortgages insured by the Federal Housing Administration.

Both the Reverse Mortgage of America (RMOA) offering and the Financial Freedom mortgage function similarly to the FHA Home Equity Conversion Mortgage (HECM) and Fannie Mae HomeKeeper reverse-mortgage programs, but are funded by a third-party lender.

The Lifestyle Plan could be more beneficial than the HECM for homeowners with substantial equity. For example, a HECM would provide a typical 73-year-old couple with an appraised home value of $700,000 with approximately $203,723 in available funds. Under The Lifestyle Plan this same couple could avoid closing costs and loan fees, netting $291,915 in available funds, a difference of $88,192, according to Reverse Mortgage of America.

"The Lifestyle Plan provides additional opportunities for seniors across the nation, particularly those in expensive housing markets, who are eagerly seeking alternate sources of income," said John Nixon, executive vice president of Reverse Mortgage of America. "It is important that seniors understand and fully examine their financing options. As our population ages, reverse mortgages will supplement retirement and enhance the quality of life for many more senior homeowners."

Financial Freedom first introduced a jumbo reverse mortgage in 1996 and had no competition until now. Jumbo amounts, now starting at $417,000, adjust annually and are greater than the "conforming" limits established by Fannie Mae and Freddie Mac.

The interest rate on the new RMOA program is the six-month LIBOR Index, plus 3.6 percentage points. That rate today would be 9.02 percent, compared with 5.07 percent three years ago. While the new RMOA program's "margin" is slightly higher than the Financial Freedom mortgage (3.6 compared with 3.5) the RMOA mortgage offers a more flexible no-fee option.

Most seniors prefer predictable, reliable mortgages. Many have requested a fixed-rate reverse to the unpredictable moves of an adjustable, but underwriters have been unwilling to take on the risk of a long-term product.

Tom Scaberti, who left Financial Freedom last year to head up the soon-to-be-released reverse mortgage at Countrywide Home Loans, said it has been difficult for potential mortgage investors such as Lehman to commit to gauge how long seniors will remain in the home. That information, plus other research, would bring more mortgage variety and result in lower rates and fees for consumers.

"There are actuarial tables, like the ones insurance companies use, to predict how long a senior will live," Scaberti said. "But we don't have a lot of data yet on the move-out rate. How long will they stay once they get the reverse?"

FHA's HECM is clearly the nation's most popular reverse mortgage and carries a lower interest rate than the jumbo products, but borrowers are limited in the amount they are able to borrower by FHA's loan ceilings and geographic regions. Urban areas typically have higher loan ceilings than rural areas. Borrowers have to pay HECM loan fees, typically 2 percent of the appraised value plus a 2 percent mortgage insurance premium, but these fees can be subtracted from the loan proceeds. Thus, borrowers do not have to pay "out of pocket" for most of these fees.

Reverse borrowers make no monthly payments on their mortgage during its term. The loan comes due when the borrower permanently moves out of his or her home. To qualify, consumers must be at least 62 years of age and own their own home. The home does not have to be paid off entirely, but the greater the equity, the greater the reverse loan amount.

However, seniors can "outlive" the value of their home without being forced to move. The homeowner cannot be displaced and forced to sell the home to pay off the mortgage, even if the principal balance grows to exceed the value of the property. If the value of the house exceeds what is owed at the time of the homeowner's death, the rest goes to the estate.

Tom Kelly's book "The New Reverse Mortgage Formula" (John Wiley & Sons) is now available in local bookstores and on Amazon.com. He can be reached at news@tomkelly.com.
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The Worst May Be Over, Economists Say

Consumers are growing more optimistic about the housing market, and economists concede the worst has likely passed.
By: Marc Hogan: REALTOR® Magazine Online
On Oct. 7, after mortgage applications posted their largest weekly gain since June 2005, former Federal Reserve Chairman Alan Greenspan was quoted as saying, “The worst may well be over.”

A growing number of economists and analysts are beginning to see things his way.

"The point of maximum deterioration in housing activity has probably passed," says Jan Hatzius, chief U.S. economist at Goldman Sachs (GS), in an Oct. 20 report. "The sharp downturn of the past year seems to have brought total housing starts — single-family starts, multi-family starts, and mobile-home shipments — close to the level justified by the underlying demographics."

Peter Kretzmer, a senior economist at Bank of America (BAC), points to the University of Michigan's latest consumer-sentiment report, in which the share of respondents indicating that it was a good time to buy a house jumped to its highest level in 14 months.

Even the bears are slightly more circumspect. In an Oct. 20 note, Richard Berner, chief U.S. economist at Morgan Stanley, says the housing slowdown is far from over, but may not be as bad as everyone expected. "The latest data suggest that the intensity of the housing decline may be fading somewhat, and with it some of the concurrent downward pressure on housing prices," he said. "If so, one of the biggest perceived risks to the U.S. economy may be smaller than feared."
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How to find a real estate bargain

Buyers now have luxury of choice
By: Dian Hymer: Inman News
Everybody wants a bargain. Last year, good real estate deals were few and far between. This was due to the fact that inventories of homes for sale were at record low levels. And, there was an abundance of buyers, all looking for the same thing.

Today in most areas, buyers have the luxury of choice. So, there's less of a chance you'll overpay because you have to outbid another buyer. However, even though there is a lot to choose from, this doesn't mean that it will be easier to buy a property at a bargain price.

One reason is that most sellers aren't desperate to sell. Just because the market has changed doesn't mean that sellers are slashing their prices dramatically. Many listings that have price reductions were overpriced to begin with.

Another factor is that there is usually little consistency in pricing. Some listings are well-priced, others are overpriced, and then there is the occasional listing that is actually priced below market value.

Another complicating factor is variability. Unless you're looking at listings in a single tract development, where each house is a cookie cutter of the others, you'll find disparities in age, condition, size and amenities. Each of these variables has an affect on market value.

HOUSE HUNTING TIP: In order to find a good deal, you need to be able to identify a fairly priced property when you see it. This requires intimate knowledge of home values in the area.

A good real estate agent can help you to develop this product knowledge. But, there is no substitute for doing your own due diligence-driving the area, researching the local economy, viewing listings online and visiting open houses. This gives you the confidence you need to make an educated decision about what constitutes a good deal.

Even though the pace of the home sale market has slowed, you may have to make a snap decision or risk losing out on a great buy. Many home sellers price their homes too high for the market. They usually sit for a while before the sellers realize the house can't sell without reducing their price.

But sellers who understand the market and have a pressing need to speed the process along will price their properties at or under market value. If you aren't up on current market values, you could let a good deal slip by because you didn't act quickly enough.

Part of buying at the right price is being there when the well-priced listings come on the market. Don't wait until a Sunday open house to see a new listing if your agent thinks it will sell quickly.

It's possible to create a good deal. One way is to research the listings that have been on the market a while without any offers.

Find out why they haven't sold. If there isn't anything wrong except the price, ask the listing agent why the seller is selling and whether there's any flexibility in the price. Sellers who have a real reason for selling, like a divorce, death in the family or job transfer, will soften on price in time.

Be sure to find out the amount of the outstanding loans secured against the property. If the sellers are mortgaged to the hilt, you might want to move on and negotiate with a seller who has a strong equity position in the property. Even if he sells for less than he'd hoped, he'll at least sell for a profit.

THE CLOSING: Steer clear of listings that aren't selling because they have an incurable defect, like a location on a busy street. You may be able to negotiate a bargain price, but you'll also have to discount your price when you resell the property.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.
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Keeping Your Credit Clean

Is your credit affected each time a credit report inquiry is made? Columnist Phoebe Chongchua answers this pressing question.
By: Phoebe Chongchua: Realty Times
Many homebuyers frequently wonder, "If I am shopping for a home loan will my credit be affected each time a credit report inquiry is made?"

It's a logical and intelligent question to ask; the answer is: not significantly, if the credit checks are done in a short period of time.

When a credit check is made by a potential lender it is called a hard inquiry. When a hard inquiry occurs it does have an impact on your credit score. However, when you're shopping for a mortgage or a car loan, credit bureaus typically cluster the hard inquiries together because the credit reporting bureaus understand that the consumer is shopping for the best loan.

"So for example, if you're shopping for a new mortgage and three potential lenders pull your credit score within three weeks, that is looked at as one inquiry for that purpose," says Steven Katz a spokesperson for TransUnion's TrueCredit.com.

Keeping your credit clean is critical. Katz offers the following advice to help ensure healthy credit.

One card you should not carry: Leave your Social Security card at home. "There is basically no reason that you need to [carry] that with you," says Katz.

Most people have their Social Security card number memorized. If you're not one of those people, then only carry your card with you when you know you need the information on it. Your Social Security card number contains personal information that if it gets into the wrong hands, can cause major credit dilemmas.

Lock it up: Apartment complexes and condominiums typically have locking mailboxes, but these types of secure mailboxes aren't as common in residential, single-family neighborhoods.

"If at all possible, people should have a locking mailbox," says Katz.

Katz says mailboxes with locking devices are becoming more popular at hardware stores because identity theft is spreading. Taking precaution to protect your personal information can save you months of agony.

Shred your documents: Katz says if you don't shred your personal documents and criminals access the information, the result can be devastating to your credit. Criminals will often attempt to open new accounts using your name and information. If they're successful, they will use the new account and divert the account information to the criminals' address or post office box.

"So, you'll never even know that the account was established. They'll be receiving the bills and then just throwing them out. It's ruining your credit." explains Katz.

Keep an eye on your credit card: Katz says while it is difficult, people should not let their credit card out of their sight or else they run the risk of becoming a victim of skimming.

Skimming has become prevalent at some restaurants and gas stations where a clerk might have a small device that scans the consumer's credit card.

"It's a very small scanner that captures all the information that is on the magnetic strip, and then the card's information can be cloned," explains Katz.

Of course, keeping your credit card visible at all times is nearly impossible. Katz says, "If you're going to go to a restaurant in an area that you're a little uncertain of - that's in a fringe area or you're in a foreign country and you're not too certain about where you're dining - attempt to use cash."

Also, when using credit cards be sure that the receipt you leave with the merchant does not have your credit card number exposed. Most merchants have credit card systems that only print out the last four digits of a consumer's credit card; however, some still show the entire account number on the print out. If your full credit card account number appears on the receipt, scratch it out with a pen. Additionally, in rare cases where carbon copies are used, ask for the carbon.

Check your credit history

Consumers can check their credit history for free once a year at annualcreditreport.com. Katz says that the free reports will not contain an actual credit score, but you can get the scores for a fee.

Another good credit-checking resource is found at truecredit.com. The website offers access to tools to manage a consumer's credit health by receiving credit reports, credit scores, credit monitoring, and informational materials.
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Want your own home someday? Start by saying, 'Charge it'

About 50 million people lack the credit record necessary to buy a house.
By: Lew Sichelman: Los Angeles Times
They are mostly immigrants and minorities who, for one reason or another, pay their bills in cash. But the ranks of the "credit underserved" cut a much wider swath, including college students and those recently divorced or widowed.

You don't need perfect credit to become a homeowner, but you do need good credit. And it's never too late to start establishing a good credit record or improving the one you have.

For starters, establish a budget and stick to it. "No matter what their income, everyone must live within his means," says Sherene Costanzo, vice president of Credit Consultants Inc., a Margate, Fla., company that helps people restore their tarnished credit histories.

Your budget is not only your spending plan, it's your savings plan too. But for it to work, it must be realistic and accurate. List your monthly income, but don't overstate it by including, for example, overtime or bonuses. List your monthly expenses, including whatever you spend on entertainment.

And be sure to remember the bills that aren't due every month, such as your automobile insurance.

Now compare what you earn with what you pay out. If you have a positive balance and can put some money away in savings, you are on your way to homeownership. But if you have a negative balance, you are living over the edge and must adjust your spending habits.

Consumer Credit Counseling Services, a nonprofit, nationwide agency, operates on the 70-20-10 rule: No more than 70% of your income should go to living expenses and no more than 20% should go to your creditors. The remaining 10% should be put in savings.

If you don't already have one, the next step is to open a checking account. Without one, it's more difficult to provide creditors with a record of how you manage your money. Many checking accounts are free these days, making them less costly than paying with a money order or using a neighborhood check-cashing store to cash your paycheck.

Savings accounts are important too, because the best way to improve your overall financial health is to save money every month. Put the money in a savings account and don't touch it unless you need it for an emergency.

Pay your bills on time, making sure they arrive before their due date. This is the best way to build the good credit you'll need to qualify for the lowest possible rate on a home loan.

Paying bills late is a sure way of damaging your credit record. Not only will late fees eat up your hard-earned cash, but some creditors also report customers if they miss the due date by a single day.

Others wait until you are more than 30 days late before reporting you to the credit bureau. Either way, a late payment or two will hurt your chances of getting a low-rate mortgage.

If you are just starting out, you'll find it easiest to obtain a credit card from a department store or gasoline retailer. Even though these come with the highest interest rates, you should use them frequently so you can demonstrate you know how to handle credit, says Maxine Sweet, vice president of public education at Experian, one of the big three credit bureaus. But pay it off in full every month.

After you do that for several months, it should be easier to obtain a national bank card from Visa, MasterCard or American Express.

Other ways to start building your credit file are to buy an automobile and make payments on time, or take out a secured credit card in which you deposit an amount with your bank, say $250, and then use your card up to that amount. Activity on secured cards is reported to the three credit bureaus as conventional credit cards.

If you are married, make sure some accounts are in both your names, so you and your spouse can build a credit history.

There is no rule regarding the optimum number of credit cards you should have. Tanisha Warner, spokeswoman for Consumer Credit Counseling Services, says all you need is "one or two major credit cards."

Nick Jacobs, spokesman for the National Foundation for Credit Counseling, suggests one bank card, either debit or credit, and one department store card.

A third opinion, this one from Ginny Ferguson, an expert in credit scoring, says the numerical programs lenders use to rate borrowers for risk, make it preferable to have one or two national cards, a couple of department-store cards and even a gasoline card.

Why? Because scoring systems look for how well you handle "a nice, balanced mix" of credit, Ferguson explains.

One thing the three experts agree on is that you should pay all your debts on time.

If you find you can't meet all your obligations, call some of your creditors and see if they will reduce your payment or allow you to be late. Many are willing to work with their customers, but they can't if you don't notify them in advance that you are having problems.
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Face-Lifts on Downtown Skyline

Landmark AT&T Center is among the towers getting 're-skinned' as owners seek to cash in on the area's boom.
By: Cara Mia DiMassa: Los Angeles Times
Maybe turning 40 was a sign. The look that once was so stylish now feels a little dated. The complexion is getting a little rough.

Is a little cosmetic surgery in order?

The owners of the 35-story AT&T Center on the southern edge of downtown Los Angeles think so. So workers are beginning to remake the landmark tower, replacing the 1960s-era square metal cladding with a cutting-edge translucent metal skin that when completed will change the look of downtown's skyline.

The skyscraper — perhaps better known by its old name, the Transamerica Tower — would be come the latest L.A. building to be "re-skinned."

Giving face-lifts to buildings has become popular across Los Angeles but particularly downtown, where property owners attempt to cash in on the central city's development boom by giving their buildings a fresh look.

When complete, the AT&T building will look more like a glimmering rectangle, its distinctive penthouse restaurant somewhat obscured by the cladding.

"It was tired and outdated and a little run-down. It just didn't have a positive image in the marketplace," said Steve Briggs, a principal partner at LBA Realty.

"So many things are happening in the South Park [area of downtown]. We knew the building had great architectural bones, but it needed to be modernized and updated."

The project consists of placing new metal panels (in a neutral tone) on top of the brown terra-cotta tiles that have been a trademark. The building was designed by William K. Pereira and Associates — the firm behind many midcentury L.A. landmarks — and completed in 1965.

It turns out that in architecture, as in much else, sometimes the way to look at things anew is to put on a brand-new face.

Re-fronting a building is an inexpensive way to re-create a structure with a new look. And it's a practice that dates to the Roman Emperor Hadrian.

In modern times, the process can involve stripping out an old facade or placing something new on top of the existing design, using materials such as tile, metal, even Styrofoam. It usually involves fewer zoning hurdles than a new building.

In the case of AT&T Center, the refacing will both brighten the look and provide new insulation and waterproofing.

In Hollywood, the 6565 Sunset Building, originally constructed in 1965, was re-clad in titanium-blue reflective glass.

The Westwood Center was reworked in the late 1990s, the 1965 building's concrete skin and aggregate panels replaced by a glass curtain wall.

In downtown, a face-lift of 811 Wilshire replaced the small blue tiles that covered the mid-'60s skyscraper with more than 1,100 aluminum and stainless-steel panels. A few years ago, the Union Bank tower on Figueroa Street was significantly reworked.

But in an environment where everything old becomes new again, the issue of whether to re-clad a building is not without controversy.

"The general issue of re-cladding has become more controversial in recent years," said Ken Bernstein, manager of the office of historic resources in the city's Planning Department, "particularly as we have seen a new appreciation for the architectural value of the 'recent past.'

"In many cases," said Bernstein, the former director of preservation issues for the Los Angeles Conservancy, "architectural styles that once seemed tired or dated have won new appreciation in recent years. In some cases, that happened before the buildings have been remade, and in other cases, we have seen significant makeovers of buildings go forward."

Bernstein said he could not comment specifically on the AT&T Center project.

But architect Andy Cohen, executive director of the architectural firm Gensler, said that the building is leaking and "the sun really creates a lot of heat gain in the building. By dealing with the exterior skin, it creates energy efficiency in the building and also fixes the waterproofing and leaking problems."

Cohen said his firm was sensitive about the historic nature of the building — and the final design, he said, would maintain its architectural integrity.

"That's been a real push on our part," he said.

While the debate among many preservationists focuses on whether re-cladding is an appropriate way to save a building from possible remodeling, another movement is underway too.

As some old downtown office buildings are being converted to residential spaces, property owners are finding that it makes historical and commercial sense to bring their buildings back to the way they once were — at least in part to appeal to residents who say they value the historic nature of the structures.

Often, those restorations involve stripping away the cladding the building acquired over the years as its use — and prevailing architectural styles — changed.

Two years ago, the Los Angeles Conservancy awarded seven grants for local buildings — most of them along Broadway — to rehabilitate their facades.

One of those is the 12-story Chester Williams building at 5th and Broadway, named for one of downtown's original real estate moguls. Work is underway to expose and restore historic metal grillwork, long buried under a mishmash of signage and awnings, as well as return the building to its original milky white color.

At the Pacific Electric Lofts at 6th and Main, workers have uncovered the building's distinctive arched windows, patched up since the late 1960s or '70s.

The new owners of the Redwood Bar and Grill on 2nd Street were going for a pirate theme when they began remodeling the space months ago.

They changed the ceiling and opened up the front doorway. Working inside the building's vestibule, they discovered a piece of the now-stuccoed building's original green marble facade.

Co-owner Christian Frizzell said it was beyond the owners' purview to strip the building back entirely.

But they did expose a 3-foot piece of the facade, visible from the vestibule.

"It's really awesome," said Frizzell. "It's really like a treasure, pun intended."
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How Much is Too Much to Fix up Your House?

As with any resale product, the person trying to sell said product will usually try to make the product look as new as possible to ensure the highest profit available. In reviewing many of the homes on the market today, however, some sellers don't get that notion.
By: M. Anthony Carr: Realty Times
Don't make the mistake of the seller who, knowing full well that buyers were coming by, not only failed to do a fresh clean up, but also left his underwear on the exercise bike, a pan of crusty macaroni and cheese on the stove and debris throughout the yard.

There are some task items any seller should consider when selling a house. Even if you decide to sell "as is," a little soap and water could put a few more bucks in your pocket. With that in mind, let's look at what sellers should look at doing with any house they want to put on the market; what to do when you want to get a little more money; and how to compete with the Joneses when looking to prepare your home for sale.

Any House

    1. All homes going on the market should receive a deep cleaning. This is the
       cleaning that you do when … well, you would never do it unless you're selling
       your house (or you're just an absolute neatnik. This involves scrubbing every
       cranny of the house. Nothing goes unscrubbed. I would suggest bringing in a
       professional group to get this done and plan on spending a couple hundred
       bucks (maybe more) to get the house ready for your new buyer.

    2. Next, declutter the house. Go ahead and rent a huge storage unit and fill it
       up. Plan this with a bunch of pre-made boxes that have lids you can tape shut
       and label. Take extra kid's toys to charity. Donate all clothes that are even
       a bit too tight or out of date. Remove excess furniture (or even cover with
       matching covers).

    3. Repair and paint where needed. As with most homes that have been lived in,
       that would be all of them. Walk through a new construction home to see what
       you're up against and then go and make yours look as best you can on your
       budget.

    4. Landscaping. Thankfully, mulch and flowering plants don't really cost a lot
       of money for those who are just sprucing up. Before going out and paying for
       a designer-created landscaping job, start with the local garden center and
       get some free advice on how to spruce up on a budget. Fresh, flowering plants
       (even in fall and winter) can make the house look oh-so much better.

Even if you're selling as-is, the above four tips are a must. Next is where we spend a little more money.

Redecorating

    1. Renewed color. Giving your house a makeover doesn't have to cost you a second
       mortgage. The first item to consider for rehab is your color selection. While
       the traditional advice is "go vanilla," professionally selected colors (not
       too bold) can make a "nice" house into a "wow" house.

    2. Flooring is one of the best moderately priced upgrades a seller can install
       to make a huge difference. While I like the concept of "choose-your-own-
       carpet" offers in home listings, think about what else it's saying: "We're
       too cheap to fix up the house now, so we'll let you walk through our
       tattered, stained carpeting and let you get it installed the weekend after we
       leave." Like I said, make your house a "wow" by making that first great
       impression with new carpet.

    3. Replacing dated items. Sometimes replacing certain items in the house is
       really more like maintaining your home instead of upgrading it. Items like
       windows, doors, light fixtures, faucets, door hardware, etc., need upgrading
       and replacing periodically. A walk down the light aisle at your favorite
       hardware store reveals this could be done on a budget. Nevertheless, there's
       nothing more gross looking than a brass light fixture that's chipping and
       rusting.

Keeping up with the Joneses

At some point you have to look at what the neighbors are doing and keep up or you'll lose out. If everyone in the neighborhood is ripping out the old and installing the new (kitchen, bath, carpet, doors, etc.) then you may be forced to do the same thing long before you're thinking of putting your home on the market. My wife and I are facing that right now with the kitchen. It's starting to show its age, which means before we put the house on the market in a few years, if I want the best buyer (or any buyer for that matter) the kitchen cabinets need an upgrade.

Redo, Remodel, Relax

As you look around the house, making your list of things to change before putting the house on the market, remember to create some time to enjoy your new digs before selling the place. If a sale is on your horizon and you must redo the landscaping before putting the house on the market - do it early so you can drive home to the professionally designed flowerbeds and floral creations a few months or years before selling it to someone else.

While you want to repair, paint, remodel and add on to your house because it adds value to your home, every homeowner should especially do it because they want to enjoy the changes as well.
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The Weekend Guide! October 19 - October 22, 2006

The Weekend Guide for October 19 - October 22, 2006.
Full Article:
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C.A.R.'s California Housing Market Forecast for 2007:

Cooling home sales, modest price decrease next year.
California Association of REALTORS®
LOS ANGELES – The rate of home price appreciation will post a modest decline next year following several years of steep increases, while the sales pace will decrease as the market stabilizes throughout 2007, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) "2007 California Housing Market Forecast" released today. The forecast will be presented this afternoon during the California REALTOR® EXPO 2006 (www.realtorexpo.org), running from Oct. 17 – 19 at the Long Beach Convention Center in Long Beach, Calif. The trade show attracts more than 12,000 attendees and is the largest state real estate trade show in the nation.

The median home price in California will decline 2 percent to $550,000 in 2007 compared with a projected median of $561,000 this year, while sales for 2007 are projected to decrease 7 percent to 447,500 units, compared with 481,200 units (projected) in 2006.

“The housing market clearly downshifted in 2006 from the record-setting sales and robust price gains of the last few years,” said C.A.R. President Vince Malta. “The residential real estate market in 2006 was characterized by a gap between buyer and seller expectations. Sellers sensed that the peak of the market was approaching, yet still hoped to obtain the highest possible prices. Buyers’ sense of urgency waned as the number of homes on the market grew and they took longer to identify and subsequently purchase a home.

“Although the 2007 sales decline is not expected to be as steep as what we experienced this year, the psychology of the market - matching the differing expectations of sellers and buyers - will continue to be a factor as REALTORS® help consumers navigate their way through a changing market.

“While we’re projecting a modest decline in the median price of a home, over the long term, residential real estate in California has been and will continue to be a solid investment. Since 1968, the long-term average price appreciation is 9.1 percent,” he said.

“While we recognized that the frenetic sales pace of the past four years could not continue indefinitely, the housing market in 2006 did not fare as well as we initially expected,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The anticipated slowdown that began in October 2005 was heightened by dual natural disasters in the Gulf Coast, a significant drop in consumer confidence, rising energy and raw materials costs, and a series of Federal Reserve interest rate hikes that began in June 2004. Fixed-rate mortgages also hit and passed the psychological threshold of 6 percent, while adjustable rate mortgages passed 5 percent, ultimately causing a decline in affordability. Affordability concerns also will continue to constrain sales for many households in California throughout 2007, especially for first-time home buyers.

“Looking to 2007, we expect that some regions of the state, including the Central Valley, San Diego and Riverside/San Bernardino regions, will experience sales declines greater than the state as a whole,” she said. “That also holds true for several second-home markets, including the desert areas of Southern California and the Wine Country.”

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 195,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.



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Housing confidence at low point

Part 3: Effects of a national housing slump
By: Jessica Swesey: Inman News
Editor's note: Many real estate markets have slowed, and the effects are now being felt by brokers and agents who are struggling through tougher negotiations, and buyers and sellers who are aware of changing times. Among consumers, the slowdown has shaken up expectations and attitudes toward home buying, causing them to worry about future price decreases. In this three-part report, Inman News examines three areas of impact: how the slowdown is expected to influence economic growth; problems created in the property appraisal process; and consumer attitude toward home buying. (Read Part 1 and Part 2.)

In his five years working as a real estate agent in Charlottesville, Va., Jim Duncan of Century 21 Manley Associates, recently heard a prospective buyer say something he'd never heard before: "There's just too much to choose from."

Homes sales in markets nationwide have slowed considerably in the last year, causing property inventory levels to rise and price gains to slow or even decline in some areas, and national consumer confidence indexes show some of the lowest confidence levels toward housing in a decade.

The University of Michigan's monthly survey of consumers in September showed that home-buying attitudes were at the lowest level since 1990, with consumers citing concerns over potential future price decreases and increases in mortgage interest rates.

Despite the unfavorable outlook on housing, consumers' assessment of overall economic conditions was less pessimistic in September compared with past months. Overall consumer confidence, which decreased sharply in August, rebounded in September, according to The Conference Board, which reported its index increased to 104.5 from 100.2 in August, and the University of Michigan, which reported its index stood at 85.4, up from 82 in August.

Real estate brokers agree that home buyers' attitudes have changed, but said that overall, buyers they are working with still feel real estate is worth their money. The difference today from a year ago is that buyers in many markets know they have the upper hand and are letting homes sit on the market longer in hopes of finding a better deal. There's a lack of urgency in pushing buying decisions, brokers say.

"I don't see a lack of confidence (in home buying)," said Jeffrey Bastress, broker/owner of StartPoint Realty in Sterling, Mass. "I see it more as they know they have choices so they think, 'why rush into it?'" With interest rates remaining low, buyers today are more likely to wait on the sidelines until they find a good deal, he said.

Once buyers do make offers, they're being tough in what they ask for, Bastress said, referring to a recent client who at the last minute demanded another $5,000 off the home's asking price for no reason other than knowing the seller had no choice but to agree.

Bastress said the reason buyers aren't moving quickly comes down to the fact that they have no compelling motivation to do otherwise. They know they have the upper hand and though Bastress said he hates to use the phrase "sweet revenge," "that's exactly what they're doing."

Home sellers, meanwhile, see the future as the unknown and some think that next year's market may be worse so they feel they have to sell now, he said.

"The advice I give sellers is that you're going to have to put a price on your home that you won't regret selling for and also a price that if you don't sell you won't regret keeping it," Bastress said.

Richard T. Curtin, director of the University of Michigan's Survey of Consumers, said that consumer confidence in home buying measured by his university's surveys started to decline in early 2005, and current confidence levels are the lowest recorded since 1990. "One other part of the bad news for real estate is that more consumers are aware of declining housing prices - or at least the declining rate of appreciation - than we've recorded since 1993," he said.

Consumers are worried about price declines and thinking that if they buy now and prices go down then they will lose money so many are postponing their buying plans, he said.

The good news, though, is that while confidence in home-buying is at a low point, it has not significantly fallen since March of this year so it appears to be leveling, Curtin said. The data do not forecast a downward spiral, but they do indicate a prolonged slowing rather than the market turning up again, Curtin said.

Consumers in the university survey give a variety of reasons for their low confidence in housing, he said, including concerns about interest rates and home prices as well as how they view their income and employment situations, which have been favorable but not improved over the last six months.

Curtin said there's been a close correlation between steep declines in consumer's home-buying attitudes and new- and existing-home sales. Many brokers refer to the current situation as a "standoff" between buyers and sellers.

David Michonski, CEO Coldwell Banker Hunt Kennedy, a large brokerage firm in Manhattan, said that buyers in his market are uncertain, worried and have lost their courage to make a decision.

"There's a very big standoff going on … It's like a buffet table at a banquet where they keep bringing more plates from the kitchen," he said. It's as if buyers are thinking, "I like this shrimp, but maybe there's lobster coming out," he said.

Michonski said he doesn't think that confidence in real estate as a sound investment has eroded. "The confidence that's eroded is the thought that you can buy something and flip it," he said.

The slowing market in Manhattan, he said, is being driven more by an oversupply of new properties than by the resale market. Inventory is up 65 percent from last year in Manhattan and the majority of those properties are new construction, he said.

Jim Duncan, the Century 21 agent in Charlottesville, Va., said that home buyers and sellers in his market have not lost confidence in housing, but are thinking about it differently than they have over the last few years.

"I think we're returning to a more normal mindset with more normal expectations." Buyers today are thinking about their purchases more as places to live rather than properties they can flip for fast cash, he said.

"It's a long-term investment and people are taking time to consider whether they want to live in a house for two or three years," Duncan said. Also, "sellers expectations are coming more in line with reality."

Another indicator of the consumer mindset over housing is the number of consumers researching real estate online. The number of unique visitors to top real estate Web sites increased 17 percent from August 2005 to August 2006, according to analytics firm comScore Media Metrix, though that increase was not seen by all real estate sites.

The most visited site, Realtor.com, had an 11 percent year-over-year decrease in unique visitors, with about 6.6 million people visiting the national property listings site in August this year, according to comScore. The entire Move.com network of sites had only a 1 percent decline with 10.4 million unique visitors. HomeGain, a company that matches real estate agents to consumers, also saw a 2 percent decline in traffic from last year to 4.1 million in August. (Inman News publisher Bradley Inman founded HomeGain in 1999 and sold the company to Classified Ventures in July 2005.)

Despite declines at a few top real estate Web sites, plenty of sites in the top 10 posted increases in visitors during the first year of the slowing market. HouseValues sites – which include JustListed.com, HouseValues.com and HomePages.com – saw traffic increase, as well as AOL Real Estate, Yahoo! Real Estate, Rent.com, Apartments.com, and HPCInter@ctive, a division of Primedia that publishes a number of rental print guides.

National foreclosure service RealtyTrac saw very little change in traffic and comScore had no data on MSN Real Estate's traffic numbers for the previous year.
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Baby boomers drive second-home market

Survey: Generation is working longer, living longer
Inman News
About 25 percent of baby boomers own one or more types of real estate in addition to a primary residence, and boomers own 57 percent of all vacation and seasonal homes and 58 percent of rental property, according to a survey conducted by Harris Interactive for the National Association of Realtors trade group.

The baby boomers study, based on responses from about 2,000 U.S. baby boomers born from 1946-64, also found that home equity accounts for about half of the net worth for middle-income boomer homeowners, and about nine in 10 of boomers earning $100,000 or more each year are homeowners.

About 19 percent of survey respondents are renters, 37 percent say they have just enough to make ends meet, and 17 percent say they are having financial difficulty, the survey revealed.

About 13 percent of respondents own land, 8 percent own rental property, 7 percent own a vacation home or seasonally occupied property, 2 percent own commercial real estate and 3 percent some other kind of real estate.

About 40 percent of respondents intend to convert their vacation home into a primary residence in retirement, the Realtor group announced. Analysis by NAR shows baby boomers are proportionately more active in the second home market, owning about 57 percent of all vacation and seasonal homes and 58 percent of rental property.

Ten percent of boomers said they plan to buy some form of real estate within the next year, which corresponds with U.S. Census Bureau data that shows 3.5 million boomer households moved during the past year, according to the announcement. Two-thirds are considering a primary residence, but the rest are thinking about land, second homes or commercial property, the survey found.

"Most of the 78 million baby boomers are far from retirement, with diverse plans and timelines resulting in different housing requirements and significant shifts from patterns established by earlier generations," the Realtor group reported.

David Lereah, NAR's chief economist, said in a statement, "The differences from past generations -- and between baby boomers themselves -- will have a significant impact on housing needs over the next 10 to 20 years that is very different from the World War II generation, and many boomers simply don't know how they'll retire."

He added, "A significant portion of baby boomers married later in life and had children at a later age, which means many will continue to work beyond the traditional retirement age. Older boomers are thinking about retirement, but one-third expect to go back and forth between periods of work and periods of leisure and another 35 percent want to work at least part-time or start a business -- all of this will have an impact on the kind of homes they buy as well as where they buy them."

The median age at which baby boomers expect to stop working is 70, but 27 percent say they never intend to stop working, according to the survey.

"Because they will be in the workforce longer, boomers will postpone purchase of retirement property and won't be making those moves as early as assumed," Lereah said.

About 42 percent of survey respondents said they would like to retire in the South, 32 percent in the West, 15 percent in the Midwest and 12 percent in the Northeast.

Most boomers live in two-income households, with a median income in 2005 of $64,700, which is 31 percent higher than the median for all households. This generation makes up 37.5 percent of U.S. households, but receives nearly half of all aggregate household income.

Thomas M. Stevens, NAR president and senior vice president of NRT Inc., said in a statement that the survey shows most boomers want professional services when they buy real estate. "When buying a home, they want agents to represent their interests in the complex transaction process, and when selling they want help to establish the right asking price. Regardless of whether they're buying or selling, boomers want agents to explain all of the complicated contracts, forms and agreements, to manage the closing process from start to finish, and to negotiate on their behalf," Stevens said.

About 75 percent of respondents said they are not financially prepared for retirement, and many expressed anxiety about their ability to retire. Some boomers said they might withdraw retirement funds for housing or real estate expenses.

Peter Francese, an independent demographic trends analyst who served as a consultant for the survey results, said in a statement, "For the vast majority of baby boomers, retirement is somewhere off in the future," he said. "Considering that boomers are healthier than their predecessors, and are more likely to work in an office setting, many of them may work five or 10 years beyond the traditional retirement age of 65."

Half of the respondents who live in an urban area said they would like to retire in a small town or rural area. Their ideal retirement location characteristics include a lower cost of living, being near family, quality health care, better climate and being near a body of water, the survey revealed.

More than a third of all baby boomers want to retire in an urban or suburban setting, motivated by quality health care and cultural activities. Half of responding boomers said they would consider living in an age-restricted community.

Francese speculated that boomers may choose a larger home than earlier generations. "Boomers may want or need a somewhat larger dwelling that includes one or two home offices, and a low-maintenance home on a single level would have broad appeal to this group," he stated.

About one in four boomer households have a high net worth of $500,000 or more, and this ratio is expected to increase in the future as the generation ages, the Realtor group reported. Virtually all high-net-worth households are homeowners (97 percent), and 47 percent are likely to also own other real estate in addition to their primary residence, according to the survey. More than a third expect to help children or grandchildren with a down payment on a home. Wealthier boomers said they want amenities where they retire, including cultural activities such as museums and art galleries. As a result, they are more likely to retire in an urban area or city.

Although most boomers are married couples and 27 percent have children under the age of 18, nearly two out of five baby-boom households are nontraditional households, most of which are headed by women, the survey revealed.

Twenty percent of boomer households are headed by women, but because women 60 to 69 account for a quarter of homeowners in that age group, the number of women boomer homeowners is likely to increase much faster than average as they age, the Realtor association reported.

Francese said there's little doubt that the vast majority of baby boomers will delay retirement. "Some will put off retirement because they have to, but many because they want to," he said. "Many will have a larger income stream to purchase possibly two homes, which they may use to move back and forth between their retirement life and their working life."

He also noted, "Surveys of future intentions often include a dose of wishful thinking, and attitudes can be influenced by the media and other outside pressures. For example, many are probably not going to be able to, or even want to, retire in a small rural town far from their current home, even if they may dream about it currently."

The "Baby Boomers and Real Estate: Today and Tomorrow" study was conducted online between March 31 and April 6, 2006, among a nationwide cross section of 1,969 U.S. adults born from 1946-64. Figures for age, sex, race, education, region and household income were weighted to bring them into line with actual proportions in the population, the Realtor association reported. With 95 percent certainty, overall results have a sampling error of plus or minus 2.2 percentage points, with a higher sampling error for various sub-sample results.

The study is available by calling (800) 874-6500 or visiting the http://www.realtor.org/babyboomerstudy Web site. The cost is $50 for Realtors and $125 for non-Realtors.
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Some robust stats contradict the market-gone-bust reports

With all the dismal reports about the home real estate market, don't lose track of something critically important: Mortgage interest rates have been falling quietly but steadily for months and are now at their lowest level in half a year, barely a percentage point above 40-year lows.
By: Kenneth R. Harney: Los Angeles Times
New mortgage applications are up sharply, the number of pending home sales is up, the national economy continues to expand moderately, and the rate of unemployment just declined again — to 4.6%.

All of which begs the question: Just what kind of housing bust is this anyway? With gloom-and-doom purveyors forecasting imminent crashes in dozens of metropolitan areas, how could such key fundamentals as jobs, interest rates and even pending home sales simultaneously be trending in the opposite direction?

Donald L. Kohn, the Federal Reserve's vice chairman, took a stab at that seeming conundrum in a recent speech at New York University. His views are worth keeping in mind if you want to put the negative news on home prices and sales in perspective.

To begin with the fundamental point: Kohn sees no imminent bust or crash in housing. It is a "correction" that's underway — a cyclical re-balancing of a marketplace that got too hot for too long in some parts of the country and is now heading back toward more "normal" conditions, where prices are more in line with what consumers can afford.

"The reported declines in house prices in a number of areas should help to facilitate the re-balancing of supply and demand in those markets," Kohn said. Not all home sellers have fully grasped the altered realities in their own local markets — that they've got to reduce their asking prices if they truly want to sell. So the process is still unfolding. Re-priced houses, in turn, should stimulate greater numbers of potential buyers to get off the sidelines and make offers. The unexpected 4.3% increase in the latest monthly number of pending home-sales contracts heading for closing nationwide reported Oct. 2 by the National Assn. of Realtors could be a sign that Kohn's prediction is already taking shape.

Second, said Kohn, the housing correction — expressed through new-home starts — suggests we are well on our way toward bottoming out and eventually returning to positive growth in new-home starts and resales.

Now to interest rates. Today's "unusually low" long-term mortgage rate environment "stands in sharp contrast to some past downturns in the housing market that followed actions by the Federal Reserve to tighten credit conditions significantly." Translation: Affordable mortgage money should help shorten the current housing down cycle compared with credit-squeezed periods in the 1980s, when mortgage rates sometimes exceeded 16% for fixed-rate loans.

A final key factor, according to Kohn: "Continuing growth in real incomes should underpin the demand for housing and, as home prices stop rising, help erode affordability constraints."

Add it all up: Lower asking and selling prices on houses are integral parts of the correction. Lower interest rates should make those lower prices affordable to a broader number of potential buyers. That could become an even more important factor if mortgage rates dip below 6% in the coming months, as some Wall Street capital market analysts expect.

5.75% a possibility

James Glassman, a managing director at JP Morgan Chase, says 30-year fixed-rate mortgages at 5.75% are a distinct possibility if long-term rates in the global bond market continue to ease.

So, what's the source of some of the confusion about just where housing is headed? Mike Moran, chief economist of Wall Street's Daiwa Securities America, minces no words: The financial press and TV news shows are over-dramatizing what is a normal and long-predicted cyclical re-balancing, and "portraying it as a catastrophe," he said

Housing "is going through a correction that's badly needed," he said. "The key issue is whether it is orderly or disorderly" — and all signs point to a continued orderly process, not a breakout bust or panic.

Doug Duncan, chief economist of the Mortgage Bankers Assn., points out that national housing sales numbers are merely rolling back to 2003 levels — "and that was a record year." Serious sellers and buyers shouldn't be misled by predictions of imminent crashes, Duncan said. Not only do the doom reports ignore the positives out there in the marketplace — mortgage rates in particular — but also "the rhetoric is just way overwrought."
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Your fall home-maintenance checklist

It's time once again to get ready for winter
By: Paul Bianchina: Inman News
Fall is already in the air, which means that another chilly winter can't be too far behind. So before the cold weather arrives and you snuggle up indoors again, here's your annual checklist of things to do to get your home ready for the change of season.

INSIDE YOUR HOME

Check smoke detectors: Please don't neglect that smoke detector any longer! Take some time right now to check the operation of detectors and to change the batteries. If you have an older house with a limited number of smoke detectors, you really need to install some additional ones. Battery-powered smoke detectors are inexpensive and very easy to install, so add one to each bedroom and make sure there is one centrally located on each level of the home as well.

Install a carbon monoxide detector:A fire is not the only danger you can face inside your home. As houses get closed up for winter, the chances of carbon monoxide poisoning from malfunctioning gas appliances increases substantially. If you have a furnace, fireplace, water heater or other appliance that is fueled by propane or natural gas, now is the ideal time to install a carbon monoxide detector. They're available inexpensively from many home centers and retailers of heating system supplies, they're an easy do-it-yourself installation, and they can truly be a lifesaver!

Clean furnace ducts: A surprising amount of dirt can accumulate inside your home's furnace ducts, which can decrease your furnace's efficiency and add unnecessary dust to the indoor air. Now is the time to have a professional duct cleaning service come out and take care of this for you.

Change your furnace filters: Now is also the time to change your furnace filter and you might consider spending a few extra dollars and install one with a higher efficiency rating then the standard inexpensive filters have. While you're changing the filter, consult the owner's manual for the furnace to see if any annual fix-ups of belts, pulleys and other components are necessary - follow all of the manufacturer safety instructions for shutting the power and fuel to the furnace before servicing.

Clean and inspect the fireplace: Last winter your hardworking fireplace was building up a layer of soot and creosote and you've no doubt forgotten all about that during the summer. Before you light the first log, clean the fireplace chimney or wood stove flue using brushes approved for the size and type of flue you have, or consider hiring a chimney sweep to take care of this task for you - most do a great job at a very reasonable price. Clean out the firebox, making sure you place the ashes in a fireproof container with a tight lid for proper disposal. If you have an airtight wood stove or fireplace insert, check the door-seal gasket, and clean the glass on the door.

OUTSIDE THE HOUSE

Check weather-stripping: When you have gaps around doors, windows or other areas that penetrate the exterior of your home, you waste expensive heated air from inside as well as allow annoying drafts to keep you from feeling comfortable. Fall is the time to check the weather-stripping around doors and windows, and replace any that are worn. Everything you need can be found at home centers and retailers who specialize in doors and windows. Now is also a good time to close up a few more air leaks by checking the condition of caulking around exterior door and window frames and other penetrations.

Check and clean gutters: Time to break out the ladder and clean your gutters of leaf and pine needle debris and check that the opening between the gutter and the downspout is unobstructed. Check the entire system for loose joints or other structural problems, and use a gutter sealant to seal any connections where leaks may be occurring. For any repairs or cleaning you don't want to undertake yourself, you can also consider the services of a professional gutter company.

Adjust exterior grade: Fall is also a great time to take a long look at the grade around your home, and make sure that everything slopes away from your foundation to avoid costly problems with ground water. Add, remove or adjust soil grades as necessary for good drainage.

Drain sprinkler systems:In colder areas, now is the time to be thinking about having your sprinkler and irrigation systems blown out. You can rent a compressor and do this yourself or contact a landscape or irrigation system installer and them handle this for you. This is also the time to shut off outdoor faucets and install freeze-proof faucet covers as needed.
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Second-home tax benefits too good to pass up

Homeowner debates whether to sell or rent to mother
By: Robert J. Bruss: Inman News
DEAR BOB: My 85-year-old mother is legally blind and hard of hearing. Recently my wife and I bought the townhouse that adjoins our home and invited her to live there so we will be readily available when she needs help. Since my mother will be selling her home of 40 years (its value is the bulk of her assets), we would appreciate your advice on the best way to protect her assets. Should the new house be put into her name instead of ours by selling it to her although we want to keep this property after she moves out? Or should the property be treated as a second residence or a rental property for tax purposes? -Terry P.

DEAR TERRY: If your mother's capital gain on the sale of her principal residence is $250,000 or less, and if she owned and occupied it at least 24 of the last 60 months before its sale, her sale profit will be tax-free thanks to Internal Revenue Code 121.

Since you already own the adjoining house, why sell it to your mother and lose your tax benefits? I don't see any advantage for you or your mother.

If she pays you rent, treat the townhouse as a rental property. Otherwise, treat it as a second residence on your tax returns. For details, please consult your tax adviser.

PITFALLS OF PAYING ALL CASH FOR A NEW HOUSE

DEAR BOB: We will soon be buying a brand-new house and paying cash. But I am concerned I will not have the protections of using a mortgage lender or a real estate agent. Do you have any information on what to watch out for when buying a new house for cash? -Larry K.

DEAR LARRY: If you read my articles regularly, I do not recommend paying all cash for any property unless you are so wealthy you won't ever need your cash again (just in case you buy a "bad house").

My best advice is don't pay all cash for your next home. Instead, pay 10 percent or 20 percent cash down payment and obtain a fixed-interest-rate mortgage. If all goes well, after a few years then you can pay off the mortgage without the worry you tied up most of your cash. Of course, be sure the mortgage doesn't have a prepayment penalty.

DEAD EX-HUSBAND'S NAME ON TITLE CAUSES PROBLEMS

DEAR BOB: My daughter and her former husband divorced. Subsequently, he died. Together they owned property in the mountains. She presumed the mortgage company took his name off the mortgage. They didn't. Even though he is now dead, his name is still on the mortgage and on the title. She has continued paying the mortgage. She wants to sell the property but cannot do so until her dead ex-husband's name is removed from the title. Why would the mortgage company not remove his name from the title? -Margery M.

DEAR MARGERY: You sound a bit mixed up. Having the dead ex-husband's name on the mortgage is irrelevant.

What matters is the title to the property. If his name is still on the title, the mortgage company cannot remove it. The only way it can be removed so your daughter can sell the property is to have his estate probated.

Somebody is entitled to receive his interest in the property and it is up to the local probate court to determine who inherited that interest.

However, if your daughter and late ex-husband held title as joint tenants with right of survivorship, then probate is not necessary. Your daughter can then clear his name from the title by recording with the county recorder a certified copy of his death certificate and her affidavit of survivorship. For details, she should consult a probate or real estate attorney in the county where the property is located.

The new Robert Bruss special report, "How to Sell Your House or Condo for Top Dollar in a Buyer's Market," is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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'Fundamentals' Will Sustain U.S. Housing Demand

A slowing housing market doesn't appear to be hampering the U.S. economy substantially, the Federal Reserve reported yesterday.
By: Martin Crutsinger: REALTOR® Magazine Online
The Fed said that the majority of its 12 regions reported lower asking prices for homes, softening in sales activity, and rising inventories of unsold homes. But Michael Moskow, president of the Chicago Federal Reserve Bank, downplays fears that the housing slump would pull the entire economy into a prolonged downturn.

"We do not see the slowing in housing markets spilling over into a more prolonged period of weakness in the overall economy," Moskow said Thursday. There are some very important fundamentals that should continue to support housing demand, especially the low level of mortgage rates, he said.

The Fed's regional economic reports will be used when central bankers meet on Oct. 24-25 to consider whether or not to raise interest rates.

While it’s expected that the Fed will leave interest rates alone for the third straight meeting, it is clear that officials remain concerned about inflation. "The risk of inflation remaining too high is greater than the risk of growth being too low," Moskow said.
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Finally, the Contractor Will Take Your Calls

For homeowners who have been putting off remodeling projects, now may be the time to get started. Sluggish home-building demand is pushing down the cost of construction materials and spurring remodelers and other professionals to take on smaller projects - and sometimes cut fees.
By: Sara Schaefer Munoz: The Wall Street Journal Online
For homeowners who have been putting off remodeling projects, now may be the time to call the contractor.

While the current housing slump isn't cheering investors, it is making remodeling a kitchen or bathroom or adding an addition easier and cheaper. During the booming real-estate market of the past several years, people wanting to remodel often found themselves waiting months for contractors to take on lower-ticket jobs - if the contractors would take them on at all. Now, sluggish home-building demand is pushing down the cost of construction materials (prices for lumber are near their lowest level in a decade) and spurring contractors to take on smaller projects - and sometimes cut fees.

Custom and speculative builders are also starting to take on renovation jobs, picking up work they may have passed over just a year ago. In Tucson, Ariz., Richard Fink, co-owner of Becklin Construction LLC, a custom home builder, used to do a few remodeling jobs as favors to former clients; now remodeling has grown to half his business. Samm Jernigan, a high-end custom home builder in Wilmington, N.C., said earlier this year he started "aggressively pursuing" remodeling projects for the first time, and John Diament, a home builder outside of Philadelphia, says two months ago he started asking architects to send big remodeling jobs his way.

"It's good news for the consumer if you've got a lot more people seeking projects," says Gopal Ahluwalia, staff vice president of research for the National Association of Home Builders.

Meanwhile, prices of framing lumber have fallen dramatically, says Shawn Church, the editor of Random Lengths, an industry newsletter based in Eugene, Ore. The composite price per thousand board feet of framing lumber was $274 this week, compared with $375 a year earlier, according to data from Random Lengths. Ken Simonson, the chief economist for the Associated General Contractors of America, a trade group in Arlington, Va., says he expects to see a roughly 10% drop in prices of gypsum and construction plastics when government price data are released later this month. Economists say the lower material costs could save homeowners an estimated 5% to 10% on additions.

The falloff is largely because of slowing new-home construction, which for several years had driven up the cost of materials. Housing starts dropped 6% in August from a month earlier to a seasonally adjusted annual rate of 1.665 million units, according to the Commerce Department. That was the slowest rate of starts since April 2003.

Growth in spending on remodeling has also slowed recently, a result of rising interest rates and homeowners who have postponed selling, along with presale renovations. According to the most recent data from Harvard University's Joint Center for Housing Studies, spending on home remodeling rose just 2.8% in the 12-month period ending in June, compared with the frenzied 20% increase in 2004. Still, spending on home remodeling, maintenance and repairs totaled $215 billion in 2005, up from $199 billion in 2004, according to the most recent annual data from the Census Bureau.

The new environment means that homeowners are more likely to find contractors willing to take on projects quickly. "Rather than saying 'call me next spring,' they'll be more likely to say 'I'll be over this week to the talk about the project,' " says Kermit Baker, a senior research fellow at the Harvard Joint Center.

That is what Kurt and Susan Askin found this summer when they sought a bid for remodeling a bathroom in their northern Virginia home. About three years earlier, the couple redid their kitchen and had to wait a couple of months to get started. But when they decided to go ahead with the bathroom project this summer, they called the same contractor and the project was under way in two weeks.

"I was certainly pleasantly surprised," says Ms. Askin, a retired accountant.

Their contractor, Don Sever, the owner of Sever Construction, in Oakton, Va., says he sees interest in remodeling starting to ease. He has trimmed prices by about 5% to attract more business. "People are much more cautious about spending that home-equity money," he says.

Economists caution that people should only invest in their home if they are planning to stay awhile and enjoy it. With home prices starting to fall, owners may not see the same, hefty return on their investment that renovations have brought in the past several years.

"It's a riskier proposition to fix it up for a buyer," says Mr. Simonson of the Associated General Contractors of America.

There are also risks in hiring a new-home builder who doesn't have remodeling experience, building experts say. On the surface, the required skills may seem the same, but staffers that work on new homes tend to have specific skills, such as roofing or framing, and managers may not be versed in the challenges and costs associated with reconfiguring an existing kitchen. Remodelers, they say, are better-suited to coordinate all the details of project, from putting up wallboard to installing faucets.

Longtime remodelers also warn that new-home builders may not be accustomed to interacting frequently with clients. While builders may be used to working on their own in an empty house, remodelers must be in a home for weeks at a time while their clients are living there.

"It takes a different kind of person," says Mr. Sever, the Oakton, Va., remodeler. "You need to put up tarps, clean up and not set tools on a customer's dresser."

Scott Sevon is a custom builder and remodeler in the Chicago area who has recently taken on more remodeling projects. He says he has made his staff aware that remodeling "is a lot more time and hand-holding and lot of good communication skills." As one way to demonstrate their responsiveness, he gave all of his staff Blackberry e-mail devices so clients can get in touch at any time.

Despite possible drawbacks, some clients say hiring custom builders for remodeling projects is a plus. When Bruce Ash wanted to do a large-scale renovation at his Tucson home, he wasn't sure if a traditional remodeler would have the attention to detail required to mimic the Arts and Crafts style he and his wife envisioned. They wanted mahogany wainscoting in a specific pattern and custom-made doors that were modeled on an old house in Wisconsin. He found Mr. Fink of Becklin Construction to take on the $700,000 project. It was one of Mr. Fink's first major remodeling projects.

"Guys who are used to commissioning million-dollar houses are going to be attuned to a whole different level of detail," says Mr. Ash, a real-estate manager. "Normally, the market has been such that we could never get custom builders to remodel homes, but now, they are interested."
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