What are Contingency Provisions? Do I need them?


Contingency provisions
describe an event, activity or condition which needs to occur before the purchase agreement transaction can proceed toward closing. On the occurrence of the event or approval of information described in a contingency provision, the contingency has been satisfied and is no longer an obstacle to further performance and closing.

Contingency provisions authorize the buyer or seller to cancel the transaction when:

  • the described event fails to occur; or
  • the information received is disapproved.

Contingency provisions stating conditions allowing for the termination of an agreement are separated into two categories:

  • event-occurrence contingency provisions — those provisions satisfied by the existence, completion or outcome of an activity or event which eliminates the contingency; and
  • further-approval or personal-satisfaction contingency provisions — those provisions satisfied by the receipt, review and approval of data, documents and reports which eliminate the contingency.

Event-occurrence contingency provisions address the occurrence of specific activities and events, such as:

  • the sale or acquisition of other property by the buyer or the seller;
  • obtaining purchase-assist financing;
  • the approval of building permits; and
  • the elimination of title conditions, or the release of encumbrances, such as liens or leases.

Further-approval contingency provisions address the right of the buyer or seller to cancel the transaction on their disapproval due to unacceptable property conditions and
material facts, such as:

  • disclosures and inspection reports concerning the physical integrity and natural and environmental hazards of the property;
  • appraisals;
  • title reports; and
  • rental income and expenses.

To terminate a purchase agreement under a contingency provision, the buyer or seller needs to have a reasonable cause to cancel for the cancellation to be enforceable. When a reasonable basis exists, they may avoid enforcement of the purchase agreement by the other person by notice of cancellation.

Contingency provisions contained in purchase agreements are eliminated by either:

  • satisfaction of the contingency provision by the occurrence of an event or by someone’s approval of the conditions contained in information, data, documents or a report; or
  • waiver or expiration of the contingency provision.

Contingency provisions are unique as they deal with uncertainties at the time an agreement is entered into. As a matter of good practice, contingency provisions are included in purchase agreements to eliminate any uncertainty about aspects the property’s title, income/expenses or physical condition. Before escrow is able to close, contingency provisions need to be eliminated.

Solar Panels: Pros & Cons


As the cost of electricity increases, more homeowners are thinking about purchasing solar panels or enrolling in a solar lease program. Before committing your time, effort and money, consider these solar panel system pros and cons:

PROS

    • Solar panels add value to your home. Nine out of ten homebuyers prefer to purchase an energy-efficient home even if the price is 2%-3% higher than a similar non-energy-efficient home, according to the National Association of Home Builders.
    • The federal government offers a 30% Investment Tax Credit against your personal income taxes on the purchase of a solar panel system.
    • Solar lease programs offer a no-money-down option, a locked-in reduced electrical rate and a full warranty for the duration of the lease.
    • Solar panel systems save you money on your monthly electrical bill. A solar lease provides an average 15% savings on monthly utility costs. The savings are even higher for panels that are purchased outright. However, this is offset by the cost of the panels. California is also a “net metering” state which means you receive credit on your electric bill for any excess energy your solar panels produce.

CONS

    • Solar panel systems can cost $15,000-$30,000 installed.
    • You may have to perform costly roof repairs before you can install solar panels.
    • Solar lease contracts may cause a delay in closing or even cancellation of a pending home sale. Some buyers may not qualify to assume your solar lease. However, most solar companies will allow you to buy your solar panel system if you are interested in converting the lease. In this case, you will then need to negotiate with the buyer the price they are willing to pay for the existing system.
    • Solar panel systems are long-term investments. On average, it takes a homeowner 20 years to pay off the full cost of a solar panel system. Solar leases eliminate the investment aspect, but still require a similar, lengthy commitment.

Remember to keep me in mind for all your real estate needs. Thanks!

How to Stage a House for Free: 7 Ideas That Don’t Cost a Dime

One of the most common mistakes sellers make is assuming they need to sink a bunch of money into home staging. Some choose the expensive route—swapping out their furniture and art at the behest of a hired professional home stager—but that’s not the only way to impress potential buyers.

“Everyone needs to stage their home to sell it efficiently,” says Laura McHolm, co-founder of NorthStar Moving. “But you do not need to spend a lot of money to stage your home.”

Want to get your house in tiptop shape without spending a dime? Follow these home staging ideas that are 100% free.

1. Depersonalize

The first step to staging your home is getting rid of personal items such as photos, albums, handmade items, trophies, and mementos—even the kids’ artwork on the fridge.

“No family pictures,” says McHolm. “A buyer wants to be able to envision living in that house. It’s not your house anymore. It’s a house that will soon be their house. So get the ‘you’ out of your house.”

Removing your personal items isn’t easy—they’re the things that make your house feel like your home, but keep in mind that it’s only temporary. Pack them up and store them safely until you can find them all spots of honor in your new place.

2. Declutter

All that stuff littering the surfaces of your home has to go.

“Most surfaces should have between three to five items on them, because clutter is distracting both in photos and in person,” says property stylist Julie Chrissis, of Chrissis & Company Interiors. “You want buyers looking at the home, not the stuff.”

This means eliminating piles of mail and magazines, collections you have on display, knickknacks, and most other items that can easily be packed away.

3. Nix the extra storage

If you’ve been living in your current home for a while, you’ve probably come up with a lot of creative ways to store all of the items you’ve accumulated. But now that you’re hoping to sell, it’s time to get rid of them. Purge!

“Eliminate any plastic storage bins, over-door storage, above-cabinet storage, and extra racks in rooms,” says Chrissis. “This is important because buyers never want to think they will outgrow a home. A seller’s job is to show them there is plenty of storage space for them to grow into.”

Since all those stored items are already packed into bins and baskets, it should be simple enough to move them to a storage facility until you’ve moved.

4. Deep clean

Even if you consider yourself a neatnik, you’re probably going to need to do a little extra work to get your house ready for buyers.

“Take a critical eye to your home. Living somewhere daily reduces the things you notice that might be a problem, like dirty walls, scuffs and scrapes, leaks, or even odors you have become accustomed to,” says Marty Basher, home organization expert at ModularClosets.com. “Also, deep clean the kitchen and bathrooms. These areas of the home are generally the most cluttered and dirty. Both of those things will turn off willing buyers.”

It might help to ask a friend or family member to come by and help you find areas that need attention. Someone who doesn’t live in your house will be better able to look at your space through the eyes of a buyer.

5. Change the furniture layout

Maybe you’ve placed your couch at an odd angle to keep the sun out of your eyes during your midday nap, or your armchair is in the middle of the room so you can better see the TV. Those things are all fine for you—but not for buyers. Now it’s time to stage the room for optimal space and flow.

“Room layouts should be set up for photos first. It’s important that the photo not be of the back of a sofa, large chair, or other piece of furniture, as this makes the room look smaller because it blocks the view of part of the room,” says Chrissis. “The same goes for open houses and showings. If buyers see a room with furniture barriers, it makes the room seem smaller.”

6. Let there be light

Now that your home is clean and uncluttered, it’s time to brighten things up so buyers can actually see it.

“You want natural light and lamps with warm light—no swirly bulbs that look like office light,” says Chrissis. “We tell most of our clients to remove valances as they typically make a room darker and, in most markets, are a little out of fashion. Lamps are important, especially in winter months when there is less sun and sunset is earlier.”

7. Reduce your furniture

If your house is filled to the brim with furniture, it’s time to move some of it out.

“After the home is thoroughly cleaned out, keep only up-to-date furniture in excellent condition, and just a couple of accent pieces in each room,” suggests broker and interior designer Tory Keith of Natick, MA.

Not only does this go hand in hand with making things look less cluttered, but less furniture will also make the rooms look bigger.

Move unneeded pieces to the basement, garage, or a storage facility until you’re ready to move.

Hard Luck Mine Castle

Ever wish you could get away from it all?

This four-story, 22-room, 8,000-square-foot castle for sale for $900,000 in the Nevada desert is one solution.

“In a lot of ways, it’s a ‘doomsday prepper’ dream home…extremely self-sustaining, secure and — admittedly — quite odd,” Jake Rasmuson, who is marketing the property, tells CNBC Make It.

“Basically this property is an enormous, privately owned fortress with 16-inch-thick concrete walls and self-sustained energy systems using solar and wind, and with a 4,000-gallon water storage/rain catchment system. It’s located in the middle of the Nevada desert, and the owner has added two enormous, vintage pipe organs which resonate through the halls [when played], only adding to the oddity of it all,” Rasmuson says.

So-called “doomsday preppers” are people and groups preparing for worst-case scenarios, like the end of the world as we know it. Companies that cater to doomsday preppers sell things like food preserved in military grade Mylar pouches, portable toilets, propane grills, solar panels, generators. (When the perceived tensions between the United States and North Korea increased in the summer of 2017, such companies’ sales increased, the New York Times reported at the time.)

Those who can afford to do so — think Silicon Valley tech elite and New York City financiers — are going a step further, buying bunkers and homes where they can hold up in the event of calamity. “Hard Luck Mine Castle” in Goldfield, Nevada, is one such option.

Take a look inside.

Read the rest HERE

Report Raises Concerns Over Dual Agency

Consumers are confused when it comes to dual agency arrangements in real estate, according to a new report from the Consumer Federation of America that reflects results from a consumer survey and a mystery shopper survey of real estate agents.

Two-thirds of consumers surveyed believe that real estate agents are always or almost always required to represent the interests of the home buyer or seller they’re working with. However, they’re confused when agents can also work with the other party.

“Today, many home buyers and sellers do not know whether their agent is representing their interests, those of the other party, or those of neither,” says Stephen Brobeck, a CFA senior fellow and author of the report. “Given the huge expenditure of a home purchase and the conflict of financial interests between seller and buyer, it is important that consumers know who their real estate agent is actually representing.”

States have laws requiring real estate interests and relationships to be disclosed to clients. But the CFA report suggests the laws may not be sufficient. The report says that the laws typically define agent roles as “agent,” “subagent,” “transactional agent,” “designated agent,” and “dual agent”—words consumers say they do not understand.

Also, the CFA notes that these disclosures could be diminished by the fact that they are only required to be given orally and may not be required early on during the home purchase. The CFA also notes that some agents are failing to make these disclosures or mention dual agency issues.

The failure of these disclosures can harm consumers, the report says. For example, home buyers who think subagents are working for them often have disclosed information about their finances and house price ceilings that the subagents are then legally required to share with sellers.

The CFA report calls for reforms including the prohibition of dual agency. Eight states currently ban the practice. Also, the report calls for clearer written and verbal communications from the real estate professional to the consumer about whether the agent will function as a fiduciary agent, subagent, or transaction agent or facilitator and what exactly that will mean to them.

“These reforms would benefit both consumers and real estate agents,” Brobeck says. “More informed home buyers and sellers will make better decisions. … And agents will not face the risks and ethical dilemmas of dual agency and undisclosed subagency.”

Read the CFA’s full report.

Original article

The Trending Kitchen Styles in Remodels

Farmhouse design continues to gain popularity in kitchen remodels, according to the 2019 Houzz Kitchen Trends Study, a survey of more than 1,300 homeowners who are planning or in the midst of a kitchen project.

Eighty-two percent of renovating homeowners this year who are changing the style of their kitchen says they’re making it farmhouse. Farmhouse now nearly ties contemporary in popularity (14 percent versus 15 percent, respectively). Transition—a mix of tradition and modern—still remains the most popular in kitchen design at 21 percent.

“This year’s study illuminates a number of prominent trends in today’s kitchen,” says Nino Sitchinava, Houzz principal economist. “Engineered materials are clearly taking over natural stone in countertops and flooring. Thanks in part to the versatility of these materials, white continues to dominate the kitchen, from cabinets to countertops and walls. Finally, rapid advances in wireless and voice technology are transforming some kitchens into ‘air traffic control’ centers of the home.”

Kitchens aren’t cheap to redo and are about 10 percent more expensive this year, according to the study. The median kitchen renovation cost $11,000, while a major renovation to a large kitchen (more than 200 feet) cost $33,000.

Here are some more kitchen trends that emerged from the Houzz report:

Gray cabinets: White cabinets remain the most common (43 percent), but gray cabinets are winning over more fans. About one in ten homeowners—or 11 percent—chose gray cabinets for their kitchen. Gray cabinets are then often paired with brushed or satin nickel door hardware.

White and quartz countertops: Granite continues to decline in popularity, while engineered quartz is surpassing all of the natural stone materials combined among kitchen remodelers who updated their countertops. White counters are gaining steam, making up nearly one in every three upgraded countertops.

Mixed finishes: More than half of homeowners—54 percent—say they’ve mixed metal finishes across their fixtures and hardware. For those who mix and match, nickel is popular, but many then opt for oil-rubbed bronze or brushed or satin black finish for door hardware and lighting fixtures.

Engineered flooring: Only a quarter of remodelers who updated their flooring chose natural hardwood, marking a significant decline from recent years. Engineered flooring—such as engineered wood, vinyl, and laminate—have become nearly twice as popular in the meantime.

Appliance finish: Stainless steel may still rule, but black stainless is growing more popular as an appliance finish. It is now in one of every 10 upgraded kitchens. Read The New Kitchen Finish: Black Stainless

High-tech add-ons: More than half of upgraded faucets are high-tech, including water efficiency, no-fingerprint coating, and touch-free activation. Other high-tech features in the kitchen include wireless controls in upgraded appliances and home assistants.

Original article

America’s Safest Places To Live … Where You Can Actually Afford to Buy a Home

Buying a home these days is a high-stakes, need-to-have/nice-to-have equation. You need a home within an hour’s drive of work; it would be niceto have one that’s in walkable distance. You need a full-size kitchen with room for your five-person brood; it would be nice to have a chef’s kitchen with La Cornue Grand Palais range, Meneghini Arredamenti fridge, and, heck, a Mugnaini wood-fired pizza oven. You need at least 2.5 bathrooms; it would be nice to have a master en suite spa with a touchscreen-controlled smart bidet. Dream the dream, my friends!

So what’s the neediest of all need-to-haves? You need to find a safe place to live where you can still afford a great home. And wouldn’t it be nice if there were even fun stuff to do after work and on weekends? Yes, indeed.

Realtor.com set out to find these seductive strongholds where you can have it all. And we’re not talking about the boonies: We zeroed in on metropolitan areas, which include cities and the surrounding suburbs. (Note: Cities often have higher crime rates than their less-populated surroundings.)

Research—and common sense—indicates that when crime goes up, property values go down. Meanwhile, home buyers will pay more to live in locations with lower rates of violent crime, according to a 2015 Auburn University study. It doesn’t hurt that these areas typically also have top public schools.

“When homeowners think about the biggest investment of their life, top of mind is how safe an area would be to live in and raise a family,” says Rick Palacios Jr., director of research at John Burns Real Estate Consulting.

They also want to make sure that their investment appreciates over time, which it typically won’t do as much in areas with growing crime. “High crime rates unnerve potential home buyers,” he says. Um, yeah.

The good news: Crime has declined sharply since the early ’90s. Violent offenses, which include homicide, assault, and robbery, plummeted 49% from 1993 to 2017, according to FBI data. This explains why some of our safest places were once known for riots and rampant car thefts before they rebounded. (The downside: Gentrification is leading to some longtime residents being priced out.)

The places that made our affordable safe harbor ranking are a mix of smaller metros that never really struggled with high crime, and cities once riddled with problems that have successfully pulled off a turnaround. Our list is concentrated on resurgent Midwest, Southern, and Rust Belt cities. No Western metros were included because home prices are simply too high.

We analyzed crime data provided by NeighborhoodScout, a website that tracks community data, focusing on America’s 150 largest metros. We eliminated those with high rates of violent or property crime, and with home prices above the (roughly) $300,000 national median. Next, we zeroed in on cities with great extracurriculars—running the gamut from nightlife, to kayaking, to great indie bookstores—as tracked on Yelp.com.**

Safety, affordability, and fun! Yep, they can coexist. Let’s take a tour.

Read the rest HERE

Fixed Rate Vs. Adjustable Rate Mortgage Loans


A
fixed rate mortgage (FRM) provides the classic method for calculating interest that accrues on principal over the life of a mortgage. With an FRM, the interest rate and scheduled payments remain fixed for the life of the mortgage, giving certainty to future payment obligations.

The FRM is the most consumer-friendly and risk-free type of mortgage financing. While always available for homebuyers in need of a mortgage, FRM financing for business or investment properties typically has short due dates of three to seven years. 

An adjustable rate mortgage (ARM), as diametrically opposed to an FRM, calls for periodic adjustments to the interest rate. In turn, the amount of the scheduled payments fluctuates with each interest rate adjustment over the period remaining on the mortgage’s original amortization period. 

The unique feature defining all ARMs is an interest rate formula, typically comprised of:

    • An introductory interest rate applicable for a short period of several months, also known as a teaser rate or qualifying rate
    • An index figure, a proxy for future changes in the lender’s cost of funds
    • margin rate, which does not change during the life of the mortgage and is the earnings spread a lender adds to the index figure to determine the annual rate of interest charged on principal following each adjustment in the mortgage rate
  • An adjustment interval at the end of which the mortgage interest rate is changed to reflect a rise or fall in the index figure.

The ARM’s adjusted interest rate is determined by adding the index figure to the margin rate (at set intervals, and subject to any caps or floors as limitations beyond which the mortgage rate cannot change). 

ARMs become popular when property prices or FRM interest rates rise faster than the rise in personal incomes. ARMs allow you to leverage the lower initial interest rate charged on an ARM (compared to the FRM rate) into a higher mortgage amount to fund the purchase of a home. In turn, you are able to pay a higher price for a home, but take on the risk your payments will increase over the coming years.

 

2019 Real Estate Investment Preview

2019 will be much like 2018 – but with a bit more anxiety.

The fundamental forces that have driven rents and home prices higher – more demand for housing than supply – will continue unabated. There just hasn’t been enough construction over the last years to keep up with the demand that is increasingly concentrated in big cities (but not all of them). And – good news – in these big cities the demand is mainly for rentals.

The anxiety comes from two possibilities – that a slower economy will erode the demand for more housing – and that prices are already so high that investors won’t get enough of a return to justify new investments. In short, maybe all the good deals are gone?

My own view is that investors do indeed have to approach some markets with more caution in the new year, but that there are still plenty of opportunities available.  It is important in 2019 to pay closer attention to the stats in local markets.

Let’s look at some stats from our Investors Metro Monitor reports.

Read the rest HERE