My Real Estate Blog

C.A.R. Green Tip of the Week: Convectional idea

A toaster oven uses one-third the energy of a full-size oven and is ideal for heating small items.

Reprinted from C.A.R.

For all of the excitement of choosing plumbing fixtures, cabinets, and tiles for a remodeling project, the most important decision you make won't involve color swatches or glossy brochures. It's the contractor you pick that makes or breaks the job. That choice will determine the quality of the craftsmanship, the timeliness of the work, and the amount of emotional and financial stress the process puts on you. To make sure you're getting the best contractor for the job, here are five questions to ask the candidates.

1. Would you please itemize your bid?

Many contractors prefer to give you a single, bottom-line price for your project, but this puts you in the dark about what they're charging for each aspect of the job. For example, let's say the original plan calls for beadboard wainscot in your bathroom, but you decide not to install it after all. How much should you be credited for eliminating that work? With a single bottom-line price, you have no way to know.

On the other hand, if you get an itemized bid, it'll show the costs for all of the various elements of the job-demolition, framing, plumbing, electrical, tile, fixtures, and so forth. That makes it easier to compare different contractors' prices and see where the discrepancies are. If you need to cut the project costs, you can easily assess your options. Plus, an itemized bid becomes valuable documentation about the exact scope of the project, which may eliminate disputes later.

The contractor shouldn't give you a hard time about itemizing his bid. He has to figure out his total price line by line anyway, so you're not asking him to do more work, only to share the details. If he resists, it means he wants to withhold important information about his bid-a red flag for sure.

2. Is your bid an estimate or a fixed price?

Homeowners generally assume that the bid they're seeing is a fixed price, but some contractors treat their proposals as estimates, meaning bills could wind up being higher in the end. If he calls it an estimate, request a fixed price bid instead. If he says he can't offer a fixed price because there are too many unknowns about the job, then eliminate the unknowns.

"Have him open up a wall to check the structure he's unsure about or go back to your architect and solidify the design plans," says Tampa, Fla., attorney George Meyer, who is chair-elect of the American Bar Association's Forum on the Construction Industry. If you simply cannot resolve the unknowns he's concerned about, have the project specs describe what he expects to do-and if he needs to do additional work later, you can do a change order (http://www.houselogic.com/articles/what-remodeling-contract-should-say/) (a written mini-bid for new work).

3. How long have you been doing business in this town?

A contractor who's been plying his trade locally for 5 or 10 years has an established network of subcontractors and suppliers in the area and a local reputation to uphold. That makes him a safer bet than a contractor who's either new to the business or new to the area-or who's planning to commute to your job from 50 miles away.

You want to see a nearby address (not a PO box) on his business card-and should ask him to include one or two of his earliest clients on your list of references. This will help you verify that he hasn't just recently hung his shingle-and will give you perspective from a homeowner who has lived with the contractor's work for years. After all, the test of a quality job, whether it's a bluestone patio or a family room addition, is how well it stands the test of time.

4. Who are your main suppliers?

You've found a few potential contractors, you've talked to the happy former clients on each of their reference lists, now it's time for one additional bit of homework: talking to their primary suppliers. There's no better reference for a tile setter, for example, than his preferred tile shop; for a general contractor than his favorite lumberyard or home center pro desk; for a plumber than the kitchen and bath showroom where he's on a first name basis.

The proprietors of these shops know a contractor's professional reputation, whether he has left a trail of unhappy customers in his wake, if he's reliable about paying his bills-and whether he's someone you'll want to hire. The contractor should have absolutely no qualms about telling you where he gets his materials, as long as he's an upstanding customer.

5. I'd like to meet the job foreman-can you take me to a project he's running?

Many contractors don't actually swing hammers. They spend their days bidding new work and managing their various jobs and workers. In some cases, the contractor you hire may not visit the jobsite every day-or may not even show himself again after you've signed the contract. So the job foreman-the one who's working on your project every day-is actually the most important member of your team.

Meeting him in person and seeing a job that he's running should give you a feel for whether he's someone you want managing your project. Plus, it gives the general contractor an incentive to assign you one of his better crews since you're more likely to hire him if you see his A Team. If the contractor says he'll be running the job himself, ask whether he'll be there every day. Again, he'll want to give you a positive response-something you can hold him to later on.

It's not only the answers to these questions that will help you judge potential contractors-it's the way they answer them. Were they easy to talk to and forthcoming with details or did they hem and haw and make you ask more than once? Difficulty communicating now means difficulty communicating on the job later. But clear, timely and thoughtful responses-combined with terrific references, great completed work that you've seen, and a smart take on your project-may mean you've found the right pro for your job.

A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.

Home prices rise in 17 cities in June

By ALAN ZIBEL, AP Real Estate Writer – Tue Aug 31, 10:51 am ET

WASHINGTON – Home prices rose in June for a third straight month as now-expired tax credits inspired a burst of home-buying. But prices are expected to fall through the rest of the year now that demand has faded.

The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday posted a 1 percent increase in June from May and was up 4.2 percent from a year ago.

Seventeen cities showed monthly price gains. Still, the gains were weaker from the previous month in several markets, including San Francisco, San Diego and Los Angeles.

Home prices nationally were up 4.4 percent in the April-to-June quarter. That followed a decline of 2.8 percent in the January-to-March quarter. The jump was largely because buyers could take advantage of government tax credits of up to $8,000.

Home sales have dropped sharply since those incentives expired. Lending standards remain tight, unemployment is stuck near double digits and foreclosures are expected to remain at extraordinary levels.

"We do not take this report as a signal of future strength," wrote BNP Paribas economist Yelena Shulyatyeva. She expects the Case-Shiller report to show price declines by August. Economists at IHS Global Insight project home prices will fall by up to 8 percent and hit the bottom sometime next year.

The biggest monthly increases in June were in Chicago, Detroit and Minneapolis. Prices rose 2.5 percent in each of those cities. Prices in Seattle and Phoenix were flat. Home prices in Las Vegas fell 0.6 percent.

Nationally, prices have risen 6 percent from their April 2009 bottom. But they remain 28 percent below their July 2006 peak.

Prices are widely expected to fall in the second half of the year. Sales of previously occupied homes plunged in July to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas.

The inventory of unsold homes on the market has grown. At the current sales pace, it would take more than a year to exhaust the inventory on the market nationwide, compared with a healthy level of about six months.

When unsold homes sit on the market, sellers are forced to lower their asking prices. And homeowners looking to trade up may be forced to back out of purchases because they can't sell their homes.

Pam Geller and her husband have been trying to sell their two-bedroom condominium in Los Angeles so they can buy a house. It remains unsold after more than two months on the market, even after the couple lowered the price to $359,000 from $399,000.

They're close to completing the purchase of their next home. But the deal will collapse unless they find a buyer in two weeks. Geller said she's unwilling to slash the price further.

With home prices likely to fall, Geller wonders if it might be better to wait to buy another home. "What I see is houses still dropping" in value, she said.

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AP Real Estate Writer Alex Veiga contributed to this report from Los Angeles.

(This version CORRECTS Corrects quarterly increase to 4.4 percent. )

Fannie Mae offers online resource to educate struggling homeowners

Fannie Mae recently announced the launch of KnowYourOptions.com, a new consumer education Web site outlining the choices available to homeowners struggling to meet their mortgage obligations.  The online resource, which offers information in both English and Spanish, provides guidance on how borrowers can contact and work with their mortgage servicer to find solutions.
 
Key features of KnowYourOptions.com include:

• Interactive Options Finder to help homeowners identify options that might be right for their situation;
• Calculators to help borrowers understand how many of the options work, including refinance, repayment, forbearance, and modification;
• Videos featuring real homeowners discussing how they received help and housing counselors providing advice;
• A virtual assistant to walk homeowners through key areas of the site; and
• Next steps and helpful forms, including a financial checklist and contact log to help borrowers be prepared when contacting their mortgage company or housing counselor.

Fannie Mae plans to implement a comprehensive marketing outreach campaign to raise awareness about the site and also intends to use the site as a vehicle to roll out new options for borrowers that are currently being developed.

Reprinted from C.A.R.

FHA launches refi program for underwater borrowers

The Federal Housing Administration (FHA) last week provided details on its “FHA Short Refinance” program that will enable lenders to provide additional refinancing options to underwater homeowners.  Beginning Sept. 7, the FHA is offering eligible underwater non-FHA borrowers the opportunity to qualify for a new FHA-insured mortgage.

Participation in FHA's refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score greater than or equal to 500. The property must be the homeowner's primary residence and the borrower's existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115 percent.

Additionally, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.

Reprinted from C.A.R.