Picking the perfect paint for home exterior

Process is equal parts instinct and homework
By: Paul Bianchina: Inman News
Ever notice how the exterior colors of some homes really catch your eye, while others leave you totally flat? Or how some colors just seem to suit a particular house and its surroundings, while others seem somehow out of place? Selecting the perfect color combination for your home is equal parts instinct and homework, and with a little effort your home can become the envy of the neighborhood.

IT ALL STARTS AT HOME

Chances are, if you're ready for a paint job you have been giving some thought to what colors you like. Your house may have been yellow ever since you've lived there, and you're really ready for a change. Or it's a nice shade of green with white trim, and it blends so well with the landscaping that you want to use that combination again, but maybe a little brighter, or a little more subtle. Study what you have, and make note of what you like and don't like about it.

Next, check in with your homeowner's association. Some associations have very strict rules about exterior colors, which may limit your choices no matter how much you love that deep shade of purple. Your home may reside in a historic neighborhood, and that may place restrictions on your color choices as well. It pays to find out early in the process what you can and can't do, and what the process is – if any – for having a color choice approved.

GRAB SOME COLORS

Next, make a trip to a couple of local paint stores. Pick up some exterior color selection brochures, which contain samples of exterior color combinations that work well together for siding and trim. Don't worry about whether you like "morning mist" better than "seaside serenity" at this point – just grab those brochures.

While you're in one of the stores, borrow a paint fan. Paint fans are a collection of every color available in a particular brand of paint, grouped together by shades. Most fans contain hundreds of colors, with 60 different greens fading into 75 shades of blue, but don't panic. Probably 95 percent of the colors in the fan either won't appeal to you or won't work well with your particular house, and you'll narrow things down quicker than you think.

CHECK OUT THOSE NEIGHBORS

Spend a little time walking or driving around some different neighborhoods, your own included. Look at colors and combinations of colors that really catch your eye, and try and decide why they appeal to you. Look at the style of the house as well, and compare it to your own. What works well on a three-story Victorian might not look as good on a one-story ranch, and you need to take that into consideration.

If you see something that really appeals to you, go knock on the door. Ask if the owners would mind if you held some of the colors in your brochures or your fan deck up against their siding or trim to make some comparisons. Write down the color names you like, since "autumn russet" and "spicy cinnamon" can look confusingly alike when you get home. If the homeowner is particularly accommodating and you happen to have your digital camera with you, snap a photo (always ask permission first).

DO SOME COLORING

Back home, check some of those colors against your own home. It's tough with those tiny chips, but see if anything is beginning to jump out at you. Even if you can just narrow it down between green and brown at this point, you're making some good progress.

Next, take a photograph of the front of your own house. Make a print, and then make several black and white photocopies of the print. This will give you a blank canvas to work from as your creative juices flow, so grab your crayons or colored pencils and start trying a few combinations.

If coloring is not your favorite pastime, try the high-tech computer option instead. Most paint stores have computerized color selection programs available, either in the store or as software that you can purchase inexpensively to use at home. There are also a growing number of Web sites that offer color selection programs you can use online.

A color selection program shows different styles of homes and allows you to "paint" them on screen. Just select a style that's as close to your home as possible, then play with different color combinations. Start with the body color, which is all the siding, then add a trim color and perhaps an accent color for the windows, doors, and shutters.

When you've finally narrowed it all down, buy a quart of the color(s) you like and try them out at home. Paint small patches of siding and trim at eye level in a few areas around the house, where they'll catch different natural lighting. Your home will have a bit of a splotchy look for a few days, but seeing the actual colors on the wall in something other than a tiny paint chip will do wonders for the selection process, and is well worth the investment.

Remodeling and repair questions? E-mail Paul at paul2887@direcway.com.
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How can I build or repair my credit?

Don't let bankruptcy dissuade you
By: Robert J. Bruss: Inman News
When learning how to build or repair your credit, don't go to those "credit repair" firms, most of which are high-priced scams. But many large cities have non-profit free or very low-cost consumer credit counseling agencies, which can be very helpful to clean up your credit problems.

If you have no credit, force yourself to start building credit. To illustrate, years ago, my dad did that. He and mom were in the habit of paying cash for everything, including the house where I grew up. Yes, mom had department store charge cards, but I remember dad's banker talked him into financing the purchase of a new car to build up his credit. That was a "big deal" around our house. But after about six months, dad hated those monthly car payments so much he paid off that auto loan. However, by then he had started building his credit file. The only major purchase I recall mom and dad buying on credit after that was when they were in their 70s and they bought their condo with a 10 percent down payment and a 90 percent 30-year mortgage (it was one of the rare times they listened to my advice!). Years later, mom (who was the shrewd investor in our family) thanked me for "forcing" the low down payment purchase of their condo, which, dollar for dollar, was the best investment my parents ever made.

The easiest places to get credit cards if you have no credit file are usually gasoline companies and department stores. If you buy a car, finance it – but be sure there is no prepayment penalty if you want to pay off the car loan in a few months – and be sure you finance with a major lender who reports to the credit bureaus. It does no good, for example, to finance your auto purchase at Jake's Used Cars if Jake carries the paper himself and doesn't report to the credit bureaus. Watch out for auto loans that have stiff prepayment penalties. Don't take the dealer's word for this – read the fine print about prepayment before signing the auto finance contract.

If you filed bankruptcy, start rebuilding your credit as soon as you are "discharged" from bankruptcy court jurisdiction. If you filed Chapter 7 bankruptcy and were discharged from all or most of your debts (except secured debts, such as a real estate mortgage), be sure to pay all your obligations on time from now on.

Chapter 7 bankruptcy offers a "fresh start." But that bankruptcy will remain on your credit reports for 10 years. As I write this, Congress is considering a plan to toughen the federal bankruptcy laws, so watch for changes. If you are thinking about filing Chapter 7, my best advice is try to avoid doing so unless you have no other recourse. Although Chapter 7 wipes out most of your debts, lenders and credit grantors will be very hesitant to approve you for future credit.

Because you cannot file Chapter 7 bankruptcy again for at least seven years, some mortgage lenders will approve your application as soon as 12 months after your Chapter 7 bankruptcy discharge. However, you won't get the lowest interest rate! Also, mortgages are secured by the real property so mortgage lenders will eventually get their money, even if you again file bankruptcy in the future.

But Chapter 13 bankruptcy, often called the "wage earner reorganization plan," is different. When an individual files Chapter 13, he or she submits a plan to the U.S. Bankruptcy Court to repay unsecured debts over as long as 60 months. But secured debts, such as mortgages, remain secured by the property.

If a Chapter 13 debtor doesn't keep up payments on secured debts, plus paying the unpaid arrearages as agreed in their wage earner plan, the mortgage lender can get relief from the bankruptcy "automatic stay" and foreclose on the property. Filing Chapter 13 bankruptcy often delays foreclosure loss of the property but foreclosure loss of the property won't be avoided if the debtor doesn't keep up the payments. Having both a bankruptcy filing and a foreclosure loss on your credit report is definitely not good!

Mortgage lenders will not loan to debtors who are still in Chapter 7 or 13 bankruptcy. The reason is the bankruptcy judge's approval is required for the debtor to take on new debt, such as a home mortgage. Also, bankruptcy court approval is required to sell a property while the debtor is in Chapter 7 or 13. However, after discharge from Chapter 13 bankruptcy, there are many mortgage lenders who are willing to make new loans – but not at the lowest interest rate.

Filing Chapter 11 bankruptcy is very similar to Chapter 13 except Chapter 11 is for business bankruptcy. To illustrate, as I write this, U.S. Airways and United Airlines are in Chapter 11 business bankruptcy reorganization to obtain relief from their creditors and to reorganize their finances.

Chapter 11 business bankruptcy is not the stigma it used to be. I know several small business owners who filed Chapter 11 business bankruptcy reorganization and are now doing just fine, much financially stronger than before filing. Whether you consider Chapter 7, 11, or 13 bankruptcy, please consult several bankruptcy attorneys before proceeding because your credit will be at least temporarily ruined.
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New ranges, cabinetry improve kitchen design

Appliances get safer, more efficient
By: Katherine Salant: Inman News
In the home-building industry, everything makes its debut at the high end. It can also disappear up there, if it doesn't meet expectations or creates headaches, warranty issues and service calls for the manufacturer and builder. But, if a luxury item survives the initial vetting process of the marketplace, it will eventually reach the majority of consumers, though this can take years and the product may be considerably modified.

What aesthetic or technological innovations may be in the pipeline for you? At this year's Kitchen and Bath Industry Show in Las Vegas, held in May, I saw some interesting developments in ranges, cooktops and cabinetry.

About 30 years ago, Subzero slimmed refrigerators down from an industry standard of 30 inches to 24 inches. With this shallower depth, a kitchen could have a sleek, streamlined look without a big clunky box intruding into a designer's vision. Since then, however, clunkiness has returned in the form of six- and eight-burner professional ranges that can be, like those old refrigerators, as deep as 30 inches. To bring things back into aesthetic balance, De'Longhi, an Italian appliance manufacturer, now offers a professional-feature range in a slimmer, 24-inch depth.

The smallest, slim-line De'Longhi range has a 24-inch width (4 burners with gas, electric or dual fuel – gas burners with electric oven for $1,800). That may interest downsizing baby boomers who have said they want smaller houses with smaller kitchens, but just as many perks.

The larger ranges are gas-only. The 36-inch-wide model (5 burners, $3,000) and the 48-inch-wide model (6 burners, $7,000) have two ovens so that two ovens, so that you can broil or roast your dinner in one while you bake the dessert in the other. The gas ovens on all the ranges have an infrared broiler feature that sears meat during the initial 60 secondsof cooking, retaining all the juices in it and producing a steak that tastes as good as the one in your favorite restaurant.

The De'Longhi gas ranges also have a larger 16,800 BTU burner (the largest unit has two) for wok cooking or boiling large amounts of water for pasta or lobsters. Like all new gas ranges and cooktops, each burner has an electronic ignition instead of a pilot light. In addition, the De'Longhi models have a unique safety feature called a valve shut off. Without this feature, the gas keeps flowing if the burner is turned down very low and the flame goes out. Some gas units have a re-ignition feature. But when the flame goes out because a window is open and a breeze is blowing, for example, the burner continuously re-ignites and the gas keeps flowing until you shut the window or manually turn it off.

It will take a while for the features on the De'Longhi ranges to migrate to the mainstream, but at least one revolutionary method of cooking is already there. I saw induction cooktops offered by luxury manufacturer Diva de Provence (5 burner cooktop for $3,600) and Sears Kenmore Elite(4 burner cooktop for $1,500).

What is the radical departure here? A conventional gas burner, electric coil burner or a halogen electric burner generate heat. This warms up the cooking pot, which in turn heats and cooks the food. With an induction burner, an electric coil below the glass top generates a small electromagnetic field instead of heat. When a pot containing iron is placed on the burner, this energy agitates and excites the iron molecules in the pot. The agitated molecules give off heat, which cooks the food.

The induction method of cooking is extremely efficient. About 90 percent of the heat produced is utilized to cook the food. With gas, only about half the heat generated actually is used to cook the food; the rest goes out into the kitchen, which is one reason it can get unbearably hot during the summer. With electric burners, summers aren't quite as bad – only 35 to 40 percent of the heat generated diffuses into a kitchen.

Because the induction method is very efficient, it cooks the food faster. It also cooks faster because a burner can operate at a high temperature almost as soon as it is turned on. For example, with the Sears unit, a quart of tap water reaches a full boil (68 to 212 degrees F) in 98 seconds. The Sears unit has 16 gradations of heat from high to low; the Diva de Provence has 12 gradations, many more than most chefs ever use, both manufacturers said.

Another advantage of the induction burner is that the stovetop itself does not get hot. Food spills do not cook on, so the cleanup is easy, and household members will not get burned, a great safety feature.

The only downside to induction cooking is that you can only use cookware with iron content; the unit won't operate with aluminum or glass pans. To make the switch to induction easier, Diva de Provence includes a 5-piece set of All-Clad Metalworks cookware .With a purchase of the Sears unit, you get a griddle.

The Sears unit will be available in September; the Diva de Provence unit is available at independent appliance dealers.

Another potential sea change noted at KBIS – the slick look of European-style cabinetry, which has been exclusively a high-end product, is now an affordable proposition for a much bigger segment of the market. Sensing that many consumers are ready to be stylistically adventurous, Kraftmaid – a mid-priced, semi-custom cabinet maker known for a traditional look with the highest cabinet sales in the United States – has broken the aesthetic glass ceiling and developed an entirely new Venicia line that verges on edgy.

For the “I want something that looks traditional but with a difference” homeowners, Kraftmaid offers the Venicia-Natura collection. The doors are wood with raised or flat panels, but the detailing for the beading and stiles are unusual.

For the “I want something definitely different” group, the cabinet maker offers the Venicia-Lustra collection. The doors are finished with a top grade of thermofoil that looks and feels like lacquer (an expensive finish that is only offered by custom cabinet makers). The door styles include a severe flat panel for both the door and drawer front which is common in Europe but unusual here. The colors range from stark black and white to metallic gray and one that looks like an exotic African hardwood.

For the “I want something really different” crowd, Kraftmaid offers the Venicia-Mirra collection. The doors have a heavy acrylic lacquer finish that's so glossy you can see your own reflection. Two of the four flat-door styles have continuous polished aluminum pulls (the pulls run the full width of each drawer and cabinet drawer), and two door styles have metallic gray edging for both the cabinet doors and drawer fronts.

The cabinet boxes and drawers in the Venicia line are also new. The cabinet boxes are frameless, common in Europe but unusual in this country and a first for Kraftmaid. With frameless cabinets, the cabinet box has three sides instead of four, and the doors are hinged to the sides instead of the front. Without a front frame, you gain three inches of width in each cabinet, and you don't have to reach around a center stile when taking things in or out. To give the Venicia kitchen a more unified look, the cabinet interiors match or blend with the door color for the Lustra and Natura collections. For the Mirra group, all the interiors are gray.

The Venicia drawers also have new features. The drawers can be either gray metal (Kraftmaid calls this the Contempo drawer) or wood. With both you can purchase wood or metal dividers and customize your drawer storage to a remarkable degree.

The Venicia line will be available in independent kitchen and bath dealers and Lowe's by mid or late July.

Web information:

De'Longhi: www.delonghimajorappliances.com

Sears Kenmore induction cooktop: Information will be available on Sears Web site, www.Sears.com, in September when their induction cooktop is available for purchase.

Diva de Provence: www.divadeprovence.com

Kraftmaid Venicia: www.kraftmaid.com

Questions or Queries? Katherine Salant can be contacted at www.katherinesalant.com.
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Modest Inflation Should Keep Mortgage Rates Affordable

RealtyTimes
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 5.66 percent, with an average 0.6 point, for the week ending July 14, 2005, up slightly from last week when it averaged 5.62 percent. Last year at this time, the 30-year FRM averaged 6.00 percent.

The average for the 15-year FRM this week is 5.25 percent, with an average 0.6 point, up from last week when it averaged 5.20 percent. A year ago, the 15-year FRM averaged 5.40 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.15 percent this week, with an average 0.7 point, down from last week when it averaged 5.19 percent. There is no annual historical information for last year since Freddie Mac only began tracking this mortgage rate at the start of this year.

One-year Treasury-indexed ARMs averaged 4.39 percent this week, with an average 0.7 point, up from last week when it averaged 4.33 percent. At this time last year, the one-year ARM averaged 4.02 percent.

"Over the past few weeks, financial markets have been gearing up for greater growth in the economy, which ultimately leads to higher inflation rates. As a result, mortgage rates increased for the second straight week. Interest rates for 30-year fixed-rate mortgages now match those set in mid-May, but are still below January’s monthly average," explained Freddie Mac Vice President and Chief Economist Frank Nothaft.

"As a matter of fact, since Freddie Mac began tracking the 30-year mortgage rate in 1971, it has averaged 9.4 percent, and since 2000 it’s averaged 6.6 percent. Given that, today’s rates appear to be quite attractive and should continue to support a vibrant housing market."
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Fixing Up Homes To Sell Can Be Risky

By: LAUREN BAIER KIM: The Wall Street Journal Online
Lauren Baier Kim offers advice to a couple thinking about investing in properties in need of a little elbow grease.

Question: My husband and I recently bought a house. The house was in good condition, but we made some minor changes to it. It was a great experience. We are thinking of doing this kind of work as a second job. My husband has a good income, but I am a full-time student. We have $50,000 in savings, but I'm not sure we're doing the right thing. Is it a good idea to buy houses to fix and sell?

-- Shabnam Razavi

Purchasing houses that need repair, fixing and reselling them can be profitable. This year is shaping up to be another record-breaker for sales. Sales of existing homes are expected to rise 2.8% to 6.97 million this year, according to the National Association of Realtors. This means that generally most homeowners are having little difficulty in selling their homes.

What makes rehabbing lucrative is that fixer-uppers sell, on average, for 24% less than do houses in good condition, according to NAR. So, if you get a good price for such a home in an appreciating housing market and don't overspend on repairs, you have a good chance to come out ahead.

There are risks involved. If the housing market takes a downturn, or if you make a poor choice when selecting a house, you could end up in the red. You should buy in a neighborhood sought-after by buyers -- e.g., one that is safe and has good schools -- unless you want to bet that the area is on its way up and will attract buyers.

Key to your endeavor is understanding your target housing market and how well and for how much homes sell. You can get a feel for it by reading real-estate listings in the paper and online. You can also join a local real-estate investors club. You can find clubs in your area by visiting www.nationalreia.com, the Web site for the National Real Estate Investors Association (NationalREIA). You could also take a real-estate course at a nearby community college.

The best properties to rehab are those that need minor repairs, such as new sheetrock, trim, cabinets, flooring, carpeting and landscaping. These relatively cheap fixes go a long way in giving a home an appealing appearance to buyers. Be careful when making these changes. "You can get carried away in a $100,000 neighborhood and put in Corian countertops and all these beautiful things, and you will make the repairs too pricey to profit," says Steve Herbert, vice president of NationalREIA and the National Association of Responsible Home Rebuilders and Investors.

Avoid homes that need major construction work. "Any kind of structural damage is probably going to be too costly to make a good profit," says John Grice, a real-estate agent with Downing-Frye Realty in Bonita Springs, Fla., who has expertise in fixer-uppers. Choose homes that need the kind of work that matches your abilities, he suggests.

It's best to do most of the repairs yourself, but when you contract work out, have a good idea of what to expect in terms of price. "You don't have to be a roofer, but you have to understand the value of a roof in your area," Mr. Herbert says. "So when you get a contractor, you know if he is charging too much."

Your savings should work to your advantage. Buyers who succeed at turning around fixer-uppers "often have quick availability to loans or cash so they can make strong and quick offers to motivated sellers," says Bob Walters, chief economist at Quicken Loans. Talk with a mortgage banker before starting out, he suggests.

You mention that you rehabbed your own home. Sprucing up your main residence for resale can be a good money maker, thanks to an Internal Revenue Service tax break. "As long as you live in a place for two out of five years, you can walk as an individual with $250,000 profit tax free, $500,000 if you are a couple," Mr. Herbert says.


Ms. Kim is a senior editor at RealEstateJournal.com. June Fletcher is on book leave. The "House Talk" column appears most Fridays on RealEstateJournal.com. Email your questions about the residential real-estate market. Please include your name, city and state. If you don't want your name used in our column, please indicate that. Due to volume of mail received, we regret that we cannot answer every question.
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The Weekend Guide! July 14 - July 17, 2005

The Weekend Guide for July 14 - July 17, 2005.
Full Article:
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NAR Boosts Home Sales Forecast

NAR: REALTOR® Magazine Online
The NATIONAL ASSOCIATION OF REALTORS® has again raised its forecast for the housing sector, with both existing- and new-home sales on pace to set an even bigger all-time record in 2005.

Existing-home sales are expected to rise 2.8 percent to 6.97 million this year; last month, the association was expecting 6.89 million sales—the record was 6.78 million in 2004.

New-home sales should increase 3.2 percent to 1.24 million in 2005, also a record. Total housing starts—single-family and multifamily—are forecast to grow by 5 percent to 2.05 million units, the second highest on record; the peak was 2.36 million in 1972. This year is seen to be a record for single-family construction, with 1.68 million homes started.

David Lereah, NAR’s chief economist, says that in each month of 2005 the forecast has been looking stronger than in previous projections.

“The housing expansion is continuing as more Americans take advantage of favorable conditions to achieve the dream of homeownership,” he says. “Earlier this year, we expected 2005 home sales to be the second-highest on record, but monthly sales have been at or close to record levels. Although we should come off of sales peaks in the months ahead, mortgage interest rates have remained lower than expected, and job gains are providing additional stimulus, meaning unprecedented sales totals this year.”

Lereah says the most notable problem in the housing market is the shortage of homes available for sale, as well as some shortages of building materials. “These shortages are proving to be a challenge for home buyers, builders and remodelers, and are continuing to put pressure on home prices,” he says.

He expects the national median existing-home price for all housing types to rise 9.4 percent this year to $202,600, with the typical new-home price increasing 5.8 percent to $233,900.
NAR President Al Mansell, of Salt Lake City, says low interest rates are keeping housing affordable in most of the country.

“We have to go back to the mid-1960s to see a period of comparably low mortgage interest rates,” Mansell says. “A big difference now is a decline in mortgage origination costs, plus a mushrooming in the availability of low- and no-downpayment loans. These are particularly helpful to first-time buyers in high-cost markets, but buyers need to shop loans and be aware of long-term consequences, and they may need to stay in their home longer to build enough equity to trade-up to a larger home in the future.”

The 30-year fixed-rate mortgage should rise slowly to 6.1 percent in the fourth quarter, and reach only 6.5 percent by the end of 2006. The 30-year fixed rate currently stands at 5.62 percent, according to Freddie Mac.

The U.S. gross domestic product is forecast to grow 3.6 percent in 2005, with the unemployment rate is seen averaging 5.1 percent. Inflation is expected to stay modest, with the Consumer Price Index rising 3.1 percent in 2005. Inflation-adjusted disposable personal income should grow 3.2 percent this year, while the consumer confidence index is forecast to average 104.
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Senior-citizen home sellers benefit from sizeable tax exemption

Answers to capital gains dilemma bring wide smiles
By: Robert J. Bruss: Inman News
DEAR BOB: My wife and I sold our home in 1993. We bought it for $93,500 and sold it for $200,000 and did not pay any capital gains tax by using the $125,000 "over 55 rule" exemption. We bought our current retirement home the same year for $131,500. Now we want to sell our retirement home for its market value of about $325,000. Can we use the $250,000 tax exemption so we don't have to pay any capital gains tax although we previously used the $125,000 exemption? – Glenn B.

DEAR GLENN: Yes. When you sold your home in 1993 for $200,000, you had a capital gain of $108,500 ($200,000 minus $91,500).

Under the now repealed, pre-1997 Internal Revenue Code 121, called the "over 55 rule," you were entitled to claim up to $125,000 tax-free profits. Presuming you were over 55 and qualified for that tax break, you owed no tax on the sale of your previous home.

Then you purchased a less expensive principal residence costing $131,500, which you now plan to sell for $325,000. That's a very handsome net profit of about $193,500 on which you want to avoid paying capital gain tax.

The current Internal Revenue Code 121, enacted in 1997, allows use of the $250,000 principal-residence-sale tax exemption (up to $500,000 for a qualified married couple filing jointly) on your capital gain from the current home sale. Your ages don't matter.

To qualify, you must have owned and occupied your principal residence at least 24 of the 60 months before its sale. You appear to qualify. Your prior use of the old IRC 121 does not prohibit you from using today's far more generous current IRC 121 $250,000-per-person tax break. For full details, please consult your personal tax adviser.

IS A GENERAL POWER OF ATTORNEY AS GOOD AS A LIVING TRUST?

DEAR BOB: You recently said when a house title is held in a living trust, if one co-owner becomes incapacitated, the other trustee can make decisions concerning the house. If there were no living trust, wouldn't a general power of attorney for financial affairs accomplish the same result? – Jerome G.

DEAR JEROME: My experiences with powers of attorney in real estate transactions have been the title insurance companies insist on verifying the principal is still alive and understands the transaction.

For example, I vividly recall a transaction where the title insurance officer made a long-distance phone call to Sri Lanka to talk with the power-of-attorney grantor. She verified his identity and that he understood the transaction documents his attorney-in-fact sitting across the desk was signing on his behalf.

If title insurance cannot be obtained, most buyers and lenders refuse to proceed. A living trust is usually much better than a power of attorney. For full details, please consult your attorney.

WHAT HAPPENS TO RENTAL PROPERTY DEPRECIATION WHEN OWNER DIES?

DEAR BOB: What happens to my rental property accumulated depreciation after I die and my children inherit my property? – Paul W.

DEAR PAUL: They will inherit your rental property with a new "stepped-up basis" to market value on the date of your death. Uncle Sam will forget all about the depreciation tax deductions you claimed. Isn't he nice? For full details, please consult your tax adviser.

The new Robert Bruss special report, "The Seven Best Ways to Avoid Capital Gains Tax When Selling Your Home or Investment Property," is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF download at www.bobbruss.com. Questions for this column are welcome at either address.
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Leveraging the most from your Real Estate investment

How to get top dollar when it's time to sell
By: Dian Hymer: Inman News
Many homeowners recently have realized more financial gain from the homes they live in than they have from their stock portfolios. Thanks to several sequential years of rapidly rising home prices, homeowners in many cases have seen their net worth rise even though their stock market portfolio values declined.

Now, many experts are predicting that the rate of home price appreciation will wane as interest rates rise and the real estate market settles into a more balanced market. A balanced market is one that doesn't overwhelmingly favor either the buyer or seller.

During the first quarter of 2005, the national median existing single-family home price was up 9.7 percent from the first quarter of 2004, according to the National Association of Realtors. In a balanced market, you're more likely to find an annual home price appreciation rate in the 4 to 5 percent range.

When real estate markets change, you can actually lose money on your home if you have to sell soon after buying. This can occur even though home prices are still appreciating, but at a lower rate.

Suppose you purchased your home in its "as is" condition, and it needed a lot of work. In areas that experienced a strong seller's market, buyers often made "as is" offers in order to be competitive.

Real estate markets are cyclical, so you can't always count on home price appreciation to improve the value of your investment. You could experience several years of rapid appreciation followed by years of low or no appreciation.

HOUSE HUNTING TIP: To preserve and enhance the value of your real estate investment, it's wise to cure deferred maintenance, establish a good regime of ongoing home maintenance and make value-adding improvements to the property.

The best time to tackle deferred maintenance is as soon as possible after title to the property is transferred into your name. This may be difficult for buyers who stretched to their financial limit in order to buy. If you have no resources that you can tap immediately for home improvement projects, establish a budget and a plan to take care of necessary work over time.

It might help to ask your home inspector to prioritize the defects listed in his report in terms of how quickly repairs should be made. If you can't afford to correct all the deferred maintenance at once, at least you'll know which items to concentrate on first.

It's natural to want to spend money on making your home look pretty. But, don't make the mistake of overlooking defects that will diminish the value of your home when you sell. Even though you may have purchased your home "as is" regarding a poor drainage system or a rotted deck, a future buyer may not be willing to overlook these defects.

Serious drainage, foundation and wood pest problems should not be neglected. Some problems will become worse--and more expensive to correct--over time. Unless you're selling in a very strong seller's market, you'll probably have to subtract the cost of overlooked repairs from your equity when you sell. From an investment standpoint, it's risky to make major improvements to your home unless the infrastructure is sound.

When you do get around to making improvements to add value to your home, make sure to do your homework first. Over-improving your home for the neighborhood is likely to cost you more money than you make.

THE CLOSING: Before making a major investment in improvements, consult with a real estate professional. Find out if the changes you have in mind will actually add market value to your home.

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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Federal agencies partner for home energy savings

New Web site promotes Energy Star appliances, offers cost-cutting tips
Inman News
The Bush administration today announced a new partnership aimed at reducing household energy costs by 10 percent over the next decade while improving our nation's air. The Partnership for Home Energy Efficiency will provide energy saving solutions for households across the country and support research and implementation of a new generation of energy-efficiency technologies.

The Department of Energy (DOE), the Department of Housing and Urban Development (HUD) and the Environmental Protection Agency (EPA) will provide Americans, including home builders, with the latest home energy savings information on a Web portal, Energy Savers Web site.

Americans spend more than $160 billion a year to heat, cool, light and live in their homes. By taking advantage of home energy efficiencies, an average American family could save $150 year, according to a press statement.

"For most owners and renters, utility bills are the second-largest household expense," HUD Secretary Alphonso Jackson said. "That's why housing affordability and energy efficiency go hand in hand. By reducing the price of utility bills, we reduce the cost of living for the nation's low- and moderate-income families."

In addition to the billions of dollars lost through energy inefficiencies, household power waste contributes to the power plant emissions that create soot, smog and acid rain.

"Last year, through ENERGY STAR, Americans chose to invest in cleaner air and healthier lives – saving enough energy to power 18 million homes and cutting $10 billion from their energy bills," EPA Administrator Stephen Johnson said. "We are delighted to work with our federal partners to help lower energy bills, reduce emissions from power plants and provide the next generation a healthier, cleaner environment."

Goals of the Bush administration's Partnership for Home Energy Efficiency include:

    • Expanding efforts to promote ENERGY STAR products;

    • Developing durable, comfortable, affordable homes that use 40-50 percent less
      energy;

    • Developing new energy-efficiency services to provide homeowners with greater
      savings, such as Home Performance with ENERGY STAR;

    • Delivering energy-efficiency savings to low-income and subsidized housing;

    • Continue to invest in innovative research in building science technologies,
      practices and policies; and

    • Providing design technologies and building practices to allow cost-effective
      net zero energy homes, by 2020.

In addition, individuals can take many simple steps today to help make their homes more energy efficient:

    • Replace incandescent bulbs with lights that have earned the ENERGY STAR.

    • Use a programmable thermostat with air conditioners to adjust the setting
      warmer at night, or when no one is home.

    • Use a fan with window air conditioners to spread cool air through a home.

    • Use an energy-efficient ENERGY STAR air conditioner, which can save up to 50
      percent on cooling bills.

    • Plant trees around your home. Just three trees, properly placed around a
      house, can save between $100 and $250 annually in cooling and heating costs.
      Daytime air temperatures can be three to six degrees cooler in tree-shaded
      neighborhoods.

    • Plant trees or shrubs to shade air conditioning units, but do not block the
      airflow.

    • Install white window shades, drapes or blinds to reflect heat away from the
      house. Sunny windows can make air conditioners work two to three times harder.

    • Replace windows with ENERGY STAR models and consider the new double-pane
      windows with spectrally selective coatings.

    • Tightly close fireplace damper.

HUD is a federal agency that implements housing policy.
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Banks Open Doors To Illegal Immigrants

By: MIRIAM JORDAN: The Wall Street Journal Online
Home loans and other financial services are offered with the assistance of the U.S. government.

Javier and Araceli Garcia, illegal immigrants from Mexico, never imagined that the U.S. government would help them realize their dream of owning a home.

But last year, the couple secured a $54,600 mortgage to buy the gray, 1,158-square-foot bungalow that they had been renting for eight months. The Wisconsin housing authority financed the loan. The Internal Revenue Service gave them an identification number that enabled them to apply for it at local Mitchell Bank, which was happy to take their business.

"We thought we would never buy a home, because of our [illegal] status," said Mrs. Garcia.

Competition for new customers is driving banks to offer home loans and other financial services to illegal immigrants -- and they are getting help from government agencies, such as the Federal Deposit Insurance Corp. The FDIC encourages banks to lend and invest in underserved markets regardless of customers' immigration status.

The official helping hand comes as other corners of the government take an increasingly hard line against undocumented immigrants. In May, Arizona legislators passed a bill to bar illegal immigrants from English classes, child care and other state-subsidized services; it was vetoed by the governor. In Kansas, opponents of a measure to offer in-state tuition to college-bound students who are illegal immigrants have taken legal action to prevent its implementation. Also in May, Congress approved a measure containing a provision that would make it impossible for illegal immigrants to acquire a driver's license.

"There is a fundamental contradiction here," says James Smith, a senior economist at the Rand Corp., a Santa Monica, Calif., think tank. "We have one policy saying you can't be here illegally. In practice, another policy is saying that if you're here, we're going to cater to you."

In Wisconsin, the state housing agency's decision to help banks lend to illegal immigrants has set off a fierce debate in the state Senate over whether these newcomers should benefit from programs designed for legal residents. The initiative has also spurred banks in other states to kick off similar programs.

Like many parts of the U.S., this state of dairy farms and heavy industry has seen its Spanish-speaking community swell in recent years. Immigrants, mainly from Mexico, have journeyed here to fill jobs in construction, foundries and other low-skill industries. Latinos represent only 4% of Wisconsin's total population. But the population doubled between 1990 and 2000 to about 200,000, and continues to grow. The Hispanics are concentrated around Milwaukee and Madison, the state capital.

In Milwaukee, Mitchell Bank has seen those changes up close. It was founded in 1907 by the Schneider family, who named the bank after the main street in the bustling area known as the South Side. For most of its history, the bank served Polish and German immigrants. As European families moved to the suburbs, Mitchell Bank opened new branches there. But bank loyalty didn't transfer to young customers, who preferred big banks with ATMs on every corner.

In the 1990s, Mitchell Bank's old turf on the South Side began to see an influx of Latino immigrants. Taco shops and clothing stores playing piped Mexican folk music proliferated. James Maloney, the chairman of Mitchell Bank, saw the newcomers as a solution to the bank's declining fortunes. Its assets had dropped to $60 million in 1999 from $95 million in the early 1990s.

One afternoon in 1999, he walked into the bank and saw no one in the expansive hotel-like lobby but the staff. Outside, the street was filled with Latinos. "If all these people were working here and living here, I knew we had to change what we do," said Mr. Maloney, a labor attorney who took over the bank after his father-in-law died in 1991.

Mr. Maloney promoted Frank Villa, a teller and the sole Hispanic employee, to customer-service representative. He re-hired a Latina former staffer and recruited many others. The new employees translated the bank's brochures and deposit slips into Spanish, and hung banners in Spanish outside to lure passersby. Inside the bank, a painting of Mexico's patron saint, Our Lady of Guadelupe, was prominently displayed.

Mr. Maloney invited Latino community leaders and clergy to a town-hall-style meeting at the bank. Out of one meeting came the idea of opening a branch in a local high school, to ease distrust of banking among immigrants by introducing it to their children first.

The bank also offered pamphlets on how to apply for a Wisconsin state ID and driver's license, and invited the Mexican consulate in Chicago to visit with a mobile unit that issues "matricula" cards, another form of identification, issued by the Mexican government and often accepted by banks. In early May, it sent out letters to 2,400 of its undocumented customers warning that Congress was on the verge of passing a federal law, dubbed "Real I.D.", that would make it more difficult for illegal immigrants to get drivers' licenses.

Mr. Maloney decided in 2002 the bank should also start offering mortgages even to illegal immigrants, convinced that would revitalize the run-down area and generate new business. The move would be in line with a federal law, enforced by the FDIC, that requires banks to invest in the communities in which they gather deposits, according to the banker.

Because most undocumented immigrants don't have a credit history, the bank decided to consider utility, rent and overseas-remittance receipts in assessing their creditworthiness. A letter from a pastor was also welcome.

As demand for home loans gradually increased, a problem arose: Taking on the loans was creating more risk than a small bank could shoulder on its own. That's because unlike other mortgages, the loans were not sellable on the secondary market to Fannie Mae and Freddie Mac, which currently don't deal in loans for illegal immigrants as a matter of official policy. That means Mitchell Bank had to hold all the loans in its portfolio rather than spreading out the risk.

The issue was resolved last year, after Mr. Maloney made a presentation to the Wisconsin Housing and Economic Development Authority. Its mission is to help low-income families buy homes by offering mortgages at preferential interest rates that are fixed for 30 years. The housing agency regards its home-ownership program as key to combating predatory lending, which has exploded in poor inner cities, and revitalizing downtown neighborhoods. The state agency decided to start a pilot program for undocumented immigrants.

"We can stick our heads in the sand and pretend these people don't exist, or we can help them be in the U.S. with assets," says executive director Antonio Riley, the head of the Wisconsin housing authority. He has received applications from many banks interested in offering loans to undocumented immigrants.

The housing authority finances the mortgages, which Mitchell Bank and other institutions sell to their customers. Thus, Mitchell Bank no longer retains the risk for the loans.

To be considered for a loan, illegal immigrants must fulfill the same criteria as applicants who hold Social Security numbers -- proof of regular income and state residency. If they qualify, the undocumented borrowers get the same terms as other state residents.

Like Mitchell Bank, the housing authority uses the IRS-issued tax-registration number, the Individual Taxpayer Identification Number, or ITIN, instead of a Social Security number, which illegal immigrants generally cannot obtain. The banks need such numbers because they have to report their income to the government. In 1997, the IRS started issuing ITINs to foreigners who aren't eligible for a Social Security number to encourage them to file an income-tax return, regardless of immigration status. As of December 2004, the IRS had issued eight million such numbers.

An IRS spokesman declined to comment on the use of the ITIN by illegal immigrants applying for a mortgage. In prepared testimony to two congressional subcommittees last year, IRS Commissioner Mark Everson said "we are concerned that the ITIN has become an acceptable form of identification similar to the Social Security number."

The Garcias arrived at Mitchell Bank last August without a credit history or a single credit card to their name. A few days later, Mr. Garcia brought his ITIN and proof that he had filed taxes every year since getting the tax ID. He also brought pay stubs to show he earns about $450 a week making concrete molding to secure caskets in the earth, a job he has held for four years. Mrs. Garcia, who says she carefully stores bills in a safe place, amassed the receipts for every utility and rent payment the couple had ever made.

Mr. Villa, now a loan officer, read all the loan documents to the couple in Spanish. A home inspector visited the Garcia's house in September. The Garcias then obtained a $54,600 mortgage from Mitchell Bank. The Wisconsin housing authority financed it at a fixed rate of 5.3% over 30 years. The couple was required to make a modest down payment. On Oct. 19, two months after starting the application process, the couple closed on the house. All told, the couple now makes a monthly mortgage payment of $443 instead of $600 a month in rent on the same house.

In four years, Mitchell Bank has issued about 100 similar home loans, mainly to illegal immigrants, and says it has never experienced a default; it has recorded two late payments. The average household income of borrowers is $30,000 annually, for mortgages ranging from $30,000 to $100,000. Thanks to its outreach to Latino immigrants, including many illegal ones, Mitchell Bank is recording 4.5 times more transactions and at least that much more traffic at its three branches than a few years ago. It is looking for a site to open a new branch in nearby Waukesha, which has a fast-growing Hispanic population. "Our portfolio is evidence that the undocumented are model customers," says Jeff Bowman, president of Mitchell Bank.

More banks are following in Mitchell's path, helped by the FDIC, which has reached out to banks in the Midwest to encourage them to lend to immigrants, regardless of their legal status in this country. Some of the banks have become aggressive players in the undocumented market.

The initiative, based in Chicago, is partly an outgrowth of FDIC efforts to contain predatory lending, whose main victims are blacks and Latino immigrants. Without access to traditional banking, undocumented immigrants are especially easy prey for unscrupulous lenders who charge exorbitant interest and closing fees for mortgages. "Our job is to encourage banks to lend and invest in underserved markets," says Michael Frias, an FDIC official in Chicago. "We don't make distinctions of immigration status."

Dozens of small banks in such states like Ohio, Illinois, Iowa and Texas have recently started offering undocumented immigrants the opportunity to apply for home loans with an ITIN. Big banks, like Wells Fargo & Co. and Bank of America Corp., say they plan to launch their own programs within months. Don Cohen, a vice president at North Shore Bank in Milwaukee, which offers ITIN mortgages, says he has fielded inquiries from banks in Alabama, Minnesota, Mississippi, South Carolina and Washington, among others interested in serving undocumented immigrants.

For its part, the Wisconsin housing authority is stepping up efforts to promote its program to help immigrants get mortgages. Since last April, it has disbursed 112 ITIN-mortgage loans valued at about $12.2 million in total. The housing authority has been flooded with inquiries from housing agencies and lending institutions in other states. The Illinois Housing Development Authority, for one, is expected to unveil its ITIN mortgage program this summer.

But a year since its introduction, the agency's pioneering initiative is also drawing fire. Mark Belling, an outspoken conservative radio talk-show host, has lambasted the mortgage program on the air. "We should not be encouraging illegal immigration by offering home loans and the American dream to people who didn't enter the country legally," says state Rep. Steve Kestell, a Republican. "I am concerned that we are sending the message that we as a state welcome illegal immigration."

Republican state Sen. Glenn Grothman, who says the state agency shouldn't be in the business of rewarding lawbreakers, has introduced a bill to quash the program.

Mr. Grothman first heard about the ITIN mortgage on Mr. Belling's radio show. In an interview, Mr. Grothman said it's untenable that the "government sets up a program specifically designed to benefit people who have chosen to ignore...immigration laws."

The bill is now before a state Senate committee. To become law, it will have to pass both houses of the legislature, which are controlled by Republicans, and get Democratic Gov. Jim Doyle's signature.

Meanwhile, the Garcias used their ITIN to get a second, home-improvement loan for $13,700 with Mitchell Bank. The house already has a new cream-colored front door, newly built carport and renovated basement. Their summer plans include putting new siding on the house and laying grass in the backyard.
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Deck-care mysteries solved

By: Paul Bianchina: Inman News
Q: We are replacing the decking on the north side of our house, but cannot agree on the material to use. We are considering Ipe, redwood, or a composite material like Trex. What would you recommend? --Nancie J.

A: Unfortunately, there is no single "best" material that I could recommend for your new deck, and if you ask 10 people for their choice you're likely to get 10 different answers. As you've no doubt been discovering, each material has its own pros and cons, and the choice comes down to what you like the looks of, how much you want to spend, and how much maintenance you are willing to do.

The natural wood products you mention are excellent for decking, and I have to admit to a personal preference for real wood over synthetics. Ipe creates a really beautiful, rich looking deck, but it's on the expensive side and the hardness of the wood makes it a little more difficult to install. Cut ends need to be treated, and the material should be installed with concealed fasteners or stainless steel screws. Redwood is softer, easier to work with, and a little less expensive, but that all depends on the grade. Clear heart redwood is really beautiful, but again you're looking at a fairly large investment.

Any natural wood requires regular treatment (every one to three years, depending on exposure and weather conditions) if you want it to remain looking new, or you can allow it to weather naturally to a grayish tone. Even if you let the color weather out, you still need to regularly apply a sealer to prevent the wood from splitting and splintering.

Trex and all of the composite decking materials have the opposite pros and cons from natural wood. On the plus side, you have much lower maintenance with a composite, lower installed cost than with the upgraded wood products you mention, and no problems with splits, splinters, and all the rest. However, composites are not maintenance free, since they do require regular cleaning in order to keep them looking good. On the minus side, while composite-decking materials will definitely make for a very attractive deck, in my opinion they simply do not compare with the beauty of natural wood.

If you are planning to have a decking contractor do the work, ask them for some referrals of past decks they have done with different materials, and go check them out in person. If you are planning on doing the work yourself, the lumberyard may also have some referrals for you.

Q: I have a three-year-old cedar deck. It was looking drab, so I pressure-washed it and then sealed it with a product that didn't last. The deck now has a soft, gray fuzzy appearance and water no longer beads up. (A home center) sold me another cleaner, but I'm reluctant to use it. What do you recommend? --Jim M.

A: Unfortunately, it sounds like you're at the point where the deck needs to be sanded. This will remove the gray appearance and the fine fuzzy layer – which is actually wood fiber that's been torn up – and will smooth out the wood and prepare it to receive a new layer of finish.

First, make sure the deck is completely dry. Then I would suggest starting with 40 or 50 grit paper and working up to 80 to 100 grit. Don't go any finer then that, as this will actually smooth out the wood too much and lessen the ability of the finish to penetrate. You may want to use an electric random orbit sander, or rent a larger flooring sanding and then use the random orbit to finish up in those areas you can't get to effectively with the larger machine.

Remove the sawdust with a soft push broom, then follow with a leaf blower or similar blower to get the wood as clean as possible. Finally, I would recommend a penetrating stain with UV inhibitor that is formulated specifically for decks. Talk to the folks at an experienced paint store for the their recommendations (I would typically avoid the home centers for advice on something like this).

Q: I'm re-staining my deck, but I'm not clear as to whether I need to seal it also. Do I need to use a water sealer after staining? --Dennis L.

A: Typically you only need to do one or the other. Most stains that are formulated for decks also contain a water repellant, and there are also water repellants that are tinted. If you have a local paint store that you deal with, they can make recommendations for a good quality product that will meet your specific needs.

Q: Could you tell me where to buy the Wolman Deck-Brite you mentioned in a previous column? --Betty Z.

A: You can go to the Wolman website at www.wolman.com. There's a menu on the left side – click on "where to buy", enter your address, and you'll get a map and a list of local dealers.

Remodeling and repair questions? E-mail Paul at paul2887@direcway.com.
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Five key reasons real estate doesn't sell

By: Robert J. Bruss: Inman News
"I followed your instructions and interviewed three successful local Realtors before listing my house for sale with the agent I liked best. The reasonable asking price was based on the CMAs (comparative market analysis) forms of the three agents. But it has now been almost 45 days since listing and I only received one 'low ball' purchase offer from a local bargain hunter. What's wrong? Why hasn't my house sold yet?"

That was an e-mail I recently received from an irate seller whose house is located in a very active local market.

Recent home sales statistics from the National Association of Realtors show nationwide new and resale home sales volume and prices are on target for another near-record year. But home sales are a very localized market.

At the recent Washington, D.C., annual conference of the National Association of Real Estate Editors, I learned how localized home sales markets can be. Some markets are booming (that's called a "seller's market" where there are more qualified buyers than homes available for sale). But there are other local "buyer's markets" with more homes listed for sale than there are qualified buyers.

Perhaps your home is in a local buyer's market, which requires extraordinary effort by your listing agent to get your house sold.

FIVE KEY REASONS SOME HOMES DON'T SELL. Experienced real estate agents know why some homes don't sell even during this peak spring and summer home sales season. Here are the five key reasons some homes don't sell:

1. THE ASKING PRICE IS TOO HIGH. Ask any experienced realty agent why a specific home hasn't sold. The answer will usually be: "The asking price is too high."

This presumes the home is (a) listed in the local MLS (multiple listing service) (b) listed on www.realtor.com (the most popular home sales Web site), (c) without restrictions for other agents showing the home on their Web sites, (d) the sales commission split is the customary 50-50 for the buyer's agent, and (e) there is full cooperation by the listing agent with buyer's agents.

2. THE LISTING AGENT IS UNCOOPERATIVE WITH OTHER AGENTS. If the listing agent is less than 100 percent cooperative with buyer's agents who represent prospective buyers for your home, that is often a major reason a home hasn't sold during this peak home sales season.

Most home sales involve two real estate agents. The listing agent represents the seller. The selling agent (often called a "buyer's agent") represents the buyer. Very rarely does the listing agent also represent the buyer (called a "dual agency").

Some listing agents are uncooperative with buyer's agents, hoping to "double end" the home sale and obtain all the commission rather than having to split it with a buyer's agent.

3. CONDITION OF THE RESIDENCE. The majority of home buyers want to purchase a house or condo, turn the key in the front door, and move in. When a home is in less than "model home" condition, it is known as a fixer-upper, which usually sells substantially below market value of a comparable home requiring zero fix-up work.

Yes, there are buyers for fixer houses. But they usually insist on a bargain purchase price because they will encounter the obvious need for renovations.

If I were forced to guesstimate the proportion of home buyers willing to purchase fix-up houses and condos, I suppose the percent of the home buyer market is perhaps only 10 percent at best. For this reason, it pays to fix up homes before putting them on the market for sale.

Experienced real estate agents recommend getting a home into tip-top condition before exposing it to the market. But this doesn't require major renovation. Serious clean-up and repairs are usually sufficient. Fresh paint inside and outside is mandatory if you want to get your home sold for top dollar in its present condition.

4. "AS IS" SALE CAN BE A BUYER TURN-OFF. Many home sellers just don't want to spend even minimal efforts to fix-up their homes for sale. When a home is advertised for sale "as is," that means the seller must disclose known defects but refuses to pay for any repairs.

Such properties can be incredible bargains for savvy buyers who are willing to purchase the home in its current condition. But this is not the way to earn top dollar.

5. THE LISTING AGENT CAN BE A HOME-SALE OBSTACLE. Many real estate agents are disliked by their fellow local agents. They are known as "difficult agents."

Home sellers who listed with these unpopular agents will never know.

To illustrate, in my community the top-sales Realtor discounts his sales commission. But he is extremely successful. He has 10 assistants. However, other local realty agents usually show his listings only if they have nothing else to show their prospective buyers. The primary reason is they will receive less than the customary 3 percent real estate sales commission split.

Closely related to a disliked or difficult listing agent is the problem of a listing agent who uses poor marketing methods. Although newspaper ads remain the most effective marketing method for home sales, over 70 percent of today's home buyers start their quest on the Internet, usually at www.realtor.com. A listing agent who doesn't use newspaper advertising, have their own Web site, and who doesn't put all their listings on the Internet is losing out for their buyers.

But the best listing agents use aggressive listing techniques, such as their personal Web sites, mailings to nearby homeowners (often the best source of prospective buyers who have friends who want to move into a neighborhood), relocation services with out-of-town buyers, weekend open houses, broker open houses (an extremely effective marketing technique), and at least weekly newspaper ads.

Luxury homes over $500,000 usually require extra promotion, such as color brochures, Internet virtual tours, and local real estate home buyer magazine ads.

SUMMARY: There might be several reasons a specific home that is listed for sale with a successful realty agent has not sold during this peak home sales season.

If your house or condo has not yet sold, and it has been listed for sale more than 45 days, it is time to discuss with the listing agent the five key reasons why homes don't sell. After discussion, if you have an ineffective agent, when your listing expires it is time to switch to a more effective listing agent.
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First-Time Buyers Ride Emotional Roller Coaster

By: STEVE KERCH: The Wall Street Journal Online
Buying a first home can be a trying experience, a new study says.

Buying a home can prove to be a trying experience even for the most seasoned homeowners. But for first-time home buyers, the emotional roller coaster is especially gut-tugging, a new study says.

First-time buyers go through a series of emotional highs and lows in the home-buying process, based on 11 key "satisfaction milestones" identified in research from RealEstate.com. Those milestones include everything from the initial dreams of homeownership and what that might entail to the harsh realities of home-inspection reports.

Unlike dizzying amusement-park attractions that return you to level ground when the ride is over, the home-buying transaction ends on the proverbial high note, with new owners saying they feel most satisfied on the first night they spend in their new home.

"What's amazing in many ways is that completing the process is the absolute emotional high. You might have thought it was finding the right house or closing the deal. But that first night in the house, that was the real 'ah ha,'" said Holly Slaughter, senior marketing manager for RealEstate.com, who oversaw the study.

Along the way, though, the road takes some abrupt turns.

When first-time buyers initially begin thinking about becoming homeowners, their satisfaction is relatively high. They may be dreaming about the traditional single-family home with the white picket fence and looking at enticing photos of homes for sale on the Internet.

But the first time reality sets in, what the study identified as the "scaling" stage, the satisfaction meter hits its nadir.

"Once you start looking at what you can afford, specific neighborhoods, and getting preapproved for a mortgage -- things you don't think of when you're in the dreaming phase -- that's when there's a big drop," Slaughter said.

In fact, follow-up interviews with first-time buyers found that the most important lesson learned was that they should have gotten that mortgage approval early in the process, she said.

Once buyers come to grips with reality, emotional satisfaction increases again as they begin viewing properties for sale. Satisfaction sinks again as they "rescale" their expectations based on what they see and then takes off again when they find the house they want to bid on, the surveys show.

Negotiating the deal, however, causes another emotional tumble which is quickly reversed when the bid is accepted. But reality intrudes again during the inspection process, as emotions take another big drop.

The limbo between inspection and closing is also a down time, and the closing itself does nothing to lift the spirits. It's not until that key goes in the lock of the new home that satisfaction peaks.

"Going from renting to first-time homeownership is quite a bit different than going from apartment to apartment, which you can do in a weekend. The home-buying process involves more time, research and patience," Slaughter said.

"We know consumers feel a little anxious and ill-equipped to handle this whole process," she said. "But once they get into it, consumers really understand that that have to be patient with the process, that it's not something you just jump into, like going into Best Buy and buying an MP3 player."

The Internet has helped level that playing field, as 41% of first-time buyers in the RealEstate.com survey reported they used the Web to research home listings, school data, real estate agents, mortgage rates and other housing data.

"The Internet provides consumers, especially first-time home buyers, with a wealth of information that can help set their expectations and prepare for the ups and downs of the entire process," said Jeff Lyons, general manager of RealEstate.com. "Whether they're looking at listings, finding a Realtor or searching for the best mortgage, it's all at their fingertips."

The 11 stages of the home-buying process

These 11 "satisfaction milestones" were derived from a RealEstate.com study that involved hundred of hours of interviews in surveys and focus groups with more than 2,000 first-time home buyers.

    1.  Dreaming
    2.  Scaling
    3.  Viewing
    4.  Rescaling
    5.  Finding
    6.  Negotiating
    7.  Accepting
    8.  Inspecting
    9.  Limbo
    10. Closing
    11. Completing

Even after planning and setting expectations, home buyers still find themselves feeling unsettled during the process, the study found. Thirty percent were ill at ease with the time and effort they spent obtaining a mortgage, followed closely by those who found themselves anxious during the time spent "in limbo" between making the offer and closing on the house (29%).

Sixty-two percent of homeowners cited "being patient with the home buying process" as paramount to staying sane throughout the process, an accomplishment that's easier said than done.

Additional "after the purchase" survey findings:

    •  Forty percent of new homeowners said window coverings were the priority for
       their first night in a new home.
    •  Eight percent said celebratory champagne on the first night is a must.
    •  Repainting walls is the first home improvement 38% of new homeowners make.
    •  Although 15% say they're too broke after buying to make any changes, 14%
       start right in with renovating the bathroom or kitchen.
    •  Most homeowners say they moved across town (44%), while 9% relocated to
       another state.

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