Firm advice: Consider both agent and brokerage

If you’re thinking of buying or selling, chances are you’ll select your real estate agent based upon a name referred from a friend, neighbor or relative.

Referrals are the No. 1 way both first-time and repeat buyers and sellers settle on an agent, according to surveys from the National Association of Realtors.

But when a specific agent is recommended, should the name of the realty firm he’s affiliated with also matter?

Probably, say many agents.

The agent who worked out well for a trusted friend or relative may likely be associated with a new firm now. In a 2015 survey of its members, the NAR found that 30 percent were with their present firm for one year or less, compared to 18 percent in 2014.

Some newly affiliated are brand new to the profession, but doubtless many have switched firms, acknowledges Maggie Kasperski, a spokeswoman for the NAR.

“One thing sellers should ask about is whether the brokerage has a strong web presence so that their home is easy to find,” advises Angie Lotz, of RE/MAX All Pro in Bloomingdale, Ill., noting that many buyers shop the Internet vigorously.

Firms will differ in their offerings of search technology, too. For instance, buyers glued to their smartphone should put a priority on whether an app is available giving “real-time information,” says Cindy Soderstrom of RE/MAX Signature Homes in Hinsdale, Ill. Also, the commission charged a seller can be influenced by a brokerage’s policy, adds Erika Villegas, broker-associate with ERA Mi Casa in Chicago.

Judge independent and national Realty firms equally, advises Marina Krakovsky, author of “The Middleman Economy” (Palgrave Macmillan, 2015), noting that what’s important is the firm’s local reputation.

— Marilyn Kennedy Melia
© CTW Features

Buying a condo is not the same as buying a home

Stringent lending policies and the escalating costs of home ownership have led many prospective home buyers to consider condominiums instead of single-family homes. Condos are typically less expensive than single-family homes, which makes lenders and borrowers alike feel more comfortable. Lenders feel better because the loans aren’t as large, while borrowers are more comfortable because such loans allow them to improve their standing with lenders, potentially setting the table for a low-interest home loan down the road.

But the differences between buying a condo and buying a single-family home go beyond the bottom line. The following are a few things prospective buyers should know about condos before they view any properties.

 Condos come with fees. Unlike single family homes, condos come with homeowners association fees. These fees cover the cost of maintenance and repairs to the property. This includes landscaping and garbage collection, as well as general repairs throughout the condominium complex. Fees vary significantly from community to community, and the best deal is not always the one with the lowest homeowners association fees. Low fees tend to provide less bang for the buck, generally covering only the most basic services. Higher fees often mean the community offers more amenities, such as a private pool and gym for residents. Some people prefer such amenities, while others would rather find better deals on their own. But prospective condo buyers must include fees in their monthly budgets when determining how much they can afford to spend.

 Condos come with rules. Owners of single-family homes can create their own rules for their households, while condo owners must agree to follow rules established by the homeowners association or the property management firm responsible for maintaining the community and enforcing the rules. Rules may not allow pets or only allow pets of a certain size. Other rules may restrict how owners can decorate their condos during the holiday season or how they can furnish the exterior of their properties, limiting patio furniture to a set number of chairs or tables. Some condo owners are glad such rules are in place, while others might find such stipulations intrusive. Each community has different rules, and prospective buyers should familiarize themselves with a community’s rules before buying any properties within that community.

 Condos often have management firms. Property management firms can be great to deal with, but they can be troublesome as well. A good property management firm produces satisfied community members who speak glowingly of their communities, while a poorly run management firm can frustrate homeowners who feel they are not getting what they’re paying for. Some property management firms fail to collect homeowners association fees for months at a time, only to send letters demanding back dues down the road. Others simply don’t live up to expectations, failing to make repairs in a timely manner while letting the property fall into disrepair. If possible, speak to current community residents about how the property is managed. If residents are not available, potential buyers should attempt to attend a homeowners association meeting, which can shed light on what it’s like to live within a given community and how accessible the management firm is to community members and how well it tends to those members’ needs.

 Condos are not as private as single-family homes. Much like apartment dwellers, condo owners often share walls with neighbors. That means condo owners will have to sacrifice some privacy. Prospective buyers who consider privacy a top priority may want to continue living in an apartment until they can afford to buy a single-family home. Though condo owners rarely have someone living above or below them, sharing walls with neighbors is still not as private as owning a single-family home.

Condominiums are great options for people who want to own their homes but don’t have enough money or credit history to buy a single-family home. But buyers must educate themselves about condominium life before signing on the dotted line.

Automakers accelerating on auto-braking

By Jim Gorzelany
CTW Features

 Your next car could apply the brakes on its own to help avoid a collision Your next car could apply the brakes on its own to help avoid a collision Perhaps as the first step toward driverless cars, expect advanced safety systems that can help drivers avoid, or at least lessen the effects of a crash to become widespread in the not-too-distant future.

Ten automakers recently committed to making the potentially life saving systems standard in all their vehicles sold in the U.S., presumably over the next few model years. They include Audi, BMW, Ford, General Motors, Mazda, Mercedes- Benz, Tesla, Toyota, Volkswagen and Volvo. Together, these companies were responsible for 57 percent of U.S. light-duty vehicle sales in 2014.

Other automakers could follow suit, and has been the case with important safety features like antilock brakes and electronic stability control, there’s a possibility frontal crash protection could one day be mandated for use in all cars by the federal government.

Until recently limited to the luxury car segment, frontal crashavoidance systems are fast becoming prevalent among more affordable cars and crossovers, though they’re usually offered only on costlier versions within a given car line, and are often bundled with other features in expensive options packages.

A forward collision warning/prevention system uses radar, cameras or lasers to monitor the distance between a vehicle and the traffic or other obstructions in its path. The same hardware is also used in a vehicle’s adaptive cruise control system that maintains both a set speed and distance from the traffic ahead. Basic systems will engage visual and audible alerts if it determines the car is closing in at a potentially hazardous rate of speed and pre-charge the brakes to maximize their stopping power. A full-blown collision avoidance system will go a step further and automatically apply the brakes at full force if the driver isn’t reacting quickly enough.

Most such systems operate at higher speeds with the intent of saving lives, though a few models, specifically those from Volvo and Mazda, are also selling separate auto-braking systems that operate at slower speeds to avoid fender benders in stop-and-go traffic. A few Infiniti models further offer lowspeed systems that will automatically apply the brakes while backing up to avoid hitting pedestrians and other vehicles.

According to a report conducted by the Insurance Institute for Highway Safety in Arlington, Va., autobraking technology can reduce insurance injury claims by as much as 35 percent. “The evidence is mounting that AEB is making a difference,” says IIHS’ president Adrian Lund. “Most crashes involve driver error. This technology can compensate for the mistakes every driver makes because the systems are always on alert, monitoring the road ahead and never getting tired or distracted.”

In order for a vehicle to earn IIHS’s highest Top Safety Pick+ designation, it must offer an automatic braking system in one or more of its versions. Vehicles earning a “superior” rating are able to successfully avoid a crash or substantially reduce a vehicle’s speed in tests conducted at 12 and 25 mph. To garner an “advanced” rating a vehicle must include an autobraking function and be able to avoid a crash or reduce speeds by at least 5 mph in either of the two tests. Forward collision warning systems that meet performance criteria set by the National Highway Traffic Safety Administration and autobrake systems that provide only minimal speed reduction in IIHS tests earn a “basic” rating.

As of this writing, the IIHS has given a record number of models a “superior” rating for forward crash avoidance when properly equipped, including the 2016 Acura ILX, MDX, RDX and RLX; 2016 BMW X3; 2015 Chrysler 300 and its twin, the 2015 Dodge Charger; 2016 Honda Accord Coupe and Sedan, 2015 Mercedes-Benz C-Class, CLA and E-Class; and the 2016 Mazda 6 and CX-5. The 2016 Volkswagen Golf, Golf SportWagen, Jetta and 2015 Volkswagen Touareg are deemed “advanced” for front crash prevention.

© CTW Features

Unequal DUI laws

Q&A with Sharon Peters

Q: My nephew has been picked up for driving impaired at least four times. Very little in the way of punishment ever happens. And still he drives. In my part of the country, he would have lost his license years ago, and probably would have done time. He lives in Pennsylvania. Is that known as a state that does nothing about DUI?

A: You are correct in supposing that law enforcement/ courts can treat such individuals very differently from state to state. Pennsylvania is among the 10 most lenient states (ranking number 49 out of the 50 states and District of Columbia) when it comes to how strictly DUIs are approached, according to WalletHub, which did a recent analysis of DUI enforcement rules across the country. The group examined 15 metrics, including minimum jail sentences to ignition interlock devices (which are regarded by many as a highly effective deterrent to keeping drivers who have driven drunk or stoned in the past from repeating that behavior).

Any number of approaches could be used, of course, to assess how harsh or lenient the laws relating to DUI are written … and, especially, applied. This methodology may or may not lock in on all that contributes to whether a state is a crackdown state or a soft one.

MADD, using different methodology, also put together a list of the 14 most lenient states. Pennsylvania was on that group’s list, too.

All this seems to confirm your suspicions.

Readers comment: Several terrific readers got in touch with me after a recent column in which I answered a question about gas caps not consistently being on the same side of cars, and that can lead to confusion at the pumps when one is driving a rental car or the vehicle of a spouse or someone else. “I agree with all you wrote,” one reader commented, “that it would be easier if you could count on them being on one side or the other. You should have pointed out, though, as I remember you did several months ago, that in most vehicles there is a symbol on the gas gauge that indicates which side the gas cap is on.” Indeed I should have. I always appreciate the reminders!

© CTW Features

What’s your question? Sharon Peters would like to hear about what’s on your mind when it comes to caring for, driving and repairing your vehicle. Email Sharon@ctwfeatures.com.

Paying steady with unsteady income

 Lenders put increased scrutiny on borrowers with fluctuating incomes Lenders put increased scrutiny on borrowers with fluctuating incomes Fifth-grade math skills come in handy when you’re home shopping. Lenders usually don’t want to see a monthly mortgage payment — plus all other regularly occurring debts — exceed more than about 36 to 43 percent of a borrower’s gross monthly income.

No matter how adept they are converting ratios into percentages, however, many mortgage seekers will find this equation difficult because they can’t pin down a monthly income number. A recent study by J.P. Morgan Chase Institute, a nonprofit arm of the banking firm, found that 41 percent of individuals experience monthly income fluctuations of more than 30 percent.

Irregular work schedules and other changes in employment patterns cause pay variability, posing a budget problem.

Indeed, the JPMCI report reads: “Individuals need to appreciate the degree to which income and consumption are volatile, and to prepare for the possibility that they might — unexpectedly or outside of their control — experience a negative swing in income.”

Income swings concern mortgage lenders, who will apply added scrutiny to loan applicants with variable pay stubs.

But “fluctuating income is not usually a problem as long as we can document why it is fluctuating and establish a history that makes sense,” notes Neil Caron, vice president at Freedom Mortgage Corp. in South Windsor, Conn.

An income history helps put monthly fluctuations in context. For instance, a server at a high-end restaurant who’s been on the job five years but whose annual income dropped 10 percent last year may be required to submit a letter of explanation, says Caron. And, if income has declined for two years, the lender will use the lower figure.

A consistent annual pattern of monthly fluctuations gives lenders comfort.

Still, lenders are “looking for borrowers they can trust,” notes Grace Currid, senior vice president, HomeBridge Financial Services in New York. Trust is demonstrated with a good credit score, which comes from paying bills promptly.

— Marilyn Kennedy Melia
© CTW Features

REAL ESTATE BRIEFS

Carlo Siracusa, regional vice president of Weichert, Realtors, announced that sales associate Joann Otteau of the Howell office was recognized for her exceptional industry success during the month of November. Otteau led the region, which is comprised of locations throughout Ocean and Monmouth counties, for resales. She can be reached in Weichert’s Howell office located at 626 Route 9 south, or call 732-577-0440 for more information.

Hopeful buyers’ big question: Help?

 Many potential buyers seek help with down payment. But asking for it can be difficult Many potential buyers seek help with down payment. But asking for it can be difficult How do you ask a question when no one wants to talk about the subject? Often, it’s quite clumsily, without much effort at sparking an honest exchange.

That’s what Dave Hardin, of Hardin Financial Group in Troy, Mich., has observed after working with parents whose adult children have asked for money to assist with a down payment for a home purchase.

“It is so important to be careful when thinking about asking your parents for help,” Hardin says. “Many parents are unable to be honest with their children about their own financial situation … We often see parents spending down their retirement funds.”

Money may be a sensitive topic, but necessity has driven many to ask, with first-time buyers since the recession began circa 2008 twice as likely to receive down payment help from family and friends than those who bought before, according to a report from Zillow’s Aaron Terrazas, a senior economist for the real estate company.

What’s more, high rents, still-tight credit availability and student debt have combined to make down-payment assistance key to struggling buyers, notes Terrazas. Before asking, hopeful buyers should investigate options, says David Reiss, a real estate professor at The Brooklyn Law School.

“You would want to press your lenders to identify all first-time homebuyer programs you might be eligible for,” Reiss suggests. The Federal Housing Administration offers loans with low down payments, and many state housing finance agencies offer low or no-down loans to eligible buyers, he notes.

In any case, says Reiss, “It would be helpful to know your options when speaking with family members about a gift.

“They might be willing to give a smaller gift for an FHA mortgage, or they might be willing to make a larger gift if they see that it would result in lower monthly payments for you,” Reiss says

“And, the mere fact you did this type of research is evidence that you are a financially responsible adult,” he concludes.

— Marilyn Kennedy Melia
© CTW Features

Weichert, Realtors’ Brick office donates toys to Head Start

Fran Graffeo, manager of Weichert, Realtors Brick office, announced that her office donated more than 80 toys to the O.C.E.A.N., Inc. Head Start Child Development Program as a part of the 37th Annual Weichert, Realtors Toy Drive.

“My team and I are honored to provide support to the Head Start Program and bring joy to families in need this season,” said Graffeo. “In line with the Weichert culture, we are grateful to be able to continue serving our community during the holidays.” Head Start is a comprehensive preschool program for low-income 3-5 year olds. The program provides services in five major areas: Education, Health, Social Services, Parent Involvement, and Special Needs. For more information about the program, visit: http://www.oceaninc.org/programs/o-c-ea n-inc-head-start-child-development-program/

For more information, stop by Weichert, Realtors Brick office at 740 Brick Boulevard or call 732-920-7900.

Buying resolutions require determination

By Marilyn Kennedy Melia
CTW Features

 Renters want to buy, but new buying challenges are keeping the transition to homeownership a lengthy process Renters want to buy, but new buying challenges are keeping the transition to homeownership a lengthy process It’s the time of year when people start saying, “We’re going to buy a home next year.” But, one study suggests that the majority of renters planning to buy within a year won’t: The Federal Reserve followed a group of renters who in 2013 said they’d be buying, but in a follow-up a year later, two-thirds remained renters.

The basic reason why younger adults aren’t buying homes at the same rate as earlier generations is financial, says Nela Richardson, chief economist at real estate brokerage Redfin. “A good credit score is now so important to qualify for a mortgage,” she notes. “And if you don’t have much money for a down payment, you’ll need a very good score.”

Indeed, a survey of active home shoppers aged 25 to 34 by the National Association of Realtors found the most common “trigger” pushing them into buying was an increase in income.

A boost in income can make it easier to save for a down payment, but it still can take months of on-time bill paying to repair credit, notes Richardson.

Sometimes, it’s an effort to uncover financing options that help renters buy, says Doug Leever, mortgage sales manager for Tropical Federal Credit. Since 2012, the Florida credit union has quadrupled the number of purchase mortgages it’s made, largely due to counseling borrowers on lowdown payment mortgage plans and how best to pay down debt.

According to the Federal Reserve, some 81 percent of current renters said they’d prefer to buy if they could afford it.

But renters shouldn’t always fixate on buying, notes Christopher Herbert, managing director at Harvard University’s Joint Center for Housing Studies.

Resolve to buy only if future plans align with that goal. Says Herbert: “Moving costs, including sales commission, are high, and so a rule of thumb is you should be very likely to stay put for at least five to seven years.”

© CTW Features

New rules for mortgage interest deduction

By Marilyn Kennedy Melia
CTW Features

 IRS requiring more info from lenders to confirm the mortgage interest owners can deduct IRS requiring more info from lenders to confirm the mortgage interest owners can deduct The Internal Revenue Service has a keen interest in your mortgage interest. One of the big perks of homeownership is the deductibility of mortgage interest, allowing owners to whittle down the amount of their gross income subject to tax.

That’s the broad-brush rule, but like just about all tax matters, there are exceptions. For those lucky owners of more than one vacation home, for instance, interest is deductible on the mortgage of only one home beside a primary residence.

Moreover, whenever interest either on one mortgage or two totals more than $1.1 million, the overage is not deductible, explains Melissa Labant, a tax specialist with the American Institute of Certified Public Accountants.

Another wrinkle that impacts people in all income brackets, is that any “points” paid up front when buying a home are completely deductible the year of the purchase.

But if you’re refinancing and pay points, the sum “must be amortized over the life [of the new, refinanced] mortgage,” says Labant. (A point is 1 percent of the total mortgage amount borrowed, and paying points up front lowers the rate on a mortgage.)

Confusing, yes. But if it’s any consolation, the IRS needs more help to keep track of who’s taking the right deduction. That’s why starting in 2017, for the 2016 tax year, lenders will have to send the IRS more info than the currently required for the total annual mortgage interest each loan holder pays.

Lenders will be required to include the loan’s origination date — that will help identify refinances from purchase loans, says Labant. And, they must identify the amount of outstanding principal at the beginning of the year, in addition to the address of the property.

Getting the mortgage interest deduction right is important, especially because the IRS, once it finds an error — improperly deducting points paid on a refinance, for example — will recover any tax amount due. Although new rules kick in for the 2016 tax year, mistakes made in the past, once discovered, will trigger a bill.

CTW Features