Buyer & Seller Tips

Today's Top Real Estate News Provided by Inman News 2/6/2012  5:11:04 AM

Tips for replacing air ducts in slab foundation home Multiple broken joints may require rerouting system overhead Paul Bianchina Inman News® Q: We have recently discovered that the air ducts in our slab are breaking down; and it was recommended that we consider rerouting the air ducts to the attic. What are the advantages/disadvantages of having air ducts in the floor vs. overhead? Also we have heard that there are now several companies that can coat the inside of your air ducts in the floor with a paint-like substance that seals off any breaches in the system, therefore leaving the system in the floor vs. rerouting. Have you heard of this procedure, and, if so, is it something you would recommend? We feel that rerouting the system is very expensive because not only would we have to pay for the new air duct system in the attic, but also we would have to purchase a new heating unit that can be placed horizontally in the attic. The rerouting also would have a "domino" effect in that we would need to consider replacing all of our flooring to cover the old register holes. Another solution that was mentioned is a split system. What exactly is a split system, and what advantages/disadvantages are there in a split system? --Susan C. A: You have a couple of different questions here, so I'll try to answer them in order: 1. Warm air rises and cool air falls through a natural convection process. So, ducts that are in the floor tend to be a little more effective in distributing heated air throughout a room. Ducts that are in a ceiling tend to be a little more effective in distributing cooled air throughout a room. 2. If your ductwork is breaking down under the slab, a coating is not going to do you any good. There are companies that can use thermal imaging cameras to pinpoint "hot spots" in the floor where a duct might be broken, allowing you to cut into the slab at that point and make a repair. But if you have more than one bad joint, that's probably not going to be cost effective. Unfortunately, at this point your best bet is going to be to replace the ducts, and the most cost-effective way to do that is to reroute them overhead. 3. Your heating contractor can advise you on the best way to seal off the old ductwork. As to the holes in the floor, you can simply leave the old registers in place as camouflage until it comes time to replace your flooring. 4. A split system is simply one that has a furnace located somewhere inside the house, and an air conditioning unit located somewhere outside the house. The two share common ductwork, wiring, plumbing and other components, and are controlled by a common thermostat. Split systems are very common for houses requiring both heat and air conditioning, but they do not offer an alternative to replacing your ductwork. There are, however, through-the-wall units that combine both heating and air conditioning components and do not require duct work. These are the type of units commonly seen in hotel rooms. They are intended for individual rooms or zones of the house, and while not as convenient as central heating and air conditioning systems, they might offer you an alternative to a new furnace and duct system. Q: My home, built in 1971, had 6 inches of loose-fill fiberglass insulation installed. This has compressed to about 4 inches. Knowing I needed more insulation in my attic, this past June, I contracted with a local contractor (licensed in Maryland). The workers installed about 1 to 4 inches of loose cellulose in my attic, over the existing fiberglass, totaling 6 inches of insulation, and covered it with a radiant barrier, which they call Attic Mirror. It looks like aluminum foil. In the section of attic that is a storage area, they also installed this radiant barrier on the ceiling of the attic. They told me I needed a total of 12 inches of insulation for the R-38 factor, but they installed only enough to equate to 6 inches of insulation. They owe me 6 more inches of insulation. I didn't like what I saw when I returned home, so I hired an inspector who was shocked at what they had done, and suggested that the radiant barrier be removed due to moisture concerns, and to install batts for the additional 6 inches of insulation. I contacted the contractor, telling the company that the radiant barrier must be removed, and the remaining 6 inches of insulation due me is to be batts. The contractor told me the company does not have batts. I have paid in full for their service, and this problem is still unresolved. Do you have any suggestions as to what I can do here? --Catherine B. A: First, you need to go back to your original contract with this company. They're a licensed contractor so they had a legal obligation to provide you with a written contract. Within that contract there should have been some specifications about what they were going to do. 1. If the company agreed to provide you with insulation to a specific R-value, and they haven't done that, then they're in default of their contract. I don't like the fact that the contractor blew cellulose over fiberglass. Your fiberglass was already compressed, and the weight of the cellulose is going to compress it even more. I would have preferred to see the workers simply blow the proper level of fiberglass and be done with it. But either way, they need to complete the work to the specifications of the contract, and document that they have achieved a full R-38. I like the fact that you have an independent person doing the documentation. 2. If the contract specifies blown-in insulation, and that's what you agreed to, then the contractor is really under no obligation to come out and install batts. The company is, however, required to meet "industry standards" for the installation, and if the workers incorrectly installed the material then they have an obligation to remove it and reinstall it correctly. It sounds like that's the case here, which you've documented with the home inspector. 3. I'm not a fan of foil barriers in the attic, and personally I'm not convinced they're effective. Again, incorrectly installed they can become a vapor barrier that can create moisture problems. 4. I'm sure you know this now, and I hate to give you a hard time about it after the fact, but for the future you should never pay for remodeling and repair services until the job is completely done. You can pay a reasonable deposit before the job starts, as well as in-progress payments as warranted, but now that the contractor has all your money, he has no incentive to come back out and complete the job. All that being said, your first step is always to contact the contractor, which it sounds like you've already done. Since the contractor appears unwilling to make it right, your next step is to file a complaint with the Maryland contractor's board, which has an arbitration service that can step in and work with you and the contractor to help you resolve the matter. Remodeling and repair questions? Email Paul at paulbianchina@inman.com. All product reviews are based on the author's actual testing of free review samples provided by the manufacturers. Contact Paul Bianchina: Email Copyright 2012 Paul Bianchina

Mortgage help for homeowners with hospitalized child Bankers group to support charity in 3 new US locations Steve Bergsman Inman News® Last autumn, Mortgage Bankers Association President and CEO David Stevens announced that his organization had created a new, nonprofit entity -- MBA Open Doors Foundation -- to be the umbrella operating unit for all the MBA's philanthropic activities. The first charity the MBA chose to support was Spare Key, a Bloomington, Minn., nonprofit that helps families with critically ill or injured children by making a mortgage payment on their behalf. "Helping families who are current on their mortgage but under incredible financial pressure while dealing with the hardest emotional challenge a parent could ever have is just the right thing to do," said Sarah Tinsley Demarest, executive director of the MBA's new charitable group. "Parents want to be with their child, but they also want to hold on to their home. This gift allows a parent to do that, so they don't fall behind on their mortgage." Demarest added, "It's for parents who are maxed out on taking leave from work. (It allows them to spend more) time with their child in the hospital." Spare Key is a unique program founded in 1997 by Patsy and Robb Keech, whose son was born with a genetic birth defect and endured many hospitalizations during the first two years of his life. The Keeches were torn between wanting to be with their child in the hospital and going to work to maintain financial stability. They chose to be with their son, so family, friends and strangers raised money during this time of crisis to pay the Keeches' mortgage so they wouldn't lose their home. After their son died, the Keeches vowed to help other families in Minnesota who were in the same straits, and that was the start of Spare Key. In 2010, Spare Key made 140 payments; in 2011, it made a record 201 payments. Spare Key makes only one mortgage payment per family in a calendar year. "We know, for families in more dire financial straits, this may not be exactly what they need, but for those families who need a bit more time in the hospital, who need a little bit more money in their pocket, who need that extra support, it's what we do," said Erin Werde, Spare Key's director of development and communications. The one qualification to be eligible for Spare Key is that the a child must be in the hospital at least 21 out of the past 90 days, which means the charity serves kids that are at the more severe end of illness of injury. Of the children assisted, 47 percent had birth defects, 16 percent cancer, 13 percent prematurity, and 10 percent leukemia and accidents. About 75 percent of the Spare Key children are under 5. In October, Werde got a call from a mother who lived in northern Minnesota, in a rural area far from a hospital. Her daughter, 6, had been complaining of headaches, which turned out to be brain tumors. Not only did the mother and daughter have to travel from northern Minnesota to Minneapolis -- they also traveled to Boston for treatments. Spare Key paid for a month's mortgage. As for the girl, she's doing much better. Generally, the initial contacts with families are through hospital social workers. "We've been around the community long enough now that we have been able to form great relationships at the hospitals," Werde said. "When a pediatric social worker sees a child has been in the hospital for an extended period of time, (the worker knows to) refer the families to Spare Key." A family fills out an application, which can be obtained from the social worker or online, and then the Spare Key program director verifies all of the information: whether the family is current on the mortgage; length of hospital stay; and even that the house is actually located in the state of Minnesota. Once those things are in place, a program committee reviews the application to double-check whether it fits Spare Key's criteria. When all that happens, Spare Key will make a mortgage payment with a cap of $1,200 directly to the mortgage company. Perhaps the most controversial part of the Spare Key program is that it makes only one mortgage payment per calendar year. Also, the $1,200 cap may not come close to covering some families' monthly payments. "We have discussed changes, but on our estimation there are about 1,000 families within our program parameters that we could be serving every year," Werde said. "There are other programs out there that will provide other types of support with bills. We highly encourage our families to seek other sources of support, as we are relatively narrow in our focus." The MBA will follow the original Spare Key's formula and it, too, will stick to the "just one mortgage payment" formula. What the MBA intends to do is support three new chapters of Spare Key. The first will be in the Washington, D.C., metro area, and the second two locations have yet to be announced. All should be open sometime in 2012. "Our president, David Stevens, had heard about Spare Key some years ago and has been supporting it personally, as well as some of the other MBA members," Demarest said. "Since the program was announced, we have had incredible outreach from our members wanting to be involved. We are trying to do this so the actual monies raised will go into mortgage grants and assistance, so we are looking where we have need and where we have members who will help us with the fundraising." Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com. Contact Steve Bergsman: Email Letter to the Editor Copyright 2012 Inman News

IRS crackdown on identity theft Real Estate Tax Talk Stephen Fishman Inman News® Here's an easy way for an identity thief to make money: Use the victim's Social Security number to file a forged tax return and claim a refund. The fake return is usually filed early in the tax season, before the real return is filed. You may be unaware that this has happened until you file your return later in the filing season and discover that two returns have been filed using the same Social Security number. The Internal Revenue Service is well aware of this problem and is trying stop it. Last week, as part of a stepped-up effort against refund fraud and identity theft, the IRS and the U.S. Justice Department conducted a massive national sweep targeting suspected identity thieves. The IRS has also stepped up its internal reviews to spot false tax returns before tax refunds are issued. How do you know if you're an IRS identity theft victim? One way is if you receive an IRS notice or letter stating that: more than one tax return for you was filed; you have a balance due, refund offset or have had collection actions taken against you for a year in which you did not file a tax return; or IRS records indicate you received wages from an employer unknown to you. If you believe someone may have used your Social Security number fraudulently, notify the IRS immediately by responding to the name and number printed on the notice or letter. You will need to fill out the IRS Identity Theft Affidavit: Form 14039. If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Protection Specialized Unit at 800-908-4490. How to reduce the chance of becoming a victim The IRS recommends that you take the following stops to reduce the chance of becoming an identity theft victim: Don't carry your Social Security card or any document(s) with your Social Security number on it. Don't give a business your Social Security number just because they ask. Give it only when required. Protect your financial information. Check your credit report every 12 months. Secure personal information in your home. Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts. Don't give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with. Stephen Fishman is a tax expert, attorney and author who has published 18 books, including "Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors." He welcomes your questions for this weekly column. Contact Stephen Fishman: Email Letter to the Editor Copyright 2012 Inman News

Don't expect rent refund for 'illegal' lease Rent it Right Janet Portman Inman News® Q: If my landlord is required by the city to obtain a business license in order to have rental properties, but chooses not to, is the lease agreement that I signed with her a legal and binding contract? It seems to me that if she is running an illegal business, she can't enter into contracts that bind her business. --Steven D. A: The gist of your theory is that failing to get the legally required business license means she is running an illegal business, which means her business contracts are unenforceable. I don't think you would likely prevail with this argument. A court will void a contract if it is illegal, or the parties were defrauded. Let's take the first possibility: An illegal contract is one: with an illegal purpose (such as a contract for the purchase of cocaine) in which the consideration, or payment, is illegal (for example, paying with stolen merchandise or funds); or both, like an extortion agreement (obtaining money or property by threat to a victim's property or loved ones, intimidation, or false claim of a right, such as pretending to be an IRS agent). A fraudulent contract is one in which an important term has been deliberately misrepresented or a party has been deliberately misled. For example, a landlord who rents a house for immediate occupancy, but fails to mention that the current tenants have refused to move and have forced the landlord to file for eviction, has seriously misled his would-be tenants. They could probably walk away from the lease without owing any money, no matter what the lease says or doesn't say about the landlord's obligations. Your landlord's lease doesn't fit into any of these scenarios. There are other reasons for courts to invalidate contracts, however. If the contract violates public policy, particularly if it's a policy intended to protect one of the contracting parties, it won't be enforced. The best example of this is a usurious loan agreement (one that charges exorbitant interest). Your issue doesn't seem to fit into this category either. Perhaps the better way to think about the validity of your lease is to consider why cities have imposed license requirements. For some cities, the requirement is purely a revenue-generating scheme, with licenses granted to every landlord who applies for one, regardless of the quality of that landlord's business practices or the suitability of the rental properties. Other ordinances couple the fee with oversight, requiring landlords to submit to inspections and attend classes on how to comply with landlord-tenant laws before they're granted the license. Let's suppose that the licensing scheme in your city is of the first type, just a way to generate income for the city. Because the license isn't tied to protecting any tenant rights or encouraging good landlord behavior, a landlord's failure to get one is rather a non-event, as far as the tenant is concerned, and I doubt that a lease would be voided for this reason. In other words, by failing to get the license, the landlord has simply violated a local ordinance. If she failed to file tax returns, a federal requirement, she'd also be a "lawbreaker," but that would not invalidate the leases she had created. But if getting a license requires passing inspections and getting educated, sidestepping a licensing requirement might be significant as far as the tenant is concerned. Even if a landlord doesn't falsely represent that she's obtained a license, a tenant might be justified in assuming that she has done so. When the tenant learns that there's been no inspection, particularly if the property is substandard, the tenant might have grounds to not only complain about the conditions (he can always do that), but also to treat the contract as void. Keep in mind that even if the lease is voided, a court would not allow "unjust enrichment." For example, a tenant would not normally be entitled to the return of rent already paid for time the tenant spent living in the rental. Q: Our lease included a clause in which we agreed to a separation fee of two months' rent, after 60 days' notice, if we moved out early. We bought a house in October, gave notice (and paid rent) on Nov. 1, and moved on Nov. 15. The landlord re-rented the apartment almost immediately, with a new tenant set to move in on Jan. 10. While we're certainly prepared to pay rent through Jan. 10, we bristle at the thought that the landlord will be collecting double rent for the period of Jan. 10 to March 1 (when our separation fee runs out). Is this legal? --Alex H. A: In most states, landlords are required to "mitigate damages" when tenants break a lease with no legal justification. This means that they must make reasonable efforts to re-rent the unit, and once they find a new tenant, the original tenant's responsibility for the balance of the rent ends. The majority of these states have announced their rule in a statute, which may include a statement advising landlords and tenants that any attempt to contract away this duty will not be enforced by the courts. You can see why legislators would add this protection: It hardly does a tenant any good if a landlord can present the tenant with a lease that waives an important right the legislature sought to establish, especially because landlords are so often in the driver's seat when negotiating leases and rental agreements. The contract you signed requires that you pay four months' rent after giving notice, regardless of the landlord's success in finding a new tenant. In some states, however, including New Jersey, Ohio and Utah, the mitigation rule is a common law rule: one that is contained in a court opinion, fashioned by judges after they have studied their state's historical treatment of the issue. These states are less likely to have a companion "you can't waive this" rule, because unless the question of waiver was part of the case, a court will usually not go out of its way to pass judgment on issues not before it. When courts reach the waiver issue, they may invalidate the waiver on the grounds that depriving a tenant of the benefit of the mitigation requirement is against public policy. Let's assume for now that you're in the latter category: You've got the protection of the mitigation rule, but no clear legislative or judicial prohibition against waiving it. You may be in for some creative lawyering -- calling upon your state's consumer protection laws, for example -- to invalidate this contract. You might find some help in similar cases. You may learn, for example, that a court in your state has ruled that waiver is not allowable in a commercial leasing context. By extension, the same rule ought to apply to residential leases, you'd argue. In fact, you can make a pretty strong case for extension, pointing out that residential tenants are likely to have less opportunity to negotiate their leases and get such a clause taken out. When parties to a contract (including a lease) have no meaningful way to negotiate its terms, the contract becomes one of "adhesion," which many courts are loath to enforce. One way to impress upon your judge the inadvisability of allowing landlords to avoid the mitigation rule by contract would be to point to Florida, which also has a mitigation rule. Several years ago, Florida passed legislation allowing landlords and tenants to agree to a lease-breaking fee of two months' rent, but only when the issue has been clearly presented to the applicant as an option that can be declined without fear of being rejected on that basis. You might argue that if landlords in your state are to be allowed to sidestep the mitigation rule, that ability should be decided by legislators who can build in safeguards to protect tenants who don't want to waive their rights. Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com. Contact Janet Portman: Email Letter to the Editor Copyright 2012 Janet Portman

4 steps to buying a house in 2012 REThink Real Estate Tara-Nicholle Nelson Inman News® Q: I am on a mission to buy a home. I've wanted to own a home my entire life, and thought I would miss the opportunity to buy while the market was down, because I had no real savings when the market crashed. I think I'm ready, though, and prices still seem low. What should I be doing now to make this happen in 2012? A: Let me count the ways -- I mean, the things -- you can and should be doing now if you want to buy this year. The recession has done lots of favors for buyers-to-be, including dropping prices and interest rates to bargain levels. But it has also created a lending and housing market climate in which loans are tough to get, tensions about buying into a down market run high, and transactions are harder and longer to close than they have ever been. If I were talking to a friend who wanted to throw a New Year's 2013 party in her new home, here are the things I'd tell her to do, stat: 1. Fix credit problems. More deals than ever are dying on the vine, and credit problems are a top reason home-sale transactions fall out of escrow. Detect and correct errors on your credit report now by reviewing the federally mandated free reports you can get at AnnualCreditReport.com. 2. Study up. Do some research, both online and offline, into things like: Areas: Start your online research into decision points like tax rates, school districts, neighborhood character and even prices in various areas. Check out NabeWise.com for some local insight into neighborhood flavor and personality. When you start connecting with local agents, ask them to brief you on neighborhood market dynamics. They can give you a deeper view into need-to-knows like how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search vis-à-vis what you have to spend. Agents: This is the perfect time to ask your family and friends for a referral to an agent they know, have used and love. Then, follow up by doing an online search for the agent's name and seeing what sort of online reviews and activities you find. When you've narrowed the field down to a few, call them up and set up a meeting to find out if you're a good fit. Distressed properties: In some areas, more than 40 percent of the homes on the market are short sales and foreclosures, and they involve a very different timeline and set of facts than traditional home sales. Read up and talk with the agent candidates you interview about what you should expect from these types of listings, to minimize surprise and manage your expectations way in advance. 3. Save even more. Sounds like you've worked hard for a number of years to save enough cash that you think you're in the clear when it comes to funding your down payment and closing costs. Studies show that after months of saving, people often let up and relax into a spending season. Even at your early stage in the process, it's easy to start noticing and buying the furnishings and touches you want to install in your new home. While I don't want you to feel deprived or forgo amazing and affordable deals on things you know you're going to need, I assure you that no matter what amount of cash you have on hand, when you start house hunting, making offers, closing your transaction or moving in, the time will definitely come when you'll wish you had more. You might want to ratchet up your offer a bit to best another buyer, or you might just end up with a place that needs a little sprucing up. It might be months before you know exactly what you'll need extra cash for, but now is not the time to press the gas pedal when it comes to your monthly spending. 4. Purge. Now's the time to sell, donate or give away as much of your junk or, excuse me, precious personal possessions as you can. Use the proceeds to pad your cash cushion, or tuck the donation receipts away for your tax records next year. Start here, and chances are good that your house hunt -- and purchase -- will be in full swing by spring, if not sooner. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.                                                     Contact Tara-Nicholle Nelson: Facebook Twitter Email Letter to the Editor Copyright 2012 Tara-Nicholle Nelson

5 tools and 12 weeks to prosperity Book Review: 'The Prosperous Heart: Creating a Life of "Enough" ' Tara-Nicholle Nelson Inman News® Book Review Title: "The Prosperous Heart: Creating a Life of 'Enough' " Author: Julia Cameron and Emma Lively Publisher: Tarcher/Penguin, 2012; 240 pages; $25.95 I read a lot of books -- over 200 just in the last three years. I bring up that number by way of pointing out the scope and significance of this statement: one of my top 10 favorite books of my entire lifetime is "The Artist's Way." It might sound artsy-you-know-whatsy, but since its 1992 publication this masterwork has served over 3 million artists and others who need to be -- or simply want to be -- creative, with its powerful tools and insights for getting and staying unblocked. While it has served that role in my own life in my work as a writer and creator of digital content, "The Artist's Way" has been at least equally as impactful in my entrepreneurial, personal, financial, and career endeavors. The ability to think flexibly and innovatively in crafting original solutions to problems has been of great, great value (and has probably saved my bacon more than a few times). But I have long thought of my personal non-artistic uses of the book as rogue, or off-label, specifically when it comes to matters of finance and business. "The Artist's Way" was intended for artists, after all -- it's not called the "Businesswoman's Way" or the "Money Maven's Way." So imagine my delight and surprise to learn that the creator of "The Artists' Way," Julia Cameron, was releasing a title on that topic nearest and dearest to my heart: prosperity. In her new book, "The Prosperous Heart: Creating a Life of 'Enough' " (Tarcher Penguin, 2011),Cameron and co-author Emma Lively aim to first reset readers' understanding of prosperity as a spiritual matter, not a monetary one. They carve out a new definition of prosperity as having faith, satisfaction and "enough" -- "having a life beyond need and worry." Financial healing, they make sure to point out, is included, but is only one element of true prosperity. After dealing with definitions, Cameron and Lively provide a set of five tools to help readers generate this expanded sense of prosperity. The first two, dubbed "Morning Pages" (three pages written longhand, stream of consciousness, first thing every morning) and "Walking" (literally, taking a 20-minute walk two or more times a week) are tools used in "The Artist's Way" to unleash creative flow. In "The Prosperous Heart," Cameron slightly repositions them as tools for cultivating emotional and financial clarity, especially when it comes to understanding where your values and your actions are not in alignment, and healing that disconnect. The next two tools are much more financial in nature, but are still uber-simple: "Counting" (tracking every dollar and cent that flows in or out of your hands and accounts) and "Abstinence" (refraining from creating new debt, with exceptions for car and home loans that are affordable vis-a-vis your monthly income). The last tool, "Time-Outs," are like micro-meditations --  5-minute a.m. and p.m. quiet times that we can use as check-ins with ourselves, our feelings and our choices (about finances or otherwise) or to pray, meditate, or otherwise get "in touch with a deeper, kinder, wiser part of ourselves." Beyond their utility for their intended purposes, all the tools can also be used to help detect where the bulk of your own personal challenges in the prosperity realm may lie. The more resistance you feel to the idea of practicing any given tool, the authors say, the more valuable that tool will be in creating the prosperity you seek. (This mirrors precisely the lesson I learned long ago from an old yogi from India, who brusquely overruled my protests that I'd been too tired to come to class one evening by declaring that the times when I most feel like staying at home are the times I stand to gain the most by coming to class and practicing, anyway. How true that has proven to be in the years since. When I'm too tired to worry about whether I'll be able to balance on one foot, I've found that it is much easier to do so.) After introducing readers to these tools and making the case for incorporating them into our daily routines, Cameron and Lively provide a 12-week course in prosperity, touching on everything from: inventorying and examining your spending habits, money fears, relationships and past losses; trusting in a higher power and in yourself to provide for your wants and needs; and practicing kindness, forgiveness and velocity: the authors' term for not too little and not too much action. If spiritual matters or references, of even a nonspecific, nondenominational nature, tend to frustrate or offend you, "The Prosperous Heart" might not be for you. One of its core premises is that a higher power exists that wants to and will provide for you. While the authors carve out an extremely broad realm of how individual readers might conceive of that spiritual force, some might find that to be a turnoff. If, on the other hand, you do believe that some sort of higher power does exist in the universe, and you have been plagued by money problems or worries, have experienced hard times, or simply crave to feel at ease and abundant in the financial realm of your life, it would be a serious strategic error to omit "The Prosperous Heart" from your library. It should sit side by side on your bookshelf or in your e-book reader with other authoritative titles about organizing, saving and investing your money. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com. Contact Tara-Nicholle Nelson: Facebook Twitter Email Letter to the Editor Copyright 2012 Tara-Nicholle Nelson

Bracing for the 'Big One' Tips to secure structural panels in seismic zones Bill and Kevin Burnett Inman News® Q: I'm an architect who has also done my fair share of swinging a hammer. Recently, you recommended fastening shear ply with screws. The California Building Code and other U.S. building codes have always had schedules for shear wall nailing (although they do permit other types of fasteners). My structural engineers have always said that the shear value of nails is far better than the shear value of screws. The screws are far more brittle. This has been borne out in my own construction, where screws have snapped off while being driven. Because the person writing is in a high-risk seismic area, you were right to recommend plywood and to fasten it to the bottom plate. But he also needs to have the best fasteners for the job: nails. A: You reference a recent column where a reader asked for clarification about diagonal bracing ("Don't expect miracle from diagonal bracing," Dec. 28, 2011). He lives in a high-risk seismic zone. We explained how the bracing is constructed but suggested that for a better job he consider installing structural plywood shear panels instead. Although we proposed screws as alternative fasteners, we agree that nailing the panels according to a code-specified nailing schedule is the tried-and-true method. Shear panels refer to structural panels that make up exterior walls. They provide protection from the lateral forces of earthquakes. They are normally constructed by nailing 1/2-inch plywood to all framing members running from the mudsill (the piece of wood bolted to the foundation) to the top plate. Plywood can be placed either horizontally or vertically and must be nailed on all edges and in the field to framing members. This creates a rigid diaphragm. If an edge falls in the middle of a stud bay, blocking must be installed to provide a complete nailing surface. Our reader wanted to provide protection from the inside. To accomplish this, 1/2-inch plywood is installed vertically and nailed to all studs, the top plate and bottom plate. Understand that this only provides partial protection. It will eliminate cracks in the plaster or visible seams in drywall, but because it doesn't tie the mudsill and cripple wall (which are below floor level) to the stud wall, lateral forces in an earthquake may cause the building to move. There are a couple of other things to consider while the studs are exposed. Whether the job is attacked from the inside or from the outside, this is a great time to insulate and inspect and upgrade the electrical wiring. We consulted a cousin, Dan Smith, who is a retired master electrician. He recommended that if the wiring in the wall is ungrounded knob and tube or old sheathed cable, consider replacing it. It's quite possible that the insulation around the wires has deteriorated, creating a hazard. If the wiring is grounded three-wire Romex, you can add outlets or lights provided that the circuit is not already maxed out. Dan's rule of thumb for a 15-amp circuit serving living areas (not kitchens or other high-load areas) is 10 outlets. This assumes a normal electrical load and provides a little "fudge factor" if the homeowner occasionally plugs in an appliance with a heavier draw. Of course, as always, get a permit and have the work inspected whether you do it or hire it out. Insulation is pretty straightforward. If there is none, add it. Consider using spray-foam insulation if it's not too costly, or use faced insulation batts and turn the kraft paper vapor barrier toward the home's interior. In either case, insulate after the new electrical work is completed. If replacing interior lath-and-plaster walls, we suggest using unfaced batt insulation and a vapor barrier of plastic sheeting, known as Visqueen. Seal all cuts and seams in the plastic with the appropriate tape. Install the sheeting and then the drywall, tape, texture and paint. Contact Bill and Kevin Burnett: Email Letter to the Editor Copyright 2012 Inman News

Second-home market on the rise in Sayulita, Mexico Region rides the wave after discovery as south-of-the-border surf destination Tom Kelly Inman News® SAYULITA, Mexico -- While violence and crime are foremost topics when discussing Mexico in the U.S., they are rarely mentioned here. Crime? What crime? The struggling U.S. economy remains the primary concern in most of the country's popular tourist areas, but in this once sleepy town just north of Puerto Vallarta everyone seems to be betting on the uptick. "There has been so much interest in this type of housing project from family and friends alone that I decided to break ground as soon as I could," said Paul Berger, the part-time Seattleite and the money behind Sayulita Preserve, a 26-acre development just within the town's southeast limits. Located between Tepic and Manzanillo this area has been popular with Mexican nationals for generations, especially visitors from Guadalajara, the country's second-largest city. The Sayulita Preserve, which is the largest piece of undeveloped land in town, will include 198 units priced from $216,000 to $425,000 aimed at North American and Mexican second-home buyers and retirees. "I think proposing a similar project in Puerto Vallarta would be a far greater risk," Berger said. "There are still a lot of units on the market there but this is a completely different situation. People are drawn to Sayulita rather than Vallarta for different reasons. A couple of the reasons ... it is not Vallarta, and our (lower) price point." Like many previously undiscovered or remote places in Mexico, Sayulita was first made popular by nomad surfers checking the Mexican mainland for terrific waves. Word spread quickly through the West Coast surf community, and the once-quiet fishing village evolved into a "must-have" wave experience and then to its present international getaway with cobblestone streets and charming cafes. Most of the crime here is petty theft -- laptops, cameras and the occasional wallet -- but the concept of stabbings and heavy drug-dealing seems only to be talked about north of the border, in the cities from which most of the visitors come. "Residents know that the petty stuff can be annoying, so there's a lot we are doing about it," Berger said. "There's a greater police presence, especially at night. Like anywhere, we remind them that it's best to tuck any valuables away." Directly adjacent to Berger's property is the upscale Punta Sayulita development, wiith 62 lots on a 33-acre jungle and beach peninsula just south of town. A four-bedroom, 5.5-bath Casona (with 6,148 interior square feet) averages about $4 million. The lower-end Casitas (at $1.7 million) have three bedrooms, three to 4.5 bathrooms, and 2,928 interior square feet. All homes feature huge exterior decks about the same size as the interior space. The stampede to Sayulita did not take everyone by surprise. The writing probably was on the wall when the Vallarta Airport underwent a significant uplift and expansion. More planes brought more visitors willing to look farther away from Vallarta for deserted beaches and fewer "gringos" seeking late-night margaritas. Nearly 10 years ago, the rising numbers flocking to Sayulita pushed Oregonian Glen Triplett even further north of Vallarta. The former commercial real estate broker and investor and his wife, Deborah, decided not to build on their lot in Sayulita, but rather to remodel an existing home half a block from the beach in Rincon de Guyabitos, a 25-minute drive from Sayulita and 45 miles north of Puerto Vallarta. Now a popular bed-and-breakfast, Casa de los Pelicanos is open for nine months of the year. Deborah does the cooking -- including weekly classes in Mexican cuisine with a local woman -- and Glen keeps the books. Since Mexicans rarely measure contents in the kitchen, Deborah's main focus in the class is to determine and translate amounts. Sarah Walker, "a former Midwest farm girl" who now runs an airport shuttle service between the Vallarta airport and the three small towns in the Guyabitos area, said she knows of no incidents of drug violence or assaults on any visitor in the area. "I've been here for seven years and all you hear about is the occasional break-in where kids come in and take money," Walker said. "I walk alone in the evenings everywhere yet am careful like I would be anywhere. I'm sure you would be more aware of your surroundings in downtown Seattle in the middle of the night than you would be on a sunny afternoon." Glen said, "People who come and stay (here) already know things are OK and that there's nothing to worry about. It's only the people back in the States who are asking the questions about safety." Tom Kelly's book "Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border" was written with Mitch Creekmore, senior vice president of Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com. Contact Tom Kelly: Email Letter to the Editor Copyright 2012 Inman News

Vapor barrier tips for walls, floors Incorrect installation can trap moisture Paul Bianchina Inman News® CORRECTION: The original version of this article contained errors in referring to the thickness of vapor barriers, and the article has been updated. A "mil" is a unit of measurement equivalent to one-thousandth of an inch. Moisture is something we all need to have in order to survive, and it's surrounding us all the time. Unfortunately, it's also the enemy of a lot of our building materials, and if it gets into the wrong places in our homes and is allowed to remain, it can do a lot of damage. To keep moisture from getting where it doesn't belong, builders use what are known as vapor barriers. The more you understand about what vapor barriers are and how they work in conjunction with the insulation in your home -- especially when you're doing remodeling and repair work -- the more you can do to help prevent moisture problems, like dry rot and mold, from occurring. Moisture on the move First of all, understand that moisture in your home's air is a fact of life. Some of it is there naturally, as a product of the humidity that's in the air, and the more humid the climate you live in, the higher the moisture level that may be inside your home. Then there's the moisture that you generate yourself: That can come from a wide variety of sources -- anything from showers and cooking to house plants and even breathing. During the winter months, you keep the air inside your home at a higher temperature than the air outside. Air has a natural tendency to move from a warm area to a cold area, so the heated air in your home is always trying to move toward the ceiling, the floor and the outside walls, carrying moisture vapor with it. Also, our homes tend to be at a slightly higher air pressure than outside, and that slight overpressure is again pushing the air and moisture toward the ceiling and the exterior walls. So what is a vapor barrier? In simple terms, a vapor barrier is a material that won't allow moisture to pass through it, such as plastic sheeting. A very simple experiment to show how a vapor barrier works is to lay a plastic garbage bag down on some damp soil. Pick the bag up a little while later, and you'll see that the underside of the bag is covered with moisture. The damp soil was trying to give off its moisture to the surrounding air, but the bag -- the vapor barrier -- prevented that from happening. Once again, remember that the warm air in your home is trying to escape through the exterior walls, carrying moisture vapor with it. If it gets into the exterior walls, some of it will remain in the walls and condense back into a liquid, creating all kinds of problems. So one of your home's most common vapor barriers -- and one of the most important -- is the one used over the insulation in your exterior walls. It's designed to stop the moisture before it can enter the wall cavities. There are two basic types of vapor barriers used with exterior wall insulation. The most common is paper-faced insulation. This type of insulation has a Kraft paper face with two flanges. The insulation is installed into the wall cavity with the paper facing into the house. This is very important -- the paper, which is the vapor barrier, always faces the warm side of the house. That's because that's where the moisture is coming from. After the insulation is pushed into the wall cavities, the paper flanges are unfolded, then they're stapled to the face of the studs. Done correctly, that creates a continuous vapor barrier across the face of the entire wall. The second method is to fill the cavities with unfaced insulation, then cover the face of the wall with 4-mil clear plastic sheathing. The plastic sheathing is the vapor barrier, and has the advantage of having fewer gaps and openings than the paper-face method, and it's also easier for the drywallers to see the studs during installation. For the ceiling, if you're using batt insulation it's important that the insulation be installed with the vapor barrier facing down -- again toward the heated space. If you're upgrading old batt insulation by adding a second layer of batts on top of the first, never use faced batts for the second layer. If you do, you run the risk of creating a double vapor barrier; any moisture that passes through the first layer of insulation can get trapped by the vapor barrier on the second layer. For the most part, attics are insulated with blown-in insulation. So you might be wondering where the vapor barrier is. Actually, there isn't one in that case, other than the drywall and paint on the ceiling. The difference between the attic and the exterior walls is that the attic isn't a closed cavity. It's open to the outside, and has ventilation to allow the moisture to escape. That's why it's critical that attics be properly ventilated, and that exhaust fans not be vented into attic spaces. The last area to consider is your crawl space, which actually has two vapor barriers to be concerned with. In the typical crawl space with a dirt floor, a 6-mil plastic vapor barrier is used to prevent moisture from the soil from coming up into the crawl space area. That vapor barrier is laid directly on the dirt, and the seams are overlapped at least 12 inches. The other vapor barrier is created with your floor insulation. One common mistake people make when insulating a floor is to install faced batts between the floor joists with the Kraft paper facing down, so they can staple the paper to the joists to hold the batts in place. Remember, the paper is the vapor barrier, and it has to face the heated part of the house, which means it has to face up. Always install batt insulation between the joists with the paper facing up against the underside of the subfloor, then hold the insulation in place with lath, wire or other means. Remodeling and repair questions? Email Paul at paulbianchina@inman.com. All product reviews are based on the author's actual testing of free review samples provided by the manufacturers. Contact Paul Bianchina: Email Letter to the Editor Copyright 2012 Paul Bianchina

Who is to blame for faulty septic system? Sellers typically provide report from qualified contractor Barry Stone Inman News® DEAR BARRY: We bought our home two months ago, and this week our septic system backed up into the basement. When the septic contractor dug up the tank, it had no lid and was filled with dirt. If we had known about this, repairs could have been made before we bought the property. Shouldn't this have been caught by our home inspector? --Whitney DEAR WHITNEY: Home inspectors report defects that are visible and accessible. Conditions that are underground are exempt from that kind of inspection. The only clue your home inspector might have had would have been slow or congested drains at the sinks, tubs or showers. If those fixtures were draining properly on the day of the inspection, there is no way your home inspector could have known about the problem. When purchasing a home with a septic system, it is standard procedure for sellers to provide a septic report from a qualified contractor. A septic contractor should have excavated the tank before you purchased the home. The tank should have been pumped out, and the entire system should have been tested and evaluated. If any real estate agents were involved in the transaction, they should have recommended that a septic inspection take place. Failure by an agent to advise a septic inspection would constitute professional negligence. The big question is whether the sellers were aware of the problem. A septic tank full of dirt must have caused previous backups. If so, it would be reasonable to expect that the sellers had knowledge of this condition. Disclosure laws in most states require sellers to provide information about such defects. You should contact the sellers and/or agents about this situation immediately, and be sure to take pictures of the impacted tank. DEAR BARRY: We are under contract to buy a new home that is nearly completed. Our home inspector pointed out the need for yard-drainage improvements. The main issue is a steep slope in the neighbor's yard, causing water to drain onto the property we are buying. We asked the builder to address this condition but he refused. We cannot simply walk away from the deal or we will lose our deposit. What do you think we should do? --Helen DEAR HELEN: It appears that you are dealing with a builder who plays hardball, and who is more interested in your money than your satisfaction. If he is unwilling to correct a significant drainage defect, you should be able to cancel the sale without losing your deposit. If the contract requires you to accept a defective condition or lose your deposit, that contract should be reviewed by a real estate attorney. It is possible that the builder is bluffing. An attorney can let you know what your rights are in this transaction. A strong letter from the attorney could get the builder to perform the necessary corrective work. An attorney's letter might also enable you to walk away from the deal without losing your deposit. When dealing with such issues, it is essential that you have a legal advocate. To write to Barry Stone, please visit him on the Web at www.housedetective.com. Contact Barry Stone: Email Letter to the Editor Copyright 2012 Barry Stone

Exercising lease option during foreclosure If tenants still want to buy, they must play by new rules Benny Kass Inman News® DEAR BENNY: We have been renting a house with an option to buy for two years now. We recently learned from mail the bank has sent that the property was listed for foreclosure. (No, we have not opened the letters addressed to the owners, but they are from the bank that holds the mortgage and they have been coming every two weeks addressed to both lien holders.) We also received a letter from an attorney indicating that the property was listed for foreclosure. So it appears that the landlord has not been paying the mortgage. Is there anything we can do at this point? I feel as though we are being ripped off if we are paying rent on time every month but the owner is pocketing the money. If the owner can't pay the mortgage, what happens to our deposit and our option to buy next year? --Juan DEAR JUAN: Why do you think you are getting "ripped off"? Are you using the house? Are you enjoying living there? I would assume the answer is "yes" because you are still interested in buying. No one is taking advantage of you, so I don't agree that someone is "ripping you off." But I do agree that you have the right to inquire about your security deposit as well as your right to buy. Here's my suggestion: Before you stop paying the monthly rent, talk with your landlord. I doubt that he really wants to be foreclosed upon, and if you are interested -- and able -- to buy the house now, that might be a win-win for everyone. You may be able to buy at a bargain price, and the landlord won't have a foreclosure impacting his credit standing. Then, regardless of what the landlord says, you should contact the attorney who sent you a letter. Explain your position and see if the attorney can get you in contact with an appropriate, authorized representative of the lender. Unfortunately, too many foreclosure attorneys take the position that they are "hired guns" for the lender, and refuse to get involved, even if only to give you the name of an appropriate representative. Basically, if you are interested in buying, you are looking for a short sale. You may want to get a real estate agent/broker to assist, as they should know the process. However, the owner/landlord will have to agree. Finally, to answer your two questions: (1) Will you be able to buy? That depends on the lender, as discussed above. (2) What about your security deposit? Generally, most deposits are the equivalent of one month's rent. If you know that you will actually have to move, I would just withhold the last month's rent. I know this technically violates the terms of your lease, but you clearly want to protect your assets. Of course, if there is damage to the house caused by you or your family, that will be your responsibility. Keep in mind, however, that even if the house is foreclosed upon, whoever ends up owning the property (either the lender itself or a third party) may still want you to stay on as a tenant. DEAR BENNY: I read the response from your column, by a real estate broker for time shares, with tremendous interest. You did not post the name because you did not want your column to be used as advertising. I do respect that and understand that. I am wondering however, if you would be willing to share that name with me. I've been looking for a reputable time-share broker for years and I certainly would not hold you responsible for anything should I contact that person. --Elaine DEAR ELAINE: I am sorry, but I will not provide such information. There are two reasons: (1) First, I don't believe it is my role to provide free advertising to anyone; and (2) second, I really don't know if that broker is honest. I receive numerous emails from brokers (or companies) claiming they have experience in selling time shares. When I check them out on the Internet, I find that some of them have either been cited by a state agency for fraud/misrepresentation or have a negative rating from the Better Business Bureau. DEAR BENNY: I am 74. Recently, I have been contemplating paying off my condo mortgage. The remainder is $98,000 at 6 percent. Can you help me through this? On the surface it seems like a good idea, but I'm not aware of all the particulars. I am in good health and will not need the $98,000 in the near future. --Dee Dee DEAR DEE DEE: That is an excellent question, but not easy to answer. There are many factors that you should consider. You say you will not need the money "in the near future." But what about the "far future"? You are a young 74-year-old in good health. Will you need the money when you are 80, 90 or even 100? Can you take advantage of the tax benefits associated with the mortgage interest you pay, which you will lose if you pay off the loan? Over the years, I have represented too many clients who were "house rich but cash poor." What's the real advantage of having the house free and clear? Or turn this around: What's the disadvantage of having a mortgage? If and when you die, does it really matter to your heirs whether you have a condo free and clear of a mortgage? I don't think so. In my opinion, assuming you can qualify for a refinance loan, you should contact your current lender and see if it will reduce the interest rate. You are currently paying 6 percent, but interest rates (as of this writing) are hovering around 4 percent. If you can refinance, I submit you will accomplish your objectives as well as my concerns. And whether or not you refinance, there is a compromise position. Every month, add a little extra money when you pay your mortgage. That will reduce the loan principal, and shorten the term of your loan. If you do this, however, make sure you note on your check and on the payment coupon that this is "extra principal." DEAR BENNY: Due to the death of my former husband, I find myself owning a rental cottage with my two children. Due to the tough real estate market, and also family sentiment, the kids (ages 20 and 24) and I want to hold on to it as a rental property at least for a couple of years. I fully understand that co-owning property with children is not recommended, but the real estate market and the family memories for now make our decision. We will have the property retitled. As 50 percent owner can I require some sort of property use agreement for the kids (who'll each own 25 percent) and me to sign? I want to avoid the family cottage from becoming a hotbed of nightlife or other misuse. And if some sort of property use agreement is done, who does that for us: a real estate or estate attorney? --Cyndi DEAR CYNDI: Yes, you can enter into a property use agreement with your two children, and a real estate attorney can assist you. It's no different from the co-ownership agreements I draft for unmarried clients. But let me ask you a question: Why do you have to put them on title? As you know, in general I do not think it's a good idea, primarily for the tax consequences. You should go on title on your own, but prepare a last will and testament giving your two sons the property on your death. You indicated that this might be a rental property. If so, shouldn't you keep all of the rental income? And you further indicated that you might sell in a couple of years. Again, why complicate title, so that you don't have to get your son's consent for any such sale? My suggestion: Put the house in your name, and if your kids want to use it, spell out the rules and regulations. You may even want to charge them a security deposit just in case there is any damage caused by them or their guests. Incidentally, you should also check with your tax adviser to see whether there would be any taxable consequences to you should you decide to add your sons on title. The Internal Revenue Service might consider that to be a gift. Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com. Contact Benny Kass: Email Letter to the Editor Copyright 2012 Benny L. Kass

3 ways homebuyers kill their own real estate deals Mood of the Market Tara-Nicholle Nelson I recently bought a couple of spa treatment packages for a friend's birthday (as much as a gift to myself as to her, to be sure). The package included a pedicure and a massage for the price of the massage, but had a bizarro restriction that required I pick the gift cards up at least one day prior to spa day. The problem: The spa was across a bridge from my town. Despite my very best calculations, I hit unexpected traffic and it took me an hour's drive just to pick them up. It's a good thing for the spa that I was literally stuck on that bridge, unable to turn around; otherwise, that would have been an undone deal. I was very clear that the value of my hour far exceeded the value of those two "pedis." In the end, the conditions I had to surmount to take advantage of the bargain negated the value of the deal -- and then some. And that happens much more frequently than you'd think in the world of real estate. Today's ridiculously low prices and interest rates, combined, seem like the perfect storm for finding a great deal. But some buyers run into -- or even unwittingly create -- circumstances in an effort to cash in on the bargain that deactivate or diminish the full value they otherwise stand to gain from buying at the bottom of the market, for both home prices and interest rates. Here are three ways homebuyers are defeating their own deals in today's market: 1. House hunting too long. As many as 60 percent of the homes for sale in some markets are short sales. Many other listings are bank-owned (also known as real estate owned or REO) properties, and those homes tend toward two extremes: terrible condition, or so nice at such a low price they receive multiple offers. Even the nicer, nondistressed homes on the market can end up in and out of contract over and over again due to appraisal or other lending-related issues. As a result, it is not at all bizarre to hear homebuyers today say they've been house hunting for a year, 18 months, even two or three years. When you house hunt that long, you become susceptible to house hunt fatigue, which causes irrationally extreme overbidding out of sheer exhaustion. Alternatively, it can cause you to settle for whatever house you can get, even if it doesn't actually meet your needs -- then spend the next 10 years obsessively spending to upgrade, improve, repair and furnish the place to try to make it more like the home you actually wanted. Both of these outcomes negate and deactivate the bargain you stood to score. To avoid house hunting too long, it's uber-important to get and stay clear on the differences between what you want and what you need, and to work with a local real estate professional you trust. Look to your agent to get and keep your expectations centered in reality, so you can make more strategic decisions throughout your entire house hunt, like house hunting in a price range where you're likely to both find homes that will work for your life and be successful in your efforts to obtain one. 2. Making lowball offers way too low. Overbidding seems like an obvious way to cancel out the bargain potential of your deal. But making excessively low offers -- offers sellers couldn't afford to take if they wanted to -- can have the very same result. Buyers who think they can operate strictly on the basis of buyer's market dynamics -- without realizing that most sellers will need to make enough to pay off their mortgage or at least receive the fair market value for their home -- are cutting off their own noses to spite their faces, all in the name of trying to score an amazing deal. Note to "lowballers": If you don't actually secure the home, the superlow price you offered is no deal at all. 3. Freak-outs, stress, drama and mayhem. Once was, it was mostly the buyers uneducated about the homebuying process who tended to freak out and stress the most, especially at the top of the market. These were the folks who found themselves defeated at every turn by buyers who knew what they were up against and were prepared to make their best offer on their first offer. Fast forward, and now the norm is for buyers to spend much more time reading up on what to expect, but the inundation of information can create brand new mindset management challenges. Almost every buyer is stressed about whether they can qualify for a loan, and about buying into a down market. Some buyers try to apply national headlines about home prices being depressed to the superlocal dynamics of their neighborhood market. This is unwise if you happen to be, for example, trying to buy a home in the boomtown real estate markets of Silicon Valley. Others go the opposite direction and deny that the basic truths about, say, buying a short-sale listing will actually apply to them (attention homebuyers: buying a short sale usually takes a long, long time). The emotional freak-outs that result from having your expectations shattered, sometimes brutally, in the course of buying a home often lead to panic-based and fear-based decisions, which can be costly in the short and long term. Additionally, the stress itself can take a toll on your ability to be productive at work, and can even impair your relationship with your mate, neither of which are worth any deal you think you stand to strike. Again, managing your expectations by working with a trusted broker or agent you feel comfortable relying on to understand the market in your neck of the woods and the type of transaction you want to pull off is essential to downgrading the role emotion plays in your real estate decision-making. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com. Contact Tara-Nicholle Nelson: Facebook Twitter Email Letter to the Editor Copyright 2012 Tara-Nicholle Nelson

Sellers: Don't overdo it on home improvements Know which projects are worth the cost, effort Dian Hymer Inman News® Homeowners who are thinking about selling this year should be aware of what today's buyers are looking for in a home. It will affect what you should do to get your home ready for sale, and how you should price it. A survey by the National Association of Realtors in 2011 found that buyers favor walkable neighborhoods that are close to shops, restaurants and local businesses over neighborhoods that require more driving between home, work and recreation. According to the survey, 77 percent of the respondents said they would look for pedestrian-friendly neighborhoods. Improvement in public transportation was favored over building new roads. Most buyers (80 percent) still prefer to live in a single-family, detached home as long as it doesn't require a longer commute. Although space is important to most buyers, 59 percent said they would accept a smaller home if it cut 20 minutes off the commute time. Does this mean your chances of selling are slim if you don't have a high Walk Score? No, but proximity to a popular commercial area usually brings a higher price. In Oakland, Calif., this is evident if you compare homes in the Rockridge area with homes in the Oakland Hills. The housing recession has hit the entire area, but Rockridge prices have dropped less than home prices in the Oakland Hills. One Rockridge home recently sold for $20,000 more than it did in 2005, and the house had not been substantially changed. From this location you can walk to trendy shops and cafes as well as to BART, the region's rapid transit system. By rail, it's a mere 20 minutes to the financial district in San Francisco. HOUSE HUNTING TIP: Proper pricing is the key factor affecting the salability of your home in today's market. Make sure you're comparing apple to apples when you evaluate the probable selling price of your home. The home-sale business is all about location. If you live in a neighborhood where you have to drive to get to work, school or recreation, you can't expect to sell for the same price as a comparable home that's in a desirable, walkable location. You can't change the location of your home, but you can appeal to today's buyers who are typically looking for a home that is in good condition that they can move right into without doing any major work. A common refrain heard from sellers is that there's no point in painting or changing worn carpet -- buyers will surely want to do something different. In some cases, this may be so, but many buyers don't have extra cash to pay for extensive home improvements. They may ultimately change the color scheme, but don't make them worry about making the house livable when they buy. It's a good idea to consult with your real estate agent before you make fix-up improvements. Review your list of preparation-for-sale projects and get your agent's feedback before starting any work. Sometimes, sellers think projects need to be done that are really not essential in successfully marketing the home. For instance, your yard may be in poor condition, but this doesn't mean that you should have it re-landscaped. This is the kind of improvement you'd do for yourself if you were planning to stay in the house for years. A cosmetic redo will usually suffice. Get your agent's or stager's input on colors, light fixtures, carpeting, etc., so that you can ensure a positive response to your efforts. Also, watch your costs. You don't need to do a top-of-the-line paint job or use the most expensive granite for your countertops in order to sell. In fact, it will eat into your proceeds from the sale. THE CLOSING: Stick to cost-effective, tasteful improvements for maximum appeal at a reasonable cost. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide." Contact Dian Hymer: Email Letter to the Editor Copyright 2012 Dian Hymer

6 tips for a successful loan mod Avoid rookie mistakes when preparing, submitting your document package Jack Guttentag Inman News® Editor's note: This is the second of a multipart series. Read Part 1. Millions of mortgage borrowers who can no longer afford their mortgage payments but can afford a lower payment can avoid foreclosure by getting a modification of their loan contract. While the path to a modification remains torturous, it is not quite as bad as when I wrote addressed the issue in a 2009 column. Are you unqualified? It is not possible for borrowers acting on their own to determine whether they qualify for a modification because they don't have access to all the criteria. Some is kept under wraps by loan servicers. However, borrowers can determine that they are not qualified for a government-supported modification by accessing a questionnaire provided by the U.S. Treasury Department. Bear in mind, however, that servicers also offer modifications outside of the government's program. You might qualify for one even if you don't meet the government's requirements. Compiling the information the servicer wants The single most important step in obtaining a loan modification is providing the servicer with the exact information the servicer needs to make a decision. Each servicer has its own set of forms that must be completed, and its own requirements for the documentation you must provide. In my first stab at this problem, I placed the information required by each of the major servicers on my website. Now borrowers can access the DMM Document Wizard, provided at my request by Default Mitigation Management LLC, which is a lot better. Based on your answers to the questions it asks, you will be provided with a customized list of forms you must complete and documents you must provide. It is free and will take the guesswork out of what you need. Don't exaggerate your financial shortcomings Warning: The servicer will examine your statements of income and expenses to determine whether you can afford a reduced payment. Exaggerating your financial weaknesses may open his heart but close his purse, if it makes you appear to be a lost cause. Assuring accuracy Having the right form is one thing, but filling it out correctly is something else. Some industry executives estimate that about 95 percent of all packages submitted are incomplete or contain errors. A package with obvious errors may fall to the bottom of the pile, or it may lead the servicer to conclude that you do not qualify for a loan modification when, in fact, you do. Remember what you were taught in second grade: Neatness counts! In addition: 1. Use a cover sheet that identifies all documents in your package. 2. Write your name and loan number on every page. Assuring delivery Preparing an accurate and complete set of documents is one thing, but delivering the package to the servicer is something else. Servicer systems have been overwhelmed by requests for help, and documents routinely get "lost." You want to minimize the chances of that happening to you. Using fax or certified mail: Make sure you have the correct contact information. Treasury provides addresses and fax numbers of every mortgage servicer. Certified mail is more reliable than fax, but neither guarantees prompt attention by the servicer, or even that the documents won't subsequently be misplaced or lost. Using the DMM portal: The best way to deliver documents to servicers is to use the DMM portal, available through the DMM Document Wizard by clicking on "Submit," or visit www.dclmwp.com. I have no financial interest in DMM. Using the portal, your documents are delivered to the servicer electronically, and the portal then becomes a direct communication channel to the servicer. The servicer uses the portal to acknowledge receipt of your documents and to request additional information or documents. You use the portal to make corrections, to send additional information, and to update yourself on what has been completed and what remains to be done. Questions by you are automatically directed to the specific employee who can answer them. All communications are time-stamped and remain in the portal as a record of borrower/servicer exchanges. Unfortunately, not every servicer subscribes to the DMM Portal. The list of those that do is shown on the DMM Wizard. Follow up, and then follow up again Because the process of modifying mortgages remains slow and error-prone, you may need to nudge the servicer. If you faxed your documents, you should follow up to make sure the papers haven't been lost and the case is in an active queue. But even if you use the DMM Portal, you should follow up with the servicer regularly to make sure your application is on track. Next week: getting help with your modification without getting scammed. My special thanks to Igor Roitburg for assisting in my research for this column. The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com. Contact Jack Guttentag: Email Letter to the Editor Copyright 2012 Jack Guttentag

Tucson: real estate gem of the desert? Despite 'emptiest city' label, locale posts impressive growth in jobs, home sales Steve Bergsman Inman News® About six years ago, an economist with an unusually pithy sense of humor labeled the four states hit hardest by the recession -- California, Arizona, Nevada and Florida -- as the "sand states." And, if you think of it, the label makes sense, as California and Florida boast sandy beaches while Arizona and Nevada are sandy desert locales. The trouble is, the label, while eye-catching, was misconstrued. While Florida was a total mess due to the mortgage blowup and subsequent foreclosure crisis, in California the deep problems were more localized to the Central Valley and Inland Empire. In Nevada, the crush really happened in Las Vegas, while the heart of the crisis in Arizona seemed to be in Phoenix metro area. Living in Arizona and always on the lookout for what the national news has to say about us desert dwellers, I still can find almost a story a day about all the bad things that have happened to the Phoenix metro, which we locally call the Valley of the Sun. The metro is home to Arizona's largest city, Phoenix; the third-largest city, Mesa; and probably the fourth, fifth, sixth -- all the way to 10. It's Tucson, the No. 2 city, that gets little notice, although with a population greater than 520,000 the city ranks as the 32nd-largest in the nation The 118 miles between Tucson and Phoenix put it beyond the reach of economists looking for bad things to say about the formerly fast-growing Southwestern state. That was until recently, when I noticed Tucson popping up on different economic reports. However, since the city is such a newbie to economic scrutiny, so far no consensus seems to have gelled, and readers are left with a push-pull effect. Has Tucson followed the other big desert cities -- Phoenix and Las Vegas -- into the economic maelstrom, or not? It really depends on whom you believe. According to a recent CNBC/Yahoo Real Estate story, Tucson ranks No. 1 as the country's "emptiest" city, with rental vacancies at 15.9 percent (No. 7 in the country) and homeowner vacancy at 6.8 percent (No. 1 in the country) as of the second quarter of 2011. On the other hand, something called The Fiscal Times in November listed Tucson as the U.S. city with the sixth-best job-growth rate in the country, at 2.6 percent. At a time when the national jobless rate was close to 10 percent, Tucson stood at 8 percent. Tucson shares the distinction of being on both lists with much bigger Houston, which has been the fastest-growing big city in the country over the past decade. That should tell you something about one of those lists. In any case, I thought I would check in with a couple of local sources to see exactly what was going on in Tucson. The "emptiest homes" article was flawed because Tucson has a high amount of homes that are owned by winter visitors, which show up as nonoccupied, said Greg Hollman, president of the Tucson Association of Realtors and an agent with Coldwell Banker Residential Brokerage. "In general, the Tucson market is moving through our REOs ("real estate owned" properties -- mostly owned by lenders) and short sales. This has skewered our median and average sale price, but unit-wise we are really moving on." In October 2010 the median sales price for a home in Tucson was $140,000, and for October 2011 it was $120,000. "You have to put that in perspective," Hollman said. "We have a much larger volume of REO properties at the lower purchase prices than at the upper purchase prices, so it makes a difference." Those Tucson REO properties have been flying out the door. "REO properties have been moving quickly, sometimes with multiple offers," Hollman said. This has made an impact on total Tucson residential sales. "2011 unit sales through October showed a 12.8 percent increase over 2010, with 10,815 homes sold as compared to 9,588 homes sold through October (in 2010). "On a monthly basis, the median sales price increased a little over 2 percent from $117,500 in September to $120,000 in October. The average sales price increased 0.74 percent from $150,699 in September to $151,812 in October." "I don't buy the idea that Tucson is in worse shape than any other city in the nation -- it just doesn't compute for me," said Marshal Vest, director of the Economic and Business Research Center at the University of Arizona's Eller College of Management. Phoenix and Tucson, as far as the economies are concerned, are both on very similar paths, said Vest. "Both were hit very hard during the recession. Phoenix may have been hit a little harder than Tucson. Housing prices, for example, have fallen (more steeply) in Phoenix, down more than 50 percent, but declined just 35 percent in Tucson." In regard to jobs, the state lost about 11 percent from peak of employment in 2007, but in Tucson it was more like 9 percent, Vest said. "Tucson didn't lose as much of its workforce as did Phoenix." As for rental vacancies, Vest said, "the numbers I look at come from the 2010 census, and Pima County (home to Tucson) had the lowest vacancy rate of any of Arizona's counties at a little over 11 percent. Statewide it was 16.2 percent. I don't know where CNBC/Yahoo Real Estate numbers came from." If you still like Tucson as a primary or secondary home market, then you better act quickly because the window of cheap housing may be closing. "Total unit sales increased by 30 percent in October 2011 as compared to October 2010," said Hollman. "The number of active listings decreased by 28 percent over the same period. When you combine that with not a lot of new-home construction, at some point we are going to have a tight market." Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com. Contact Steve Bergsman: Email Letter to the Editor Copyright 2012 Inman News