Don't Like Surprises? Get an Inspection!

I was watching one of those "buy it / flip it" shows on TV last weekend, and this week's stars were a young couple, just 21 years old. My first thought was, "This is going to be a train wreck!" and I wasn't wrong. I missed the ending, so I don't know how bad it really was, but here's the set up:

Young couple, living in a rented apartment (and so probably have no clue about the whole home-buying process or homeowner's responsibilities), decide to gain fame and fortune through house flipping. They find a 1940's house on Craig's List in a run-down part of town that is intermixed with convenience stores, bars, hock shops, etc., and priced roughly half of what the "average" house in that city costs. OBVIOUSLY, house is going to need some work to make it pretty, but they figure "A little paint, a little grass seed... we'll make a bundle and life is good!" By the end of the show, I was just hoping they didn't lose everything, including each other, because of this fiasco. Somewhere in the middle, one of them even quit their "real" job in order to meet deadlines. And by the end, they could not afford the grass seed or anything else for the landscaping they'd planned.

But their two biggest mistakes were not really those of youth, nor even greed. The real tragedy was their inexperience and lack of foresight. They were willing to spend several thousands of dollars on paint, flooring, some new appliances... but they weren't willing to spend a few hundred BEFORE they bought to have the place professionally inspected. This tiny investment alone could have saved them a ton of heartache, headache, and body aches, not to mention the job and the money they ended up spending just to get rid of the white elephant in the less than desirable neighborhood.

An inspection would have put them on notice about the dry-rot in the bathroom that required stripping out everything down to the studs and then a complete reframing of the room. The inspector would have told them the plumbing and electrical systems would have to be "brought up to code". An inspection would have brought to light any mold issues under the house. All of these are completely treatable - albeit perhaps pricey - conditions, but at least the buyers would have been aware of them and they could have found out what the repairs would cost, and so would at least have been informed buyers.

And because the property was on Craig's List, they didn't think to consult a Realtor®. They were trying to save some money "for the house", and didn't realize a Realtor® might have been able to negotiate for some or all of a buyer's agent's compensation to come from the seller . Even if the buyers paid an agent themselves to guide them through the home-buying process, it would have been one of the wisest investments and best protections they could have bought for themselves. Most of us wouldn't cut our own hair; why risk your financial future without a professional in your corner?

Buying or Selling, the Fair Housing Act Protects You

The Fair Housing Act prohibits discrimination in housing because of:

* Race or color
* National origin
* Religion
* Sex
* Handicap (Disability)
* Familial status (including children under the age of 18 living with parents or legal custodians; pregnant women and people securing custody of children under 18)

What Housing Is Covered? The Fair Housing Act covers most housing. In some circumstances, the Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations and private clubs that limit occupancy to members.

What Is Prohibited? In the Sale and Rental of Housing: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap:

* Refuse to rent or sell housing
* Refuse to negotiate for housing
* Make housing unavailable
* Deny a dwelling
* Set different terms, conditions or privileges for sale or rental of a dwelling
* Provide different housing services or facilities
* Falsely deny that housing is available for inspection, sale, or rental
* For profit, persuade owners to sell or rent (blockbusting) or
* Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.

In addition, it is also illegal for anyone to:

* Threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right
* Advertise or make any statement that indicates a limitation or preference based on race, color, national origin, religion, sex, familial status, or handicap. This prohibition against discriminatory advertising applies to single-family and owner-occupied housing that is otherwise exempt from the Fair Housing Act.

Additional Protection If You Have a Disability: If you or someone associated with you:
* Have a physical or mental disability (including hearing, mobility and visual impairments, chronic alcoholism, chronic mental illness, AIDS, AIDS Related Complex and mental retardation) that substantially limits one or more major life activities
* Have a record of such a disability or
* Are regarded as having such a disability

then your landlord may not:

* Refuse to let you make reasonable modifications to your dwelling or common use areas, at your expense, if necessary for the disabled person to use the housing. (Where reasonable, the landlord may permit changes only if you agree to restore the property to its original condition when you move.)
*Refuse to make reasonable accommodations in rules, policies, practices or services if necessary for the disabled person to use the housing.

Example: A building with a "no pets" policy must allow a visually impaired tenant to keep a guide dog.
Example: An apartment complex that offers tenants ample, unassigned parking must honor a request from a mobility-impaired tenant for a reserved space near her apartment if necessary to assure that she can have access to her apartment.

However, housing need not be made available to a person who is a direct threat to the health or safety of others or who currently uses illegal drugs.

Requirements for New Buildings - In buildings that are ready for first occupancy after March 13, 1991, and have an elevator and four or more units:

* Public and common areas must be accessible to persons with disabilities
* Doors and hallways must be wide enough for wheelchairs

All units must have:

* An accessible route into and through the unit
* Reinforced bathroom walls to allow later installation of grab bars and
* Kitchens and bathrooms that can be used by people in wheelchairs.
* Accessible light switches, electrical outlets, thermostats and other environmental controls

If a building with four or more units has no elevator and will be ready for first occupancy after March 13, 1991, these standards apply to ground floor units. These requirements for new buildings do not replace any more stringent standards in State or local law.

Housing Opportunities For Families - Unless a building or community qualifies as housing for older persons, it may not discriminate based on familial status. That is, it may not discriminate against families in which one or more children under 18 live with:

* A parent
* A person who has legal custody of the child or children or
* The designee of the parent or legal custodian, with the parent or custodian's written permission.

Familial status protection also applies to pregnant women and anyone securing legal custody of a child under 18.

Exemption: Housing for older persons is exempt from the prohibition against familial status discrimination if:

* The HUD Secretary has determined that it is specifically designed for and occupied by elderly persons under a Federal, State or local government program or
* It is occupied solely by persons who are 62 or older or
* It houses at least one person who is 55 or older in at least 80 percent of the occupied units, and adheres to a policy that demonstrates an intent to house persons who are 55 or older. A transition period permits residents on or before September 13, 1988, to continue living in the housing, regardless of their age, without interfering with the exemption.

If You Think Your Rights Have Been Violated - HUD is ready to help with any problem of housing discrimination. If you think your rights have been violated, the Housing Discrimination Complaint Form is available for you to download, complete and return, or complete online and submit, or you may write HUD a letter, or telephone the HUD Office nearest you. You have one year after an alleged violation to file a complaint with HUD, but you should file it as soon as possible.

What to Tell HUD -
* Your name and address
* The name and address of the person your complaint is against (the respondent)
* The address or other identification to the housing involved
* The date(s) to the alleged violation
* A short description to the alleged violation (the event that caused you to believe your rights were violated)

Where to Write or Call: Send the Housing Discrimination Complaint Form or a letter to the HUD Office nearest you or you may call that office directly.

If You Are Disabled - HUD also provides:

* A toll-free TTY phone for the hearing impaired: 1-800-927-9275.
* Interpreters
* Tapes and braille materials
* Assistance in reading and completing forms

What Happens When You File A Complaint? - HUD will notify you when it receives your complaint. Normally, HUD also will:

* Notify the alleged violator of your complaint and permit that person to submit an answer
* Investigate your complaint and determine whether there is reasonable cause to believe the Fair Housing Act has been violated
* Notify you if it cannot complete an investigation within 100 days of receiving your complaint

Conciliation - HUD will try to reach an agreement with the person your complaint is against (the respondent). A conciliation agreement must protect both you and the public interest. If an agreement is signed, HUD will take no further action on your complaint. However, if HUD has reasonable cause to believe that a conciliation agreement is breached, HUD will recommend that the Attorney General file suit.

Complaint Referrals - If HUD has determined that your State or local agency has the same fair housing powers as HUD, HUD will refer your complaint to that agency for investigation and notify you of the referral. That agency must begin work on your complaint within 30 days or HUD may take it back.

What If You Need Help Quickly? If you need immediate help to stop a serious problem that is being caused by a Fair Housing Act violation, HUD may be able to assist you as soon as you file a complaint. HUD may authorize the Attorney General to go to court to seek temporary or preliminary relief, pending the outcome of your complaint, if:

* Irreparable harm is likely to occur without HUD's intervention
* There is substantial evidence that a violation of the Fair Housing Act occurred

Example: A builder agrees to sell a house but, after learning the buyer is black, fails to keep the agreement. The buyer files a complaint with HUD. HUD may authorize the Attorney General to go to court to prevent a sale to any other buyer until HUD investigates the complaint.

What Happens After A Complaint Investigation? If, after investigating your complaint, HUD finds reasonable cause to believe that discrimination occurred, it will inform you. Your case will be heard in an administrative hearing within 120 days, unless you or the respondent want the case to be heard in Federal district court. Either way, there is no cost to you.

The Administrative Hearing - If your case goes to an administrative hearing HUD attorneys will litigate the case on your behalf. You may intervene in the case and be represented by your own attorney if you wish. An Administrative Law Judge (ALA) will consider evidence from you and the respondent. If the ALA decides that discrimination occurred, the respondent can be ordered:

* To compensate you for actual damages, including humiliation, pain and suffering.
* To provide injunctive or other equitable relief, for example, to make the housing available to you.
* To pay the Federal Government a civil penalty to vindicate the public interest. The maximum penalties are $10,000 for a first violation and $50,000 for a third violation within seven years.
* To pay reasonable attorney's fees and costs.

Federal District Court If you or the respondent choose to have your case decided in Federal District Court, the Attorney General will file a suit and litigate it on your behalf. Like the ALA, the District Court can order relief, and award actual damages, attorney's fees and costs. In addition, the court can award punitive damages.

In Addition -You May File Suit: You may file suit, at your expense, in Federal District Court or State Court within two years of an alleged violation. If you cannot afford an attorney, the Court may appoint one for you. You may bring suit even after filing a complaint, if you have not signed a conciliation agreement and an Administrative Law Judge has not started a hearing. A court may award actual and punitive damages and attorney's fees and costs.

Other Tools to Combat Housing Discrimination - If there is noncompliance with the order of an Administrative Law Judge, HUD may seek temporary relief, enforcement of the order or a restraining order in a United States Court of Appeals. The Attorney General may file a suit in a Federal District Court if there is reasonable cause to believe a pattern or practice of housing discrimination is occurring.

For Further Information - The Fair Housing Act and HUD's regulations contain more detail and technical information. If you need a copy of the law or regulations, contact the HUD Office nearest you.

www.hud.gov

There's Gold in Them Thar Hills!

Contrary to what the media continues to spout on a daily basis, there IS money to lend for home buyers. Yes, there were some "lending plans", from a few lending institutions, that played a little fast and loose with traditional documentation and qualification formulas. I remember seeing an ad on TV that touted.... "With some banks, you get this much house" and the narrator steps sideways, reveals an additional section of the house, and continues "... but with OUR plans you can afford THIS much!"

So, you may have to jump through a few more hoops than your cousin did a year ago, provide a few more pieces of paper than your sister did, pass a little more stringent financial background inspection than your co-worker did. The bottom line is there are mortgages to be had, lenders still willing to loan, brokers and loan officers still willing and able to help you navigate the sometimes confusing financial channels to your new home mortgage loan. There are many different lending programs out there.... how do you know which to choose for yourself? Let's explore some of the more common programs:

* "Conventional Loan" -- in general, this is a loan that is not guaranteed by a government program or insurance. To obtain a "conventional loan", you go to the bank, credit union or mortgage company, fill out the application, provide any required income/employment verification, submit letters of explanation as required by the lender, pass credit-worthiness background examination, and be approved for a loan.

* "VA Loan" -- VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home which must be for their own personal occupancy. However, it is up to the lending institution to determine credit-worthiness. Veterans with active duty service, that was not dishonorable, during World War II and later periods are eligible for VA loan benefits. In general, if the service was during a time of conflict, veterans must have at least 90 days' service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days' active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16, 1981, must in most cases have served at least 2 years. VA regional office personnel may assist with eligibility questions.

* "FHA Loan" -- FHA-insured loans are making a strong comeback as a useful alternative for first-time home buyers and home buyers with less than perfect credit. These are loans from financial institutions that are guaranteed by the Federal Housing Administration. Typically, these loans require less of a downpayment than many other types of loans.

* "Fannie Mae" -- Fannie Mae doesn't lend money directly to borrowers, but does insure qualified loans made with a lender-partner.

* "USDA Home Loan" -- A USDA Guaranteed Loan is Government insured 100% purchase loan. These Loans are only offered in rural area's and serviced by direct lenders that meet federal guidelines. In some circumstances, the USDA also provides DIRECT LOANS to some individuals who do not qualify for a guaranteed loan. All of Highlands County, Florida meets the "rural" requirement for loan approval. These loans are also useful for those who have blemishes on their credit.

* There are a number of financial assistance and grant programs available to homebuyers offered through the Highlands County Housing Office. Your Realtor can help you with more information.

The bottom line is.... there is money available to lend, and people eager to help you through the borrowing process. Call your bank or your credit union, or call your Realtor and see what a fount of information a professional can be.

Questions to Ask When Choosing a REALTOR®

1. How long have you been in residential real estate sales? Is it your full-time job? While experience is no guarantee of skill, real estate, like many other professions, is mostly learned on the job.

2. What designations do you hold? Designations such as ABR (Accredited Buyer Representative), GRI (Graduate Realtor Institute), and CRS (Certified Residential Specialist), which require that agents take additional, specialized real estate training, are held by only about one-quarter of real estate practitioners.

3. How many homes did you and your company sell last year?

4. How many days did it take you to sell the average home? How did that compare to the overall market?

5. How close to the initial asking prices of the homes you sold were the final sale prices?

6. What types of specific marketing systems and approaches will you use to sell my home? Look for someone who has aggressive, innovative approaches, not just someone who’s going to put a sign in the yard and hope for the best.

7. Will you represent me exclusively, or will you represent both the buyer and the seller in the transaction? While it’s usually legal to represent both parties in a transaction, it’s important to understand where the agent’s obligations lie. A good agent will explain the agency relationship to you and describe the rights of each party. It’s also possible to insist that the agent represent you exclusively.

8. Can you recommend service providers who can assist me in obtaining a mortgage, making repairs on my home, and other things I need done? Keep in mind here that agents should generally recommend more than one provider and should tell you if they receive any compensation from any provider.

9. What type of support and supervision does your brokerage office provide to you? Having resources such as in-house support staff, access to a real estate attorney, or assistance with technology can help an agent sell your home.

10. What’s your business philosophy? While there’s no right answer to this question, the response will help you assess what’s important to the agent—fast sales, service, etc.—and determine how closely the agent’s goals and business emphasis mesh with your own.

11. How will you keep me informed about the progress of my transaction? How frequently? Using what media? Again, this is not a question with a correct answer, but that one reflects your desires. Do you want updates twice a week or don’t want to be bothered unless there’s a hot prospect? Do you prefer phone, e-mail, or a personal visit?

12. Could you please give me the names and phone numbers of your three most recent clients?

© Copyright, 2008, by the NATIONAL ASSOCIATION OF REALTORS®