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Question: Can I lease my home while it is listed for sale? We could really use the extra income towards our new home.Answer: Yes, you can offer your house for lease while it is being offered for sale. Ultimately, it is your home and your choice.
If you decide to offer your home for lease, you must keep in mind that there are some advantages and drawbacks to leasing your home while offering it for sale.
You may have a buyer who wants to invest in income property—having the home already leased out would probably be desirable. Also, a tenant could turn into a buyer. Occupied properties have a homey feel and look and can increase the chances for selling.
Unfortunately, you may not be able to sell to a buyer who wants immediate possession. Another drawback is that you may have to deal with tenants who might not treat your property as well as you do. You would certainly know this when prospective buyers are viewing the home, but it can be prevented. Do all you can to check out prospective tenants if you are planning to sell.
If you do decide to lease your home while offering it for sale, you might want to consider renting it on a month-to-month lease so any prospective buyer can take possession of the property within a reasonable amount of time. This also gives the tenants enough time to vacate the property. Your agent should write this into your listing agreement—if you already have an agreement, it should be amended.
Your REALTOR® can give you additional advice on leasing your home while it is offered for sale.
Bettina Settles
Bettina Settles Realty
Question: Is a timeshare considered a real estate investment? My wife and I are thinking of buying one for our own enjoyment, but I wanted to know if it was also a smart investment?
Answer: A timeshare should be considered an investment in real estate—not a real estate investment. Developers of new timeshare properties routinely budget as much as 50 percent of the cost of the timeshare for sales and marketing. Therefore, if you pay $100,000 for a new timeshare, once the developer cashes your check, the resale value of your investment may really be only $50,000. That does not mean that you shouldn't own a timeshare, but it does mean that you need to do your homework before buying one.
A timeshare is a program in which a group of people shares use of a property by dividing among themselves the rights to use the property for specific time periods. Usually, the property is a residential project but the concept has been applied to houseboats, campgrounds and recreational vehicle parks.
I have heard the expression, "nobody intends to buy a timeshare." I think that should be changed to, "nobody should buy a timeshare—until they know what they are buying."
Answering the following questions will help you to decide whether you should invest in a timeshare. Is the period that you are buying fixed, floating or rotating? Is the timeshare a deeded interest, a "right-to-use" interest, or a vacation club? Would you be considered to be a foreign owner in the location of the timeshare? Many countries prohibit or limit foreign ownership. How is your ownership interest recorded, and what are the limitations of transfer should you decide to sell at a later date? Is title insurance available in the locale of the timeshare and should you buy it? What are the annual maintenance and usage costs after purchase?
A timeshare can be a good investment if your goal is recreation, relaxation and low personal involvement in maintenance or upkeep. Just make an informed decision that is best for you.
Jan Endes
RE/MAX Legends REALTOR®
Question: Does buying near a school positively or negatively impact resale value?
Answer: Many factors come into play when determining value, and location is certainly at or near the top of the list. Proximity to a school is a mixed blessing. Schools certainly cause increased traffic in the neighborhood, and noise levels can be high while students are outside on playgrounds and athletic fields. (For example, Friday night football games can be a nuisance.) The factors affect those homes adjacent to the school property. Parking can also be at a premium in neighborhoods near high schools if there is not adequate off-street parking for student vehicles.
Living within easy walking distance of a school is a nice benefit for children who attend the neighborhood school. I see a lot of children in my own neighborhood riding bikes to school, and many parents chose the neighborhood because of its proximity to the school. On the plus side, schools offer playgrounds and recreational opportunities for neighbors after school hours and on weekends. Many schools allow public use of athletic facilities—swimming pools, for instance.
As far as a direct effect on resale value, homes that are physically adjacent to school property will probably remain on the market longer and sell at a greater discount than homes that are several blocks away in the same neighborhood. Being next to a school is similar to being next to a busy road or adjacent to a shopping center—most buyers would feel more comfortable a few blocks farther away.
Dave Goff Carpenter, REALTORS®
Question: Is a timeshare considered a real estate investment? My wife and I are thinking of buying one for our own enjoyment, but I wanted to know if it was also a smart financial move.
Answer: There are many reasons to buy a timeshare, but viewing it as an investment in real estate should not be your primary purpose. Timeshare ownership can provide your family many fabulous vacation opportunities.
To help you analyze the value of the investment aspect, let's review some timeshare basics. The concept stems from a group of people sharing the use of a single vacation unit, at different times, at a specific resort and sharing the costs. It is called time-sharing. A resort could be an apartment building, condominium complex, hotel or a single house. A unit could be an apartment, condo, hotel room, whole house or a cabin, along with the use of the on-site amenities, such as a pool, hot tub, tennis courts or private beach.
Your timeshare purchase provides you the right to return to a resort annually, at the same time of the year, by buying a block of time—usually a one-week period. This is often referred to as an interval. To increase flexibility, many resorts offer owners the ability to move intervals around in the calendar year, by trading time with other owners. Many buy into resorts that offer the option of trading vacations with other locations. Trades are handled internally or though a vacation trading club, offering the potential to trade your unit/interval with another owner at another resort, in another town, state or even country. This can create an exciting variety of vacations.
With a timeshare, you are actually buying more of "a right to use real estate" verses the real estate proper. However, you are usually issued a Deed of Ownership, which in itself causes confusion. State laws vary on how timeshare ownership is sold and deeded. In considering a purchase, you should carefully research all documentation to understand type of ownership, the rights of ownership, and the duration of ownership included. In some instances, you might find a 99-year period instead of permanent time.
Consider all the costs involved. The purchase price of the timeshare ownership is the initial cost. The perpetual cost is the periodic payments, usually billed annually, often referred to as the maintenance fees, for which you pay for your portion of the property taxes, building insurance, costs to maintain the property, and the management staff that run the resort. Expect to be responsible for these periodic payments for the lifetime of your ownership.
Another issue is the resale potential. Any commodity or prospective purchase needs to have the ability to either grow in value or at least maintain value, in order to be considered a good investment. Unfortunately, timeshares are often very difficult to resale for the owner. The average consumer has a difficult time understanding the general concept, and has a natural hesitancy in buying something they cannot see, feel or touch. Timeshares are best sold when the consumers can physically visit the resort site. So there remains the concern, that when you are ready to sell, it might be hard to unload your ownership. However, you will still be responsible for your continuous obligation of the maintenance fees until the next owner is secured.
So, is it an investment, an asset or a liability? Good question.
Dee A. Young
NEW DAY, the real estate company
Question: I am planning to sell my home after the first of the year, and have been researching REALTOR®. Many of them have initials or titles after their names that I don't recognize, like "CRS". What does this mean, and do I need to find a REALTOR® that holds this designation?
Answer: The initials you see after a REALTOR's® name denote additional training and education that individual has obtained. There are a variety of different designations—signaled by the various letters following a last name—that a REALTOR® can work toward. Often, the designations are for specialty markets such as working with international clients or working with clients over 65 years of age. A designation after a name is a good sign—it's a signal to you that the REALTOR® has gone above and beyond to hone their craft.
The designation CRS after a REALTOR's® name represents "Certified Residential Specialist". Of the approximate 15,000 residential REALTOR® in Indiana, only 716 hold the CRS designation. The CRS designation is considered the premier designation to be held by a residential REALTOR®. It is obtained after years of experience in the field and strenuous class work requirements that ensure expertise in this area of practice. CRS designees specialize in residential sales, not commercial or retail. Looking for a CRS is the best assurance of professionalism a member of the public can seek when hiring a REALTOR® to market their home or assist them in the purchase of a new home. You can find a CRS by visiting www.indianacrs.com.
Vicki Roberson
RE/MAX Preferred REALTOR®
Question: We are building our first home, and we are having a hard time choosing amenities that we will enjoy and will also have a good return on investment when we sell our home. We can't afford everything, so your advice on the best choices would be helpful?
Answer: Congratulations on your first home. When building a new home, the upgrade choices are often endless and confusing. The best way to start is to decide what amenities you are not willing to live without. From that point, the decisions become tougher, but sometimes it is easier to view amenity choices in a more simplistic way. Features of a home that add value to the property do so because they are amenities that the market demands. A market is simply a group of buyers and sellers, of which you are a part. The value added by certain features can vary drastically from market to market depending on how the purchasers in that market view the feature. For example, an in-ground swimming pool might contribute value to the property in excess of the cost to install the pool in some high-end markets, but in other markets, the value added might be slashed by comparison. It all depends on the buyers. Fortunately, you are probably in as good a position as any to understand how people in your market think since you are one of the participants. Chances are, if it is an amenity you would pay extra for, others might too.
Safer bets for a good return on investment usually include upgrades in the kitchen and bathrooms, as well as finishing additional living area in the basement or attic. Another choice that commonly shows a return of most of the cost is adding a deck or a larger porch. These areas get the most attention when entertaining and are often scrutinized heavily by a potential buyer. Upgraded floor covers with neutral color choices also usually pay dividends in a resale. Examples of kitchen upgrades that can provide good returns include floor cover and counter tops—again, keeping the color choices neutral and not personalized. Premium appliances are desired in many markets, but a functional kitchen design is usually more important. Appliances that are not built-in are considered personal property and many times will not remain with the home.
Upgraded counter tops can have a big impact on appearance, which can provide some distinction when compared to other homes in your market without this feature. Common bathroom upgrades that usually provide a return of the investment include premium faucets, double sinks and ceramic tile flooring. Although garden tubs look nice, many owners don't use the tub. As an alternative, you might prefer to upgrade the shower stall to be larger and more functional. For example, a walk-in shower and/or dual showerheads might be a more fruitful upgrade. Whatever your choices, try to make them logical, not emotional, in the context of what you would think if you stepped into a buyer's shoes.
David B. Cain, MAI, CCIM
West Clay Realty
Question: We are planning to build our first home this summer—can we use a REALTOR®, just like if we were buying an existing home? What different things will a REALTOR® do to help us as new construction buyers?
Answer: Yes you can and should use a REALTOR® when building, just as you should to buy an existing home.
First and foremost, having a REALTOR® of your own means you have a professional whose entire purpose is to represent your best interest throughout the entire process, from helping select the best builder for you and your needs, to closing on and taking possession of your new home. Remember, the sales rep or agent representing the builder works for and represents the builder's best interest and not yours. Here is a partial list of some of the things your REALTOR® will assist you with or simply take care of for you:
1) Your REALTOR® will help you decide on the best builder for you.
2) The REALTOR® you select can be an excellent source when it comes to interior and exterior design selection. He or she can help determine what will resell best for the area and price range of your new home.
3) Turn to your REALTOR® again when it comes to selecting various options and features for your new home. Once again, he or she can be an excellent source of insight when it comes to what will add true sales value to your home when it comes time to resell. Remember, not all features are created equal.
4) Your REALTOR® can help you arrange for independent inspections both during and following completion of construction. These are in addition to the building inspector or appraiser. Do I really need additional inspections with new construction you ask? Yes!
5) Your REALTOR® will be there to monitor the building process throughout, and intercede on your behalf should problems or concerns arise. You will have an additional set of experienced and trained eyes right by your side watching over everything.
6) The REALTOR® you select can walk through your inspections with you, as well as be there for your final walk-through with the builder.
7) Your REALTOR® will be there with you at the time of closing to make sure that all the documents necessary are completed and are accurate. This is not the time for problems, but should problems develop, your REALTOR® is exactly the person you need at your side.
8) Last but not least, your REALTOR® will be there long after closing should issues or concerns arise. You have someone who is available to help whose sole concern and responsibility is your best interest.
Building can be a truly exciting and happy experience if you select a REALTOR® who can and will be on guard for you and your family.
Jeff Van Utt
Century 21 Scheetz
Question: A coworker just sold his home through a land contract. I have never heard of this before—what exactly is it?
Answer: A land contract is an agreement by which a property is sold to a buyer who agrees to make installment payments directly to a seller over time. Land contracts, also sometimes called "contract for a deed," or "private land contract," involve a negotiation of four specific components of the purchase—the purchase price, interest rate, down payment and specific term length. By their nature, Land Contracts are negotiated between individuals. They are not regulated by banks, and have no mortgage guideline restrictions— therefore, they can be structured quite creatively to serve a variety of needs.
A land contract purchase is often desirable for a buyer who does not wish to or is not able to obtain a traditional mortgage from a lending institution. As all pieces of the deal are negotiable, the possibility of a low down payment and attractive terms can help a buyer get a property that might otherwise be out of reach.
Sellers are equally attracted to land contracts, as they can often sell at a higher price and earn additional income through the collection of the interest. In essence, the seller serves as both the property seller and private banker.
But land contracts do have pitfalls. As the seller typically retains title to the property until the buyer has made all their payments or paid a certain percentage of the principal, the buyer doesn't really own the property, which might limit ability to use the property or to make improvements. If there's an existing mortgage, the seller would still be liable for making the payments on his loan. Contracts can create a landlord and tenant relationship, but these are not always comfortable for either side. It is important for both parties to carefully evaluate each other, as each will be relying on the other to act responsibly.
Even with the best intentions, there can be unintended consequences. The bankruptcy of either party, prior liens or personal judgments could force the property into a foreclosure action, which can cause both to risk the loss of their equity. These are not always recorded documents, so proper notice of legal action is not always accomplished.
Hopefully, your friend sought the counsel of trained professionals before entering into this agreement. If his REALTOR® is experienced in land contracts, she could help ensure that the value of the property is not overstated, that the transaction is structured to enable the buyer to eventually get a mortgage to pay off the balance, and that all the proper provisions of a typical purchase were taken into consideration. An attorney can help with the legal language to protect the interests of all parties and provide a contract document that would be enforceable under Indiana law. Because these can have serious tax implications to both buyer and seller, an accountant should review and advise of impact.
Simple design and flexibility of terms make land contracts look easy and enticing. With a little precaution and the help of the pros, they can be successful, as well.
Dee A. Young
NEW DAY, the real estate company
Question: I know there are tax benefits to buying a new home, but are there similar tax benefits or write-offs for selling a home?
Answer: This is a great question, and one a REALTOR® is often asked. Since I am not an accountant or tax professional, I am only speaking from my first-hand experience of owning homes, and knowledge I've gained through real estate transactions.
If you itemize your taxes, you can deduct all of your selling expenses. That would include commission, title insurance, deed preparation, recording fees, and any of the normal seller expenses. However, if you have lived in your home two of the last five years, you may profit up to $250,000 for a single person or $500,000 for a married couple without owing taxes on that profit.
If you are selling an investment property or a home you have only lived in for less than two years, you should itemize all of those expenses. It is important to save your HUD Settlement Statement from your closing for your taxes.
I happen to think that the IRS tax code change in the late 1990s was one of the best benefits given to Americans. It has allowed those who are nearing retirement to downsize without a huge tax obligation, and also benefited those who like to live in, remodel and re-sell their personal homes earn a profit.
I would suggest consulting your tax advisor for further information.
Leslie Cooper Pyle
RE/MAX Real Estate Associates
Question: Last month, we signed a six-month listing agreement with a REALTOR®. Since that time, we have had a major argument, and really feel we are having a personality conflict. I don't want to use the agent anymore. Can the listing be cancelled?
Answer: You can void the agreement by asking the listing broker to release you from the listing, explaining that you are dissatisfied with your agent. They may try to keep the listing by assigning another agent, but they should do as you wish. If they refuse to release you, you can tell them to withdraw your home from the market and wait until the listing agreement expires before you list with another REALTOR®. If they release you, you may list with another REALTOR® immediately.
Anne Elsbury
Century 21 Realty Group Elsbury
Question: Since the stock market is shaky, I am considering purchasing residential real estate for investment. Besides the cost of buying the homes, what other expenses can I expect? I have never been a landlord or even rented. I could use some advice.
Answer: Profitable real estate investments are seldom accomplished without a working knowledge of the market. If you are truly interested in real estate as an investment, the only reason to buy is if it makes sense financially. Don't buy for emotional reasons. Often, the right real estate investment takes patience to find. Start by identifying a few markets where you would want to buy. If you are going to manage the property yourself, you might consider a market close to where you live or work for convenience. Professional management companies are also available, and they might even help with finding a property. Once you have identified a market, watch sales activity and get a feel for the prices being paid. You should be targeting a property that shows a return on your money, and demonstrates property appreciation. For a simple measure of your cash on cash return, divide the annual net income (cash your receive after payment of all expenses and debt) by the down payment. Of course, it is always smart to visit a REALTOR® who can offer advice and help with the acquisition. An accountant can also offer a clearer picture on investment strategies including tax implications.
Besides the cost of the property, other costs include financing. An important part of the profitability of the investment is the cost of money. Investment interest rates are often different when compared to a home that will be purchased for owner occupancy—it's important to find the best rates. If you plan on keeping the property for the long term, a fixed-rate mortgage is usually the best option. It will protect you from interest rate spikes in the future, and its fixed nature will allow investment returns to be more predictable. Other expenses over the life of the property include capital expenses, such as roof replacement. It is not uncommon for an investor to set up a reserve account to pay for future capital expenses, reserving a portion of the cash flow for such expenditures.
Unlike investing in the stock market, residential real estate investment is a more active endeavor. It will usually require much more effort from the investor compared to the stock market, which is a more passive investment. Be prepared to put forth more effort to secure investment returns from real estate. You should also be aware that real estate and stock markets share the concept of risk. Nothing is guaranteed in either market. Be sure to exercise caution when investing and do not get overextended or borrow more than the property is worth. Remember, patience coupled with solid market research is the key to successful real estate investing.
David B. Cain, MAI, CCIM
West Clay Realty
Question: What is a land contract? Are there any dangers involved for the buyer?
Answer: A land contract occurs when the deed or title of the property is transferred only after all the payments have been made. This can also be known as a conditional sales contract or installment contract.
In a land contract, the greatest danger to a buyer is that they will not hold title to the property until they pay off the balance of the land contract. In addition, however, the buyer is usually restricted from making any repairs or improvements to the home without permission of the titleholder—usually the seller. This could become a point of contention, depending on what the property needs to make it livable, or desirable for the buyer.
If the buyer has a sufficient down payment, however, the land contract is treated like a mortgage and there are specific guidelines to allow them to cure any default or vacate the premises—usually more generous than renters' rights.
If the buyer defaults on the land contract, any improvements made to the property become the seller's, and any down payment money belongs to the seller, too. I have used land contracts when mortgage money is difficult to obtain (usually as a result of high rates or lots of discount points) in order to get a buyer into the property—and to allow the seller to get some of their equity and their mortgage payment offset. In this situation, land contracts enable both buyers and sellers to move forward in a challenging market. The agent may be paid upon closing of the land contract, or when permanent financing is obtained. This depends on how the contract is written, and how much money is available at the first closing to pay the brokerage fee.
The land contract should be recorded upon execution, or the buyer will have little protection if the seller fails to make tax or mortgage payments and the property goes into foreclosure. The buyer has little control over the seller's actions, and failure of the seller to make timely payments could result in the buyer losing all claims and rights to the property.
Kaye Hirt Eggleston
Carpenter, REALTORS®
Question: "We already own a home, but we have outgrown it. Is it a good idea to sell or list our current home before making an offer on a new property?"
Answer: The ideal situation would be putting your house on the market, subject to finding suitable housing. That way, if you get an offer, you are protected by that condition. You are marketing your home while you are looking for a new one, and you are in control—you don't have to sell unless you have a new home to go to. It works out most of the time—buyers usually have a home in mind by the time they receive an acceptable offer. You can then write your offer on the new home subject to obtaining an accepted offer on the old one, providing protection once again.
But don't try this without the guidance of your REALTOR®. REALTORS® can provide all the necessary paperwork and can explain scenarios to you, so you are confident that you won't be left out in the street without a place to go.
Anne Elsbury
Century 21 Realty Group Elsbury
Question: I've heard you should always close on a home at the end of the month. Is this true? If so, why?
Answer: The best reason to close at the end of the month is that some of the out-of-pocket costs for the buyer would be minimized because the lender will charge interest from the day of closing to the end of the month. Instead of 15 days of interest (which is probably indicated on the Good Faith Estimate), they might have only one or two days' worth. This might save them a couple of hundred dollars in interest, depending on the size of the mortgage. However, some lenders allow an interest credit if the closing takes place within the first five days of the month. That way, the buyer would actually receive up to five days' interest credit at closing, and the first mortgage payment would still be due the first of the next month, as if they had closed at the end of the previous month.
Otherwise, buyers and sellers should schedule the closing to work with the timeline of possession or vacation of previous residences, or any other issues. Closing earlier in the month, and getting possession quickly, would enable the buyers to make any decorating changes or improvements before moving into the home, which is quicker and less costly to accomplish if it isn't occupied.
Kaye Hirt Eggleston
Carpenter, REALTORS®
Question: Is there a difference between a homeowner's association and a neighborhood association?
Answer: The only real difference between a homeowner's association and a neighborhood association is the source of the group. A homeowner's association is legally established by a builder or developer. The builder or developer maintains ownership of the fees collected and handles any grievances until mandated by the covenants or by-laws. Usually, this is when 80 percent of the homes are sold, or whatever has been formally and legally determined.
I, personally, live in a condominium community where they are almost done building new units. Therefore, it only will be a short time before the association will be turned over to the homeowners. They will then elect officers, maintain secure accounts to receive and disburse payments, and maintain the community as mandated in the by-laws. Membership is usually mandatory of all homeowners.
A neighborhood association, on the other hand, grows out of concern of area homeowners and works to collectively maintain a neighborhood. Participation is usually voluntary, with minimal dues. For example, I used to live in a neighborhood with an annual association fee of $15. The money was used to fund a Fourth of July picnic, awards for the best holiday decorations, and flower planting in the spring.
One season, a homeowner erected a 100-foot ham radio tower. Since the neighborhood association had no power to enforce the covenants and restrictions that could have limited the situation, nothing could be done about the problem. The neighborhood association decided to take legal action to make membership mandatory—they legally filed the required documents, and got approval from the necessary homeowners. Now, association dues become a lien against the property if they are not current when title is transferred, and the neighborhood association has the power to enforce all covenants and restrictions. Throughout the transition, the dues only rose to $25 a year. Since there are no clubhouses, pools, tennis courts, or other amenities to maintain, the primary expense continues to be flowers for neighborhood entrances, and awards for contests. And now, the situation with of the ham tower and other grievances can be addressed.
Kaye Hirt Eggleston
Carpenter, REALTORS®
Question: Please help me with an out-of-town problem. Our daughter is attending IUPUI on an athletic scholarship next year. My wife and I will be in Indianapolis at least two to four days per month for the next four years. Including hotel rooms and dinners out, we probably will spend $600-$700 a month. Would it be more cost effective to purchase a condo in the city? Assuming we spend $100,000-$125,000 for a condo downtown, would you envision a good possibility for resale in four years?
Answer: Looking at ways to make your money work for you while your daughter is in Indianapolis is a smart move. Unfortunately, there are only two or three downtown condominiums that would fall into your price range. The average price of condos in the downtown area ranges from $170,000 to $600,000. Rather than limiting your search to condos, I would encourage you to also consider buying a house—it will provide the best resale value in the future, at a comparable price.
Anne Elsbury
Century 21 Realty Group Elsbury
Question: Now that our children have moved away from home, my husband and I can't decide what to do with our family home. Should we stay and remodel, or should we move into a new home?
Answer: For empty nesters, whether or not to leave their original home is a very personal choice. If you have always been socially active and travel often, you may want to move when you retire. Downsizing to a smaller home will allow more free time to enjoy retirement, or even allow you to move to a warmer climate. However, many people cannot bear to move because of the memories, and continue to live in and maintain their family home. As they age, they may opt to hire help to assist with the property's upkeep. Some people stay in their family home during the summer and close it up in the colder months to enjoy winter in the South. If you decide to downsize, a condo or a zero-lot-line home is your best option. They allow you all the benefits of owning a home with none of the upkeep.
A REALTOR® will help you evaluate all your options as empty nesters by looking at your lifestyle and what you want and need from your home. If you choose to move out of state, we find a REALTOR® in the new state that specializes in assisting older clients. That way, we make sure you are treated with the respect and care that is essential in such a big move.
Lana Detro
Ala Carte Realty
Question: Can I lease my home while it is listed for sale?
Answer: Signing a lease contract while offering a property for sale will place a limit on the occupancy that can be offered to a buyer. Once a lease has been signed, the rights to the real estate are subject to the tenant's rights created by the lease. If the property for sale is an investment, or rental real estate, then leasing the property could be to your advantage. On the other hand, leasing owner-user real estate will normally inhibit the marketability. While bound by a listing agreement, most traditional listing contracts—those offering an exclusive right to sell—require written notification to the REALTOR® before a property is leased. Your REALTOR® is clearly in the best position to offer advice on how leasing might impact your chances of finding a buyer. If you think a potential buyer in your market will be purchasing with the intent of occupying the property, then leasing creates an occupancy issue that could dampen the marketability. Don't forget, when you give up occupancy of a home, you run a risk that damage might occur in your absence. For the best results, weigh your options carefully with the input of someone familiar with your market.
David B. Cain, MAI, CCIM
West Clay Realty
Question: What exactly are the BLC™ listing service codes I am seeing everywhere?
Answer: Broker Listing Cooperative™ (BLC™) listing service codes help to accurately describe the rooms and other physical features of a property. Prospective buyers usually ask for a copy of the BLC™ listing service information sheet to learn more about a specific home. These sheets were initially designed for computers, but are now used extensively by REALTOR®. In BLC™ listing service code, 3C-A translates to "an attached 3-car garage," and the letter B can mean either "basement," "broker" or that the seller is accepting back-up offers. Even professionals can find these short-form codes to be a bit confusing.
The best way for consumers to understand BLC™ listing service codes is to have their REALTOR® sit down and thoroughly explain an BLC™ listing service listing sheet. I usually meet my buyers for a consultation to qualify their price range, learn about their specific needs and wishes before showing them any homes. Then, I print out some of the choices that fit their needs and go over the BLC™ listing service sheet to help them learn as much about the homes as possible. From there, we select the properties to view. Usually we can sort out the best choices from the beginning and not waste a lot of time looking at homes that don't really fit the family's needs.
Anne Elsbury
Century 21 Realty Group Elsbury
Question: How can I find the right moving company for me, and how far in advance should I call them?
Answer: Whether you are moving across town or across country, I suggest calling three or four companies for a written quote. Finding a reputable moving company is extremely important, so before selecting a quote, check with the Better Business Bureau and make sure there are no complaints against the company. Seek recommendations from friends and coworkers—they can be a great resource. Also, be sure to start looking for your moving company at least 30-45 days prior to your anticipated move. Most moving companies are extremely busy during the last week of the month, so it is necessary to plan ahead and secure a reservation for the date you want.
You can then begin to compare the companies' quotes. Don't just look at price alone—you need to evaluate the company's level of service, their stability and reputation. Scrutinize the quote carefully. Some companies may include packing services, while others require that you pack your belongings yourself. Determine what package best meets your needs, but make sure you are comparing apples to apples. One important safeguard of a professional moving company is insurance. Some companies offer special coverage to belongings during transit for an additional fee. If you want further security for your personal items, you can always purchase additional insurance through your own insurer.
Greg Overton
Merit Realty, Inc.
Question: We are weary of pouring money down a rat hole, namely the 20,000-gallon in-ground swimming pool in our backyard. The annual increase in our electric bill, plus the never-ending cost of chemicals is becoming prohibitive. Our pool is cement with a 3-foot metal band around the inside perimeter and topped off with a vinyl liner surrounded by a cement deck. We would like to fill it in. What are some options? One suggestion has been to rent a demolition tool, break up the concrete, fill the opening with the concrete and then top it off with topsoil. Another, more expensive, suggestion was to have all of the materials hauled away and then fill in the huge opening. Any suggestions? In either case, what do we do with the metal band, pump, filter, etc? Also, will this have a negative or positive effect on the resale value of our home?
Answer: Not unlike other property amenities, a pool takes the right buyer to recoup on the investment. The market also plays an important role in the value added. A pool requires a buyer with disposable income, and a willingness to spend this income on the pool. In a market where the buyer carries a maximum debt load, a pool is probably not a feature that will offer much value. Moreover, community pools that are found in some subdivisions can diminish the value of a private pool. If you are in a market where buyers have borrowed less money, you might see the value of a pool on the rise. In other markets, this feature represents an expense that can cause a buyer to choose another home or at least pay no more for a home with a pool. Deciding to remove the pool might reduce some negligible value contribution, but the savings of ownership costs—including real estate taxes—might offset it. Consider talking to a REALTOR® that is active in your market about the value of a pool in a potential sale.
If you decide to remove the pool, you should get quotes for removal from a pool specialist. Most companies that install pools will also have suggestions for removal. Should you choose to do the removal yourself, be sure to check with the local zoning board to obtain the required permits. This authority can also point you in the right direction regarding what can be put in the opening. If filling in the pool with concrete is allowed, that is usually the most cost-effective option. However, if you are filling the hole with concrete and topping it off with topsoil, you can expect settlement over time that will require additional fill. As for the metal band, pump, filter, etc. you mentioned, again check local restrictions before you put them in the hole, too.
David B. Cain, MAI, CCIM
West Clay Realty
Question: My husband and I recently purchased our first home. Only a few days after we moved in, our new neighbors asked us what we thought about the "upcoming changes" to the neighborhood. Apparently, a very busy, major thoroughfare is being extended within a few feet of our property. Our quiet neighborhood is soon going to be polluted with noise and traffic. We were devastated—and angry. The seller knew about this, but didn't tell us. (We were told a letter was sent to all residents a few weeks before we closed on the house.) Our REALTOR® says she didn't know about the expansion, and we don't know if the seller's REALTOR® knew, but his client definitely did. We feel deceived. Do we have any options besides living with the congestion or looking for another home?
Answer: In Indiana, the seller is required to fill out a seller's disclosure and give it to the buyer before writing an offer on a property. The disclosure asks if any government has given notice for any alteration on or near the property. The disclosure form is signed once again before closing, stating that the information contained in the seller's disclosure is still true. If the sellers did know about the development, and did not notify you on the seller's disclosure form, then the seller was fraudulent.
John T. Creamer
Century 21 At The Crossing
MIBOR President 2002
Question: "How far in advance should I turn on the utilities in my new house?"
Answer: If your "new" home is a pre-owned home that is new to you, the transfer of utilities to your name is something you will need to work out with the sellers. For example, if the signed purchase agreement gives you possession of the property on the day of closing, it would be necessary for you to contact all of the utility companies a few days prior to your closing to have them transferred into your name. If the seller is going to retain possession for a period of time after closing, then they should remain responsible for the utilities until their final day of possession. About three to five days prior to the change of possession, contact all of the utility companies to have the service put into your name. It is important and to your benefit to make a smooth transition, because if the utilities should happen to get shut off during this change in ownership, you will be required to pay an additional fee for reconnection.
If you are purchasing a new home from a builder, you should contact the utility companies about three to five days prior to closing to have the service transferred from the builder's name to your name on the day of closing. Most builders allow a grace period of three to seven days after closing to change the utility services—make sure you contact your builder's representative regarding their specific policy. Once again, a smooth changeover will prevent you from having to pay costly reconnection fees.
Greg Overton
Merit Realty, Inc.
Question: I'm going to be moving to an urban area, but don't plan on living there forever. I'm debating whether to rent an apartment or to buy a home (house, townhouse, condo, etc.), but I'm not sure how long I would have to live there to get a return on my investment if I buy a home. If I were to live there for, say, six years, would buying a home make sense, or would it be cheaper in the long run to get an apartment? Given the current housing market, roughly where would the cutoff term be for buying a home vs. renting an apartment?
Answer: Unfortunately, real estate markets are not predictable with certainty. Like the stock market, you expect your investment to increase in value over time, but the market doesn't always cooperate. Overall, however, it is generally accepted that buying offers the potential for appreciation caused by market conditions, equity build-up resulting from paying down your debt over time, and potentially certain tax advantages whereas renting does not. The tax advantages and amortization of your debt (systematic reduction of principal loan amount over time) might be sufficient to warrant owning instead of renting even if your home didn't appreciate over time.
The best advice would be to consult someone knowledgeable in the market where you are moving and ask for empirical evidence as it relates to sales and resales of homes from the past two to six years. Look at this information and see if the market has trended upward over time. Moreover, you should collect any information that might suggest what the future prospects are for this market. This type of data might be available from a REALTOR® or an appraiser that is active in this market. The data should, however, be specific to this market in order to show any relevance. You must understand that past performance is no guarantee of future appreciation, but is often a better investment if the market shows historical signs of appreciation or at least stability versus declining values. Secondly, you should seek advice from a tax specialist to see if any income tax advantages would be created from a purchase compared to renting. Armed with this information, you should be in a better position to evaluate the decision of renting versus buying.
David B. Cain, MAI, CCIM
West Clay Realty
Question: I am very frustrated. We were set to close on our new home, and the seller now wants to set up a new closing date. They won't even give us a reason for the change. Can we get them to come down on the price of the house because of the hardship of this delay, or is there anything else you think that would help us?
Answer: Few things are as frustrating as dealing with someone who suddenly wants to change the terms of an agreement after everything has been settled and all parties have signed the contract. The closing date is an especially critical date, as it is when title to the property actually transfers. Many things are usually tied to the closing date—like moving in—and changing it can cause hardships for the affected party. Your situation is a little more frustrating since the seller has given no reason for wishing to change the closing date, and I presume that the seller wants to close later than specified, not sooner.
The purchase agreement used by most Indiana REALTOR® states that if the closing date is not met, "this Agreement shall terminate unless an extension of time is mutually agreed to in writing." Your specific contract may or may not have a penalty built in. If it does, it could be imposed against the seller and you may have some opportunity for compensation.
The seller needs to be reminded that he has signed a binding contract agreeing to a specific date for your closing. Your REALTOR® and the seller's REALTOR® should try to work it out so that you are able to close on the date specified in your contract. The REALTOR® may be able to negotiate some monetary relief for you, and if the seller understands what hardships you might incur because of the delayed closing, it might help.
However, if the seller will not or cannot meet the specified closing date, you should seek advice from an attorney knowledgeable in real estate law. Legal action may be your best recourse if the seller is unwilling to meet his obligation to close on time. Good luck!
Dave Goff
Carpenter, REALTORS®
