Should the newly discovered roof problems be communicated to the buyer?

Question:  A home is under contract to sell.  Inspection is completed.  Buyer requests repairs to roof.  Seller agrees to make repairs.  While making the repairs the contractor finds the damage to be more extensive than was previously recognized and tells the seller that additional work is needed for the roof to be in good condition.  The seller wants to limit the repair only to the damage identified in the initial inspection and does not want the buyer to know of the additional damage.  Should the newly discovered problems be communicated to the buyer?
Answer:  Yes.  The additional defects fall under the sellers obligation to disclose all known defects to the property.  The seller had no obligation to discover the additional roof defects.  But, once they are known, regardless of how, failing to disclose them now would amount to concealment of pertinent facts about the property. 

The 100 Best Business Books of All Time: How Many of These Books Have You Read?

You: Improving your life, your person and your strengths.

•  Flow by Mihaly Csikzentmihalyi
•  Getting Things Done by David Allen
•  The Effective Executive by Peter Drucker
•  How to Be a Star at Work by Robert E. Kelley
•  The 7 Habits of Highly Effective People by Stephen R. Covey
•  How to Win Friends & Influence People by Dale Carnegie
•  Swim with the Sharks Without Being Eaten Alive by Harvey B. Mackay
•  The Power of Intuition by Gary Klein
•  What Should I Do with My Life? by Po Bronson
•  Oh, the Places You’ll Go by Dr. Seuss/Theodore Geisel 
•  Chasing Daylight by Eugene O'Kelly  

Leadership: Inspiration. Challenge. Courage. Change.

•  On Becoming a Leader by Warren Bennis
•  The Leadership Moment by Michael Useem
•  The Leadership Challenge by James M. Kouzes and Barry Z. Posner
•  Leadership Is an Art by Max De Pree
•  The Radical Leap by Steve Farber
•  Control Your Destiny or Someone Else Will by Tichy and Sherman
•  Leading Change by John P. Kotter
•  Questions of Character by Joseph L. Badaracco, Jr.
•  The Story Factor by Annette Simmons
•  Never Give In! Speeches by Winston Churchill

 Strategy: Eight organizational blueprints from which to draft your own.

•  In Search of Excellence by Thomas J. Peters and Robert H. Waterman, Jr.
•  Good to Great by Jim Collins
•  The Innovator’s Dilemma by Clayton M. Christensen
•  Only the Paranoid Survive by Andrew S. Grove
•  Who Says Elephants Can’t Dance? by Louis V. Gerstner, Jr.
•  Discovering the Soul of Service by Leonard Berry
•  Execution by Larry Bossidy and Ram Charan
•  Competing for the Future by Gary Hamel and C. K. Prahalad

Sales and Marketing: Approaches and pitfalls in the ongoing process of creating customers.

•  Influence by Robert B. Cialdini, PhD
•  Positioning by Al Ries and Jack Trout
•  A New Brand World by Scott Bedbury with Stephen Fenichell
•  Selling the Invisible by Harry Beckwith
•  Zag by Marty Neumeier
•  Crossing the Chasm by Geoffrey A. Moore
•  Secrets of Closing the Sale by Zig Ziglar
•  How to Become a Rainmaker by Jeffrey J. Fox
•  Why We Buy by Paco Underhill
•  The Experience Economy by B. Joseph Pine II and James H. Gilmore
•  Purple Cow by Seth Godin
•  The Tipping Point by Malcolm Gladwell

Rules and Scorekeeping: The all-important numbers behind the game.

•  Naked Economics by Charles Wheelan
•  Financial Intelligence by Karen Berman and Joe Knight
•  The Balanced Scorecard by Robert S. Kaplan and David P. Norton

Management: Guiding and directing the people around you.

•  The Essential Drucker by Peter Drucker
•  Out of the Crisis by W. Edwards Deming
•  Toyota Production System by Taiichi Ohno
•  Reengineering the Corporation by Michael Hammer and James Champy
•  The Goal by Eliyahu M. Goldratt and Jeff Cox
•  The Great Game of Business by Jack Stack with Bo Burlingham
•  First, Break all the Rules by Marcus Buckingham and Curt Coffman
•  Now, Discover Your Strengths by Buckingham and Clifton
•  The Knowing-Doing Gap by Jeffrey Pfeffer and Robert I. Sutton
•  The Five Dysfunctions of a Team by Patrick Lencioni
•  Six Thinking Hats by Edward De Bono

Biographies: Seven lives. Unlimited lessons.

•  Titan by Ron Chernow
•  My Years with General Motors by Alfred P. Sloan, Jr.
•  The HP Way by David Packard
•  Personal History by Katharine Graham
•  Moments of Truth by Jan Carlzon
•  Sam Walton: Made in America by Sam Walton with John Huey
•  Losing My Virginity by Richard Branson

Entrepreneurship: Seven guides to the passion and practicality necessary for any new venture.

•  The Art of the Start by Guy Kawasaki
•  The E-Myth Revisited by Michael E. Gerber
•  The Republic of Tea by Mel Ziegler, Patricia Ziegler, and Bill Rosenzweig
•  The Partnership Charter by David Gage
•  Growing a Business by Paul Hawken
•  Guerrilla Marketing by Jay Conrad Levinson
•  The Monk and the Riddle by Randy Komisar with Kent Lineback

Narratives: Six industry tales of both fortune and failure.

•  McDonald’s: Behind the Arches by John F. Love
•  American Steel by Richard Preston
•  The Force by David Dorsey
•  The Smartest Guys in the Room by Bethany McLean and Peter Elkind
•  When Genius Failed by Roger Lowenstein
•  Moneyball by Michael Lewis

Innovation & Creativity: Insight into the process of developing new ideas.

•  Orbiting the Giant Hairball by Gordon MacKenzie
•  The Art of Innovation by Tom Kelley with Jonathan Littman
•  Jump Start Your Business Brain by Doug Hall
•  A Whack on the Side of the Head by Roger Von Oech
•  The Creative Habit by Twyla Tharp
•  The Art of Possibility by Rosamund Stone Zander and Benjamin Zander

Big Ideas: The future of business books lies here.

•  The Age of Unreason by Charles Handy
•  Out of Control by Kevin Kelly
•  The Rise of the Creative Class by Richard Florida
•  Emotional Intelligence by Daniel Goleman
•  Driven by Paul R. Lawrence and Nitin Nohria
•  To Engineer is Human by Henry Petroski
•  The Wisdom of Crowds by James Surowiecki
•  Made to Stick by Chip Heath and Dan Heath

Takeaways: What everyone is looking for.

•  The First 90 Days by Michael Watkins
•  Up the Organization by Robert Townsend
•  Beyond the Core by Chris Zook
•  Little Red Book of Selling by Jeffrey Gitomer
•  What the CEO Wants You to Know by Ram Charan
•  The Team Handbook by Peter Scholtes, Brian Joiner, and Barbara Streibel
•  A Business and Its Belief by Thomas J. Watson, Jr.
•  Lucky or Smart? by Bo Peabody
•  The Lexus and the Olive Tree by Thomas L. Friedman
•  Thinkertoys by Michael Michalko 
•  More Than You Know by Michael J. Mauboussin

Sellwood Bridge Project - September 30, 2009 - Open House

The sixth public event for the Sellwood Bridge project will be held on Wednesday, September 30, 2009 from 5:30 to 7:30 p.m. in the Oaks Park Dance Pavilion (7100 SE Oaks Park Way). The goal for this meeting is to share information revisions made to the preferred alternative that have been made since the Draft Environmental Impact Statement (Draft EIS) was published. These revisions were made to comply with various agency policies and regulations. They include:

Refining access to properties with driveways on SW Macadam Avenue

Mitigating historic and natural resource impacts

Improving bicycle and pedestrian facilities on the west side

Narrowing the bridge cross section near the west side interchange

Planning more detailed connections to transit and trails

Additional information regarding the Sellwood Bridge Project is available on line at http://www.sellwoodbridge.com/

Do not be caught off guard by property tax hold backs or debits at closing.....

If you are buying a home and closing before October 15th, most lenders will now require a tax holdback (where escrow holds money until your property tax bills come out) and that can be as much as 14-15 months of taxes because of the holdback and any reserves.
If you are selling a home before October 15th, you will receive a debit on their closing statement from July 1st to closing, even if they have a property tax escrow account, because the property taxes are not paid until November 15th by their mortgage escrow account. This can be unexpected to buyers and sellers closing at this time of the tax year. Do not be caught off guard by this at closing.

Economy News...Housing...So where are we at today?

MBS Rates are slighty lower today after a pretty good rally yesterday afternoon... with resistance currently...equities trying to weaken but buying pressure has held that in check so far this morning. If you start to see a big sell off in equities that will flow over into better rates.


Yesterday's sell off was led by a worse than expected existing home sales, off setting a better than expected jobless claim number...

Today durable goods come in at -2.4%, worse than the expected .5%...

New Home sales rose .7%, the fifth straight increase...but lower than the 1.6% expected, and including a July revision lower...

Consumer Sentiment rose to 73.5 in September from 65.7 in August.
Also a disappointing number from RIMM is leading the whole tech sector down.

So where are we at? Disappointing economic data is pointing toward a slow recovery, especially in housing, but as the bears try to make a Sept swoon happen, we are seeing enough strength in equities that it hasn't happened yet. On the rate side MBS are near 4 month highs, amazing range we have seen for the last month or so... but remember the winding rubber band effect... the longer MBS stay within trading range, the tighter the rubber band winds, and when it snaps the break out is usually significant. The last time we had a similar range and reached the lows of the year we lost over a point in interest rate in 3 days -- buyer or I should say floater beware!

Lenders are now requiring a copy of the home inspection and making additional repairs a condition of funding.

A requirement that is expanding in usage within the secondary markets to which mortgage loans are sold is a requirement that can and will affect sellers and buyers.


If it is indicated in the Earnest Money Agreement that there is an Inspection Contingency, it is likely that an underwriter will require a copy of the Inspection Report and require that any items of consequence be repaired prior to funding. I am finding this to be true especially with FHA transactions and in increasing numbers with Conventional transactions. With REOs and Short Sales commanding a significant percentage of the current market, this is a real problem as buyers are in many cases investing thousands of dollars in repairs to a property before they actually own the property in cases where the Bank is unwilling to make the required repairs.


SO.....WHAT TO DO?


* As a seller have the property pre-inspected, thus removing the unknowns from the equation before the property is under contract.


* For REO buyers, the listing agents must take a more aggressive stance with the Banks, from the outset, on repair issues. It is my experience the Banks will almost invariably say no initially, but when pushed, will sometimes agree to foot the bill for needed repairs in order to off load the property.


* For sellers finding a repair contractor that will agree to be paid out of Escrow is an acceptable solution.

New Construction National Averages. How do we compare in the Portland Region?

In 2008:

* The average single-family house completed had 2,519 square feet, 764 more square feet than in 1978.


* Fiber cement, as a principal type of exterior wall material, is reported separately for the first time. It was used to build 12% of new single-family homes sold nationally. It is primarily used in the West region.


* The average single-family home sold was built on a lot of 18,433 square feet. On average, lot sizes were the largest in the Northeast at 44,781 square feet, and were the smallest in the West at 10,062 square feet.


* 13% of all new single-family homes sold were built on lots of at least 22,000 square feet (approximately a half an acre); this is a 2 percentage point increase from 1998.


* 67% of all new single-family homes completed were speculatively built (house and land are sold together as part of the same transaction), up from 63% in 1988.


* 36% of new single-family homes completed had four or more bedrooms; an increase of 10 percentage points from 20 years ago.


* In single-family homes with 4 or more bedrooms, nearly 60% had 3 bathrooms or more.


* 27% of new single-family homes sold had 3 or more bathrooms, which more than doubled the rate from 1988 (13%).

* 51% of all single-family homes were completed in the South region, up 9% from 1988.


* 40% of new single-family homes sold fell within the price range of $150,000 to $249,999. Most of these homes were sold in the Midwest and the South.


* Nearly 90% of all single-family homes completed had air conditioning.


* Nearly 20% of new single-family homes sold had at least a 3-or-more-car garage; 70% of new single-family homes sold had a 2-car garage.


* In 3 out of 4 regions, over half of the new single-family homes completed had 2 or more stories: 80% in the Northeast, 46% in the Midwest, 53% in the South and 60% in the West.


* At least ¾ of homes completed in the in the Northeast and Midwest had a basement, but in the West, only 20% had a basement and in the South, only 10% of the homes had basements.


* Across the country, over half of all single-family homes sold had at least one fireplace.


* 28% of new single-family homes completed had a deck, down from 32% in 1998.


* 65% of all new single-family homes sold used gas as the primary source of heating fuel and approximately 34% use electricity as the primary source. The Northeast region continues to have the majority of new homes sold that use oil as the primary source of heating fuel.


* 34% of all new single-family homes completed were installed with heat pumps as the primary type of heating system. This matches the 2007 share which was the highest percentage on record for this method of heating.

* Attached single-family homes accounted for 15% of all new single-family homes sold, up from 10% in 1998.


* Vinyl siding is the most common principal exterior material at 32% of new single-family homes sold. In 1998, wood was 15% of the share, but has reduced to 6%. Regionally, the exterior wall material of preference is: Vinyl - Northeast (78%), and Midwest (67%); Brick - South (42%) and Stucco - West (64%).

* 16% of all new single-family homes sold were financed by an FHA loan, up from 4% for the years 2005 through 2007.


* The average sales price of new single-family homes sold was $292,600. In 1998, the average sales price was $181,900. This is a price increase of over 60%.


* The average price per square foot for new single-family homes sold was $88.31, down from $92.74 in 2007. This is the first year-to-year decrease in the average price per square foot since 1999. Regionally, the price per square foot is the most expensive in the Northeast at $117.91 and the least expensive in the South at $79.64.


* 23,000 new single-family homes were modular homes, down 21,000 units (nearly half) from 1998. This represents about 3% of all homes completed; however, this method of construction was most prevalent in the Northeast, with nearly 10% of units built this way.


* Multi-family construction has fluctuated considerably from 636,000 units in 1986 to 153,000 units in 1993. It rebounded to 325,000 units in 2006, but decreased to 301,000 units in 2008.


* 34% of multi-family units completed were built for sale, up from 18% in 1998; this is an increase of over 25%.


* The average square feet in multi-family units completed and built for sale was 1,550. This was 190 more square feet than in 1999. On average, the South has the largest multi-family units at 1,712 square feet.


* 96% of multi-family units completed and built for sale were conventional apartments (all units are stacked or share common utilities).


* 69% of multi-family units were in buildings with 20 or more units, up from 61% in 2007 and only 30% in 1986.


* 75% of multi-family units had less than 1,400 square feet, up from 69% in 2007.


* Multi-family buildings with 1-3 floors fell to 17,000, the second-lowest level since data were first collected in 1973. Multi-family buildings with 4 floors or more remained steady at 2,000, increasing their share of total multi-family buildings to12%, up from 9% in 2007 and only 2% in 1998.

By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- New home building increased in August, a government report said Thursday, further signaling that home builders are regaining their confidence in the housing market recovery.
Building permits rose 2.7% to 579,000 from a revised 564,000 in July.

Helping to boost demand for new homes has been the first-time homebuyer tax credit, which has enabled many builders to reduce their inventories of unsold homes.

"Many builders have not only reduced excess inventory, but now are actually reporting such low inventory that they need to start more homes to replace those they've just sold," said Brad Hunter, chief economist for Metro study, a real estate analytics firm.


Both starts and permits are still well off from their levels of a year ago. The number of starts is down 29.6% from 849,000 last August, and permits dropped 32.4% from 857,000 last year.

There are some clouds on the horizon. Foreclosures continue to trouble many markets; another 76,000 homes were repossessed by banks in August. That was actually an improvement over recent months, but the expectation is that the rate of foreclosures will begin rising again.


That's because a great number of non-conventional mortgage loans, including interest-only mortgages and option ARMS, will reset over the next year or so, yielding substantial increases in the monthly mortgage payments for homeowners. Many people will not be able to afford the increases.

Real estate analysts predict a spike in these resetting loans, which might force another wave of homeowners into foreclosure.

The fear is that all these foreclosed homes will flood the market and drive down prices even more for existing homes, making it harder for new-home builders to compete.

Can I amend my 2008 tax return if I bought my 1st home in 2009 to get my tax credit sooner?

Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

Home Price Reduction Levels Rise for Fourth Straight Month

RISMEDIA, Sept 16, 2009 - Trulia, Inc announced that 26% of homes currently on the market in the United States as of September 1, 2009 have experienced at least one price cut. Price reduction levels have increased for the fourth straight month and have seen a 10% overall increase compared to June of this year. The average discount for price-reduced homes remains at ten percent off of the original listing price.  The steady rise in price reductions is a signal that sellers are still trying to adjust to the ever changing market conditions,” said Pete Flint, Trulia co-founder and CEO. “We expect the $8,000 federal tax incentive to extend the peak home purchasing season beyond the summer months, continuing to drive competition amongst sellers and ultimately leading to more price reductions, giving consumers a great opportunity to find the home of their dreams.” 

Several cities have seen four consecutive months where the percent of homes that have seen a price reduction has increased month-over-month, underscoring that sellers across the country might not be fully adjusting their home value expectations to the current real estate market.

Luxury homes (those listed at two million dollars and above) continue to bear the brunt of discounts being offered with an average of 14% being slashed from the original asking price compared to the national average of 10%. Additionally, luxury homes represent barely 2% of all current listings on Trulia, but are responsible for 25% of the $28.5 billion in home price reductions.

Rates are moving up this morning as equities advance to 2009 highs...and the inverse relationship is back today...equities up, bonds prices down and rates up... :( !


Here is the scoop:

Yesterday Ben Bernanke came and said we are out of the recession, while certainly a very important figure, his comments didn't seem to move the markets much... but this morning Warren Buffett comes and says the same thing and markets went from down to up...big market move!


Also on the move up today is Oil, above 71 dollars on a weaker dollar and a drop in crude oil supplies...


CPI came in .4% higher last month, .1% higher than the .3% expected….Core CPI was up .1%. Gasoline was up 9.1% last month...


Industrial production rose .8% last month, while last month was revised to 1% gain…led by cash by clunkers demand...


Mortgage Backed Securities have rebounded to flat.

Can I get the tax credit if I choose to build on a lot that I already own?

Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009. In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

Are there income limits for claiming the tax credit?

Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phase out range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

~Peggy

Can I get the first time home buyer tax credit if my spouse owns a home that we live in but I am not on the mortgage or title of the home?

No. The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

~Peggy

Is the Future Doom and Gloom Continues...

Darius,


You did ask a series of questions. I perceived you were expressing an opinion rather than asking for my perspective. At this time there are more short sales in our inventory than ever. Buyers on a time line for a move are not able to buy short sales. Investors with no timing pressures buy short sales. This disparity creates a divided market.

With one exception I am not seeing price increases. The exception being lower supply, higher demand neighborhoods. Seasonality is a factor, however, there is a pent up demand. Buyers delayed purchases when values were going down and they were unable to sell their homes.

In the last 90 days buyers are moving from the fence to the field. Each year the market moves like a flock of birds, some years more pronounced. After a slow period is a more active period. This year is pronounced because we saw buyers hold off for an extended period. May and June of 2008 we had seasonal pick up with little effect on inventory and we saw continued decline in values. This year we have seen a longer period of activity, reduced inventory and a slight locational increase in prices from the first quarter of the year. Seasonality being a factor, fueled by the belief that we are at the bottom and by the $8K credit soon to go away and people want to get back to normal.

In the Portland region the shadow inventory, is a small segment of the market and similar to the short sales will not have significant impact on values.

Rising interest rates if they occur to soon will cause this to be a false start and could throw us into even steeper declines if buyers lose faith in real estate. If rates rise too rapidly it will adversely effect affordability. If they wait to raise the rates until the supply and demand are balanced raising them gradually will help the market grow at a sustainable pace.

If they raise the rates at the wrong time the market will grow out of control and again create the necessity for a rapid correction. Raising rates at the wrong time and banks losing sight of their lending standards created a buying frenzy which depleted the supply causing prices to rise rapidly. This rapid raise in prices was artificially created.

Inflation/greed must be managed on all fronts. The tax deficits are a function of a sluggish economy and exasperated by the stimulus expenditures. When companies start making profits again and tax revenues grow it stands to reason the deficit will be paid by the increased tax revenues as occurred after the huge deficit that evaporated during the Clinton years due to the policies in the Regan years.

There is downward pressure on the real estate industry, some of which is avoidable. Balancing factors are: 1. Regional increase in population 2. Urban growth boundaries limit expansion which combined with the demand caused by population growth will help maintain a balance of supply and demand. 3. As people began to have faith in the economy, spend their money and businesses become vital, the unemployment rate will go down.

The rapid increase in real estate values created lack of affordability, the correction has helped bring affordability back to our region. Managing real estate growth will be a big factor in sustaining a viable local economy. We lagged coming into the real estate crisis and we may be pulling out of it early. The vitality of downtown Portland, it's cultural and foodie scene, the proximity to lifestyle... ocean, ski slopes, wind surfing, wine country... These livability factors might just help our region overcome some of the macroeconomic trends. My bet is on our region moving into the next 15 - 20 years at a sustainable rate of market growth. Perhaps the livability factor along with the regions leadership in fostering and supporting a culture of sustainable living will be our wild card.

~Peggy

Is the Future Doom and Gloom?

As I prepare market evaluation reports for clients whom are considering selling or buying at this time, I have experienced and witnessed a distinct pick up in pending home sales and closed sales in the past 60 days. This is the first increase of significance I have seen in our market in the past 18 plus months.

For sellers this is an indicator, if sustainable, that the supply and demand will come into balance and we will no longer see a decline in prices. In some of the recent comparative market analysis' I have prepared I have seen a significant increase in number of sales as well as a notable increase in sale price in comparison to earlier in the year. This however is not yet the case in all neighborhoods

For buyers this is an indicator we are likely at or near the bottom. In some close in neighborhoods prices have increased indicating we are moving from the bottom. For buyers hoping to take advantage of the bottom of the market, now is the time to act. For first time home buyers the $8k tax credit expires December 1st.