TIPS FOR SELLING DURING THE HOLIDAYS

While these tips aren't aimed at buyers, they do offer a look at the strategy of sellers toughing it out during this traditionally slow season of the market. By knowing what sellers may be thinking, you can help buyers stay focused on their own needs. (Source: craigslist)

Top Ten Reasons to List a Home during the Holidays

1. People who look for a home during the holidays tend to be more
serious about buying.

2. Serious buyers have fewer houses to choose from during the Holidays
which in turn means less competition and more money for you.

3. Starting in January, the amount of listings will dramatically
increase. With more properties on the market there will be less
demand for your particular home.

4. Houses show better when decorated for the Holidays! Buyers are more
emotional during the Holidays, so they are more likely to pay your
price if it’s something they really want.

5. Often, buyers have more time to look for a home during the Holidays
than during a regular work week, especially during winter vacations!

6. Many people want to buy before the end of the year due to tax reasons.

7. Traditionally, January is the month for corporate transferees to
begin new jobs. Since these transferees cannot wait until Spring to
buy, you must be on the market now to capture that market.

8. You can be on the market and still have the option to restrict
showings during the Holidays for your special family occasions!

9. You can sell now for more money and my title company can provide a
delayed closing or extended occupancy until next year!

10. By selling now, you may have the opportunity to be a non-contingent
buyer during the Spring, when many more houses are on the market for
less money! This will allow sell high and buy low!

WHERE AFFORDABLE HOMES ARE

In boom times, home buyers were willing to stretch their finances to the limit because they figured the more house they owned, the bigger the gains on it would be. What's more, they reasoned that if they did lose a job and had to downsize, they could sell their house and pay off the mortgage with money to spare. That's no longer a sure thing now that the boom seems to be fizzling. The pace of home sales slowed sharply in October, according to a national survey of brokerage firms by Real Trends, a Littleton (Colo.) real-estate consulting firm. A slowdown in deals is what happens when buyers cut their bids, but sellers aren't yet prepared to lower their asking prices. (Source: YahooFinance) Full Story . . .

MORTGAGE RATE INCREASE STOPS AT LAST

Mortgage rates finally stopped rising. Rates had gone up nine weeks in a row. This week, for the first time since early September, mortgage rates didn't rise. The end of the longest rising-rate streak in 18 years is being celebrated in silence. The streets remain peaceful as home buyers observe the end of the remarkable run by wondering whether they should lock, in case rates resume their upward path again, or float, in case rates fall. There is no celebratory speech by the chairman of the Federal Reserve, nor are fireworks being discharged over the headquarters of the Mortgage Bankers Association. Calm reigns over this electrifying development in mortgage rates. The benchmark 30-year, fixed-rate mortgage remained 6.42%, according to the Bankrate.com national survey of large lenders. The mortgages in this week's survey had an average total of 0.35 discount and origination points. One year ago, the mortgage index was 5.76%. Four weeks ago, it was 6.17%. (Source: Bankrate.com) Full Story . . .

MORTGAGE RATE INCREASE STOPS AT LAST

Mortgage rates finally stopped rising. Rates had gone up nine weeks in a row. This week, for the first time since early September, mortgage rates didn't rise. The end of the longest rising-rate streak in 18 years is being celebrated in silence. The streets remain peaceful as home buyers observe the end of the remarkable run by wondering whether they should lock, in case rates resume their upward path again, or float, in case rates fall. There is no celebratory speech by the chairman of the Federal Reserve, nor are fireworks being discharged over the headquarters of the Mortgage Bankers Association. Calm reigns over this electrifying development in mortgage rates. The benchmark 30-year, fixed-rate mortgage remained 6.42%, according to the Bankrate.com national survey of large lenders. The mortgages in this week's survey had an average total of 0.35 discount and origination points. One year ago, the mortgage index was 5.76%. Four weeks ago, it was 6.17%. (Source: Bankrate.com) Full Story . . .

Guaranteed Good Faith Estimates the Remedy to Settlement Sheet Shocks?

When you apply for a mortgage to buy a house, do you want to believe the "good faith estimates" of closing costs your mortgage broker or loan officer sends you three days later?

Of course you do. But thousands of consumers complain every year to HUD in Washington, saying the estimates they received were shockingly lower than what they were actually charged at closing.

For example, say your lender's good faith estimate of title insurance costs came to $1,400. But on the final HUD-1 settlement sheet they are over $1,800. Or the good faith estimate listed your total loan origination, title, settlement and other fees at $2,100, but the bottom line on the final HUD-1 said $3,200.

Who typically picks up the difference? Not the lender that made the estimates at application. Not the title company. It is you. That's because under current federal regulations, all lenders have to do is to provide you the estimates within three business days. But they don't have to warrant that the estimates are correct.

That could begin to change, however, thanks to a new movement underway among key mortgage lending trade groups in Washington. Several of them recently have endorsed the concept of either guaranteeing or "hardening" all home buyers' closing cost estimates. The groups include the National Association of Mortgage Brokers, the principal lobby for the country's 60,000-plus brokers; the Consumer Mortgage Coalition, which represents many of the nation's largest banks; and the National Association of Independent Mortgage Bankers. The Mortgage Bankers Association of America also is considering its own version of the plan.

The brokers association proposes a 10 percent maximum wiggle room -- or "tolerance" -- between good faith estimates and final closing costs. If a lender discovers that there will be any increases whatsoever beyond the original estimates, the lender would be required to "re-disclose" -- that is, inform the home buyer in writing before the closing date so there are no last minute surprises. If the increases are not re-disclosed, the home buyer would have the right to sue for damages.

The National Association of Independent Mortgage Bankers favors absolute guarantees of all fees that are directly controlled by the lender or broker. For example, if a lender estimates the appraisal charge to be $300 and the bill comes in at $450, the lender would have to eat the $150 difference. Or if loan processing and underwriting are estimated at $300, the lender would be prohibited from charging $400 or $500 at closing, as is now permitted under federal rules.

The same group proposes that once an interest rate is locked on a loan, no origination fees -- including points -- can exceed the good faith estimates. It also wants no changes to be permitted in title charges to occur, once the title company confirms its fees to the lender or broker.

The mortgage lending groups' move toward tightening the good faith estimates comes as HUD continues its work on a new RESPA settlement cost reform proposal, expected sometime in 2006. HUD's reform plan of 2002 went down in flames last year amid severe criticism by some of the same groups now recommending changes in the good faith estimates. The earlier HUD plan floated a "guaranteed mortgage package" concept that would have provided consumers rate-locked loans and settlement fee packages up front, as they shopped from lender to lender.

Real estate, title insurance and mortgage groups opposed HUD's proposals because they might have put small businesses at a disadvantage against larger competitors who could assemble fixed-fee packages for less through volume-pricing discounts.

If the lender trade groups unite behind guaranteed or "hardened" good faith estimates, that could give HUD the political cover to build its forthcoming RESPA proposals around that concept, effectively abandoning federal incentives for guaranteed packages. The net effect for home buyers would still be a big plus: They'd get closing cost estimates they could actually believe in and count on, rather than 11th hour shocks at settlement. Meanwhile, lenders who already offer popular fixed-fee programs -- GMAC Mortgage, Ditech.com, Abn-Amro Mortgage and Suntrust Bank among others -- would be free to continue doing so.


Written by Kenneth R. Harney

The origin of Thanksgiving

In the middle of the Civil War, prompted by a series of editorials written by Sarah Josepha Hale, the last of which appeared in the September 1863 issue of Godey's Lady's Book, President Abraham Lincoln proclaimed a national Thanksgiving Day, to be celebrated on the final Thursday in November 1863:

"The year that is drawing towards its close, has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature, that they cannot fail to penetrate and soften even the heart which is habitually insensible to the ever watchful providence of Almighty God. In the midst of a civil war of unequalled magnitude and severity, which has sometimes seemed to foreign States to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theatre of military conflict; while that theatre has been greatly contracted by the advancing armies and navies of the Union. Needful diversions of wealth and of strength from the fields of peaceful industry to the national defence, have not arrested the plough, the shuttle, or the ship; the axe had enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore. Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege and the battle-field; and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years, with large increase of freedom.

No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy.
It has seemed to me fit and proper that they should be solemnly, reverently and gratefully acknowledged as with one heart and voice by the whole American people. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next, as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens. And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to his tender care all those who have become widows, orphans, mourners or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty Hand to heal the wounds of the nation and to restore it as soon as may be consistent with the Divine purposes to the full enjoyment of peace, harmony, tranquillity and Union.

In testimony whereof, I have hereunto set my hand, and caused the seal of the United States to be affixed.<
Done at the city of Washington, this third day of October, in the year of our Lord one thousand eight hundred and sixty-three, and of the independence of the United States the eighty-eighth.
Proclamation of President Abraham Lincoln, 3 October 1863."

Since 1863, Thanksgiving has been observed annually in the United States.

Sauce Cafe

One of my favorite St. Louis websites is SauceCafe.com. This website gives the latest news about the St. Louis restaurant scene, restaurant reviews, and contact numbers for area establishments. My wife and I used the site last Friday night and had a great meal at a restaurant in South city that we had never before experienced -- Iron Barley. Check out SauceCafe.com.

Tax-free (deferred) like-kind exchange

In the following article, Peter A. Karl, III explains in detail The Section 1031 exchange. Also know as the tax-free (deferred) like-kind exchange, the law provides tax payers an opportunity to choose not to pay taxes when disposing of property. The taxes can essentially be deferred when exchanged with investment and rental property than an individual owns. Karl defines how the exchange works, identifies time limits involved, specifiies replacement formalities, qualifying properties and the keys to avoiding taxes through the 1031 exchange.


Section 1031 Exchanges in a Nutshell* By Peter A. Karl, III
*An article published in the August 2002
issue of the Tax Reduction Letter published by
Bradford & Company (1-877-829-9673)
The payment of income taxes on the disposition of real estate is completely voluntary!

The Section 1031 exchange is the most underutilized part of the tax law. That's truly sad as it offers the most significant savings. It could be a name problem-calling it an "exchange." People think exchange during the holidays when they stand in line to return and replace to return and replace the sweater than did not fit. The tax law "exchange" might get a lot more attention if lawmakers called it a "rollover" because that's what you accomplish with Section 1031. You rollover the gain to the new property.

You can continue the rollover of gain and postponement of tax with successive exchanges (stemming from the original property you relinquished), provided a one year holding period exists with the replacement property. The postponement of taxes turns into the cancellation of taxes to the extent that the property get a set-up in basis at date of death.[i]

For example, you buy land for $50,000. It grows in value. You exchange it for land worth $130,000. At the date of your death, the land has grown in value to $300,000. It transfer to your heirs at $300,000 (its stepped-up basis). The increase in value from the original $50,000 through the $130,000 exchange and including the increase to $300,000 its not subject to income taxes under the stepped up basis concept.



How the exchange really works

The Section 1031 exchange is really a sale and then a subsequent reinvestment. The deferred exchange is the most popular form of exchange. It involves four parties:

You as the owner (actually, seller) of the property being relinquished.

The buyer for your property.

The seller of the property you want to acquire.

A qualified intermediary.

The qualified intermediary is an individual or entity with whom you have not had a business relationship of any sort within the last two years.[ii] Therefore, your accountant, lawyer, or real estate sales professional will not qualify as an intermediary.

The intermediary makes the exchange work. Think of exchange money as "radioactive." You may not touch it. Your buddies (like your accountant or lawyer) may not touch it. If you or your buddies touch it, you destroy the exchange and trigger taxes.

The qualified intermediary handles the money and holds the sales proceeds from your property in interest bearing accounts. Then, the intermediary distributes the money as needed to purchase the replacement property.



Strict time limits

Observe the exchange time-limit rules. These dates are set in stone. They are not suggestions. Start date. The strict time limits for the Section 1031 exchange starts with the "initial transfer date." This is the date you close the sale on the property you are selling (the relinquished property).

Forty-five (45) days from the initial date you must formally identify your possible choices of replacement property.[iii]

One hundred eighty (180) days from the initial transfer date, you must have the previously identified replacement property titles in your name. [iv]

Tax law shortens the 180-day period when you tax return is due during the 180-day period. If the exchange occurs after October 17, you need to file an extension to receive the full 180 days.

For example, if your initial transfer date is December 1, you need to file for the automatic extension on or before April 15 to have the benefit of the full 180 day replacement period until May 30.

Planning tip. Postpone the initial transfer date with a lease. For example, you could allow the buyer to occupy the property under a triple net lease until you exercise your option to close the sale.[v]


The replacement formalities

Ideally, within forty-five days, the qualified intermediary uses part of the funds from the relinquished property sale for an earnest money deposit on the replacement property. This provides positive identification. Alternatively, within forty-five days, you can designate the replacement property in a signed document that you hand deliver, mail, fax, or otherwise send to the qualified intermediary.[vi]

The regulations permit you to identify more than one possible replacement property.[vii]

The maximum number of replacement properties that you may identify under the two main rules is three properties of any fair market value, or any number of properties, if the fair market value of properties identified does not exceed 200% of the agregate fair market value of properties relinquished. Look at the beauty of this! When you sell your property, you can be absolutely clueless about where to reinvest. Further, you have complete flexibility as to the type of realty you accept as replacement property. It can be investment or rental property, vacant land, or realty used in a trade or business. About the only types of property that do not qualify are personal use and foreign realty.[viii]


Keys to not pay taxes

You pay no taxes under Section 1031 when you receive no cash, and obtain no debt relief.
Say you use Section 1031 to dispose of your $200,000 building with a $100,000 mortgage for a $250,000 building with a $150,000 mortgage. No taxes here. You exchange your $100,000 equity in the $200,000 building for the same equity in the $250,000 building. You receive no cash. You received no debt relief. In fact, your debt increased from $100,000 to $150,000 because you now own more building and more depreciation deductions.

You can tax advantage of Section 1031 even if you have liability over basis problem that precludes you from giving the property to a relative or charity without recognizing gain. In these cases, you recognize no gain if the replacement cost is equal or greater than the sales proceeds from disposition of the old property.

Impounded funds used to pay closing costs do not count as cash receipts to you. The regulations state that use of money held by a qualified intermediary to pay specified transactional items will not result in actual or constructive receipt by the exchangor of the remaining funds. This rule apples to


Costs that relate to the disposition of the relinquished property or to the acquisition of the replacement property; and
Expenses listed as the responsibility of a buyer or seller in the typical closing statement under local standards.
Examples of these expenditures include commissions, recording or transfer taxes, and title company fees. Also, the selling price of the property relinquished does not include reimbursements to you to cover monies you received, like advance rents, or expenses you already paid, like property taxes.


More property flexibility than you think

There is no requirement that the exchange be a "one for one" transaction. In other words, you can divest yourself of one property and replace it with two properties or vice versa.

In fact, you might want to consider a "build to suit" (a/k/a construction exchange) where you identify replacement vacant land along with the details of a structure you want built during the 180-day reinvestment period. The qualified intermediary disburses impounded funds to the contractor(s) on a "pay as completed" basis.

Alternatively, you might buy a "fixer-upper" and have the qualified intermediary rehab it using impounded funds. The result: You improve your replacement property using pre-tax dollars. Similarly, you can identify less expensive property that needs some capital improvements (like a new roof) to gobble proceeds from the property relinquished.

This is not an "all or nothing" proposition. To the extent the qualified intermediary has money remaining at the end of the exchange period, the law taxes it as "boot" (cash received by you). That's the bad news.

The good news is that the law taxes you only on the boot received part. The receipt of boot does not ruin the entire exchange.[ix] It simply triggers taxes on the amount you receive as boot.


Owner takebacks in a 1031 exchange

Most of the normal options for selling your property apply to an exchange. For example, you (actually, your intermediary) could finance the sale of your property with an owner takeback (purchase money mortgage). With the owner takeback, you:[x]

reduce the total contract price by the like-kind property received, and

reduce the gross profit by that part that applies to the exchange.

Alternatively, you may want to avoid taxes altogether on the owner takeback. Your qualified intermediary may accomplish this for you by:

discounting the takeback mortgage to cash and then using the net proceeds for the replacement property, or

assigning the takeback mortgage in the acquistion of the replacement property.

With the assignment, the seller accepts the takeback at its face value. The seller likes this deal because he secures the takeback mortgage with two properties:

the property you sold (relinquished) in the exchange, and

the property you bought from the seller (target property).

Reverse exchanges

Section 1031 is flexible. Recently, the IRS established a safe harbor for "reverse exchanges." [xi] You have to love these. The "reverse" comes in handy when you do not yet have a buyer for the property you want to relinquish and you are afraid of losing the property you wish to acquire.

To help with reverse exchanges, the IRS issued a recent Revenue Procedure that established the notion of an Exchange Accommodation Title-holder (EAT) (really, another name for a qualified intermediary). The EAT buys the replacement property using money that you advanced. He then "parks" the property for you. You have the 180-day replacement period to "get your act together" and find a buyer for the property that you wish to relinquish.

The "paper-trail" for the reverse exchange should begin immediately with the original agreements. You could include a clause like this:

The seller reversed the option to convert the subject transaction to qualify under Section 1031 of the Internal Revenue Code with the purchaser agreeing to cooperate in the execution of any of the required documentation (including, but not limited to a Four-Party Deferred Exchange Agreement and a Qualified Intermediary Agreement) provided purchaser shall incur no addition cost or liability.


Properties that qualify

The tax-deferred exchange rules of Section 1031 apply to business and investment real estate. The rules do not apply to your personal home. Also, you may not use the favorable exchange rules for vacation homes that have substantial personal use.[xii]

Planning tips. You may use the favorable exchange rules if you convert you home to a bonafide rental property for a minimum of one year, the long term capital gain holding period.[xiii]

If you have an operating business, Section 1031 applies separately to both the realty and personal property (a "mixed property exchange"). The personal property parts, like computers, desks, and vehicles are more difficult to configure. IRS regulations that apply to Section 1031 define like-kind personal property with terms such as "like class" and "like use."[xiv]

The terms "like class" and "like use" deny exchanges of office equipment for cars. Similarly, the rules deny exchanges of an operating business intangible personalty, like goodwill, even if similar in nature (e.g. two restaurants).

Planning tips. The rules make it easy for you to use Section 1031 to defer taxes on real estate. Stay with the "easy" (real estate) for maximum return on minimum effort.


Avoiding taxes without 1031 exchange

What happens if you want to stop investing in real estate? Is there anything you can do? Yes! In an upcoming issue, we will examine tax avoidance alternatives if you are no longer interested in reinvesting in real property. We will look at property owned by a multi-member partnership or limited liability company where some want to cash out and the others want to reinvest under Section 1031.


Summary

Remember, the law gives you a choice to pay or not pay taxes when you dispose of property. You can defer taxes when you exchange investment and rental real estate that you own individually. Also, your trust or closely-held corporation may use the exchange rules to defer taxes on its investment and rental realty.

So, choose not to pay taxes! Do this with the "rollover" benefits of Section 1031 that allow you to defer the tax on property you sell by rolling the profits into replacement property. To make this happen, you need only an intermediary to sell your property and buy the replacement. What could be easier?

Housing Counsel: Protecting Your Child's Inheritance Takes Careful Planning

Question: My first wife passed away in June of 2000. After she died, I sold the home I bought with her for $300,000, which I wanted to leave to our children when I died. I have now remarried. We have a home in another State, which I will leave to my current wife. Recently, we bought a home in Maryland and both of us were on the property deed. I stated in my Will that the house was to go to my children when I died, but subsequently discovered that the Will has no effect since title was held as tenants by the entirety. My new wife has executed a Quit Claim deed relinquishing her interests in the property to me and the deed was recorded in land records in the county where the property is located.

Does this satisfy my desire to leave the property to my children or is there something else I must or should do?

Answer: The first thing you should do is have your financial and legal advisors review your Will and any estate planning arrangements you have made. You want to leave your current house to your children, so you have to make sure that your Will reflects current law and is specific enough to accomplish your desires.

Many states, including Maryland, allow a spouse to elect against the Will. For example, Maryland law specifically states that "instead of property left to him by will the surviving spouse may elect to take a one-third share of the net estate if there is also a surviving issue, or a one-half share of the net estate if there is no surviving issue."

This means that your current wife could elect to assert her spousal rights and possibly defeat your intentions to protect your children. You and your current wife should discuss this immediately. Your attorney can assist you in preparing a renunciation or similar agreement which your wife can sign -- but she must have independent legal counsel to advise her regarding this matter. If she relies only on your attorney's advice, she can subsequently argue that she was not properly represented and did not really know what she was signing. Additionally, she could claim that your attorney had a conflict of interest.

You have advised me that you have several children. How old are they? If they are not of the age of majority (usually 18 years of age) you do not want to leave your house to a minor. You should make sure that you specifically name a trustee in your Will who will hold title to your under-age children until they get older. You have the right to designate the age; some parents believe that their children will be fully mature and competent at age 18 -- while others would prefer to wait a longer period of time. The determination is yours and must be spelled out carefully in your Will.

Are any of your children married? What happens if one of them should die before you do? Do you want their spouse to inherit their share of the family home or should their share be redistributed to their children or your remaining surviving children?

Originally, you held title with your wife as tenants by the entirety. There are several ways in which title can be held with another person:


Tenants in Common: Here, each owner owns a percentage interest in the property. If is usually held on a 50-50 basis, but that is not mandatory. I have seen property held in any percentage. What is important, however, is that on the death of one tenant in common, his or her interest does not go to the survivor. Rather, that interest must be distributed in accordance with the Will of the deceased, or if there is no Will, in accordance with the laws of inheritance of the jurisdiction in which the person died.
And the deceased person's estate must be probated. The property interest of the deceased person is administered by the Personal Representative (PR). In some cases, the PR may have to sell the property to pay estate expenses or creditor claims against the decedent. This could result in your children not receiving the home -- or the full value of the home -- when you die.

It should be noted that in most jurisdictions throughout this Country, if a deed is conveyed to two persons without a description of how title is to be held, the Courts will consider that the property is titled as "tenants in common."


Joint Tenants: Here, the parties own an undivided interest in the property. In most states, the interest must be equal, although some states have enacted laws to permit an unequal ownership in a joint tenancy. On the death of one owner, his/her interest will automatically go to the surviving joint tenant, and probate will not be necessary.
It should be noted that some state laws require specific language in the deed to make sure that the title is really held as joint tenants. Thus, if you really want to avoid probate, it is important that the deed contains these magic words: "joint tenants with rights of survivorship".

It should also be noted that while both joint tenants are alive, creditors may be able to attach the interests of one of the joint tenants, thereby forcing the sale of the property. The other joint tenant who does not owe any money to the creditor will receive half of the sales proceeds, but obviously may not be able to keep the property.

Additionally, since there is nothing sacred about a joint tenancy, either joint tenant can sever that tenancy by conveying his or her interest to a third party. If that should occur, that third person would end up owning the property as tenants in common with the non-conveying owner.


Tenancy by the Entireties: This form of ownership is reserved exclusively for husbands and wives. Under a tenancy by the entirety (T by E) arrangement, both husband and wife own an undivided interest in the property. Unless both parties owe money to a creditor, the house cannot be attached. On the death of one party, the entire property will be owned by the survivor, and no probate will be necessary.
Thus, in order to protect your children's inheritance, you took the proper first step by arranging for your wife to convey her interests in the family home into your name as sole owner.

But that is not the only step you must take. Although you have a Will, it may be out-of-date. There are many questions involved, and you must make sure that your Will meets all of your needs and desires. The law favors Wills and wants to make sure that the Will-makers intentions are fully carried out. But your Will must be specific and carefully crafted.

by Benny L. Kass

Questions You Should Ask About Property Taxes

Property taxes are a major expense, one which often totals thousands of dollars per year. But property taxes are not the same for like properties or for every owner.

Property taxes provide much of the revenue used to fund local and state governments. As property values go up, property tax collections also rise which means additional dollars are available for more public services -- and perhaps even for tax refunds. Alternatively, if property values decline, then government programs tend to be squeezed or there is pressure to raise income and sales taxes to make up for short-falls.

How much you pay for property taxes depends on the value of your home and also local tax policies. In the usual case, a property value is established by government assessors. Once a value is set the tax rate is then applied. For instance, if the rate is $1.50 for each $100 in value, then a home worth $100,000 would have an annual tax bill of $1,500 or $125 per month.

The road from the tax assessment to a bill for property taxes is rarely straight, however. There are often complications, so it pays to ask questions:


What value is used to assess taxes? You might think that a home's current market worth would be used to establish a value for tax purposes, but that's not always the case. In many areas under circuit breaker programs annual tax increases are limited so the tax can be less than current market values might allow. Another approach is to apply the tax rate to a portion of the assessed value and not the full worth of the property.

What are the current owners paying? Is their tax bill consistent with neighboring homes of equal size and condition? If different, why?

How will property taxes impact your ability to borrow? Lenders use a number of measures to qualify borrowers and one of the most important is the percent of gross monthly income spent for mortgage principal, interest, property taxes, and insurance -- what loan officers call PITI. Low property tax bills can make it easier to qualify for a loan.

Has the tax bill been appealed or is it being appealed? Values by tax assessors can be contested if owners think estimates are too high -- perhaps because the valuation did not consider certain factors, the math was wrong, or an incorrect schedule was applied. Local assessment offices can tell you how to appeal and in many areas there are services which will do the fighting for you.

Are you or the current owners entitled to an exemption? Local rules vary extensively, but those over 65, veterans, individuals with limited incomes, and others may be entitled to a full or partial exemption. If, for example, the current owner has an exemption which will not apply to you, then current tax costs may be effectively understated.

Can property taxes be deferred? To ease cashflow burdens for retirees, it may be possible to have property taxes accrue as a lien against a home. Owners in such situations need not pay some or all of their property taxes: instead, when the home is sold, taxes are taken from the sale proceeds. One jurisdiction, Montgomery County, MD, actually allows qualified owners of all ages to defer property tax payments under this system.

What are the income tax benefits of property tax payments? In the usual case, property taxes are deductible from federal and state income taxes. For details, speak with a tax professional.

Will the sale of a property trigger a different tax bill? A sale may suggest a new and higher value to assessors, past exemptions may not apply, and circuit breakers may be re-started or even turned off.

How often are assessments made? In some areas physical assessments are only made every two or three years. This means that property taxes may be based on values which are out of date, something that can be important in communities where property values are rapidly changing, either up or down.
If all of this seems fairly complex, it is. The local tax assessment office can tell you how the system works while real estate brokers can provide general information. In the end, of course, there are always taxes to pay, the only question is how much.


Written by Peter G. Miller

St. Louis homes, areas considered for National Register

From the Saint Louis Business Journal.

About a dozen St. Louis-area buildings, homes or neighborhoods will be considered for inclusion on the National Register of Historic Places at the Missouri Advisory Council on Historic Preservation meeting Nov. 18 in Jefferson City.
The historic resources under consideration include:
• Council Plaza, an early example of a publicly assisted housing project constructed for the elderly, at Grand and Forest Park Avenues in St. Louis
• The Chouteau Building at the convergence of Manchester, Chouteau and Vandeventer
• The Central Carondelet Historic District, a neighborhood of nearly 600 historic residential and commercial buildings dating from 1850 to 1950
• The Herman Dreer House in the Ville neighborhood
• Homer G. Phillips House in the Ville neighborhood
• The Charles Henry Turner House in the Ville neighborhood
• The Union Depot Railroad Co. Building, built circa 1885, in South St. Louis
• The Rockwood Court Apartments in Webster Groves
• The Greenwood Historic District on Greenwood Boulevard in Maplewood
• The Louis J. and Harriet Rozier House, in De Soto
• The St. Albans Farms Stone Barn in St. Albans
• The Beaumont Telephone Exchange complex in St. Louis
• The Lucas Avenue Industrial Historic District
The Missouri Advisory Council on Historic Preservation is a 12-member group of historians, architects, archaeologists and citizens with an interest in historic preservation.

Construction spending hit all-time high in September

Earlier this month the Commerce Department noted that construction activity rose 0.5% to an all-time high of $1.12 trillion in September. This is likely due to builders taking advantage of historically low interest rates. The Fed, of course, continues pushing up rates--this will undoubtedly slow construction activity. Analysts believe that construction activity will get a boost from the massive rebuilding required after a string of devastating hurricanes but they don't think this activity will be enough to offset a slowdown in the rest of the country triggered by rising interest rates.


WASHINGTON (AP) -- Construction spending set another record in September as the building industry continued to enjoy boom times.

The Commerce Department said construction activity rose 0.5 percent to an all-time high of $1.12 trillion at a seasonally adjusted annual rate in September as builders took advantage of interest rates that are still low by historical standards.

However, analysts believe that activity is likely to slow in coming months as the Federal Reserve keeps pushing interest rates higher to combat inflation pressures stemming from the spike in energy prices that occurred following the hurricane-related energy production shutdowns along the Gulf Coast.

Private economists believe the hurricanes and the related jump in energy prices will reduce as much as a full percentage point from growth in the second half of this year.

The government reported Friday that the overall economy expanded at an annual rate of 3.8 percent in the July-September quarter. But analysts said growth would have been well above 4 percent without the drag caused by the hurricanes, which have cost more than a half-million jobs.

The 0.5 percent increase in construction spending in September followed strong gains of 0.6 percent in both August and July.

Analysts believe that construction activity will get a boost from the massive rebuilding required after a string of devastating hurricanes but they don't think this activity will be enough to offset a slowdown in the rest of the country triggered by rising interest rates.

Home mortgage rates have broken through the 6 percent level and analysts believe they will keep heading higher in coming months.

Private construction rose by 0.6 percent to a seasonally adjusted annual rate of $871.5 billion with private residential building up an even stronger 1 percent, to $624.3 billion. Both the overall private construction figure and the residential activity were at all-time highs.

Both office construction and commercial buildings, a category that includes shopping centers, showed big gains in September.

Total government construction was unchanged in September at an annual rate of $248.5 billion after posting a 0.4 percent increase in August. Activity at the state and local level rose by 0.3 percent to a record high of $231.9 billion while federal building projects dipped by 4.5 percent to an annual rate of $16.7 billion.

By Martin Crutsinger
AP Economics Writer
11/01/2005

The Boulevard -- Saint Louis

Pace Properties recently constructed Phase I of The Boulevard -- Saint Louis on property located across Brentwood Boulevard from the St. Louis Galleria. Phase one includes 120,000 square feet of retail, restaurant, and commercial space', including Crate & Barrel, Maggiano's Little Italy, and PF Chang's. Allegro Apartments are also part of Phase I. Allegro Apartments' 74 units range in price from $1000 / month for an efficiency to $2400 / month for a two bedroom unit with a den.

Phase II has just been announced. This $140 million expansion will include a 21 story, 112 unit luxury condominium tower and 33 "Main Street" condos at a cost of $50 million. A new hotel and 110,000 square feet of retail will complete the phase at a cost of $90 million. This phase will be located on the south end of the current complex.

The new condo tower will be called Valencia Place and will feature units that range between 800 and 2,700 square feet. According to a representative from Pace Properties, there is a great deal of interest from retailers looking to move to Phase II. An important trend in the current real estate market is to combine residential, retail, and restaurant spaces in developments.

Edison condos change downtown real estate

Recently I took a client to see the Edison Condominiums in downtown St. Louis -- beautiful units with lots of amenities. For more info, email me by clicking here or calling 636.391.9997. See the following article from the Post-Dispatch for more information on the Edison Condominiums.


Floor by floor, a former distribution warehouse for J.C. Penney is being converted to fit a niche in the market for condominium hotels.

Developer Donald Breckenridge and Gundaker Commercial are spending about $40 million to carve through concrete floors and beams of the old 13-story warehouse at 400 South 14th Street.

After cutting an eight-story atrium through the center of the building, they've created 81 units, known as the Edison Condominiums. The housing is built out on four floors above the Sheraton St. Louis City Center Hotel & Suites. The distinctive building, alongside Highway 40 (Interstate 64), is decorated on the outside with a huge trompe l'oeil mural.

The hotel opened in October 2001 after $53 million in renovations and a severe downturn in the tourism industry following the terrorist attacks that September.


Nationwide, the tourism and hospitality industry has struggled to return to pre-9/11 operating levels. But Breckenridge said convincing anyone in St. Louis about a high-end market for condos downtown was even harder.

"If you would have asked me or most other folks (whether) a product like this could be in the city, I would have questioned it," Breckenridge said. "Before this, only lofts had been built downtown, and they were capping out at $150,000 back in 1999."

But all 81 condominiums are sold, with about two floors still left to build out. Hardesty Homes is the construction firm; the project also is using some state and federal historic tax credits, and state Brownfield credits.

The units range from 1,600 square feet to 2,900 square feet. Prices start at $275,000 and some go up to $1 million.

The mix of tenants has been a surprise, too. The average age is 47, and most have opted for the larger condos - even buying multiple units to create larger floor plans.

With about 1 million square feet, the property was big enough to rehab and less expensive than new construction, the route that most condo hotels take, Breckenridge said.

Condominium-hotel properties are most popular in top tourist sites, such as Orlando, Fla.; Miami; and Las Vegas. Adding a residential component is one way large hotels can be built during the early recovery period, according to a report by Lodging Econometrics, a lodging industry research firm.

"These came about when larger hotels were very difficult to finance," said Gary Andreas, a consultant with H&H Consulting Group in Chesterfield. "By including condos in the hotel project or by selling the rooms as suites, developers were able to generate additional cash for equity in securing the loans. And it makes it a little easier to finance and increases the comfort level for lenders."

Top tourist cities are seeing a boom in condo-hotel construction, but the trend has been slower to catch on in Midwest markets.

Breckenridge bets that will change, as tourism rebounds and demand for the housing increases.

And he expects to see more tenants like himself and his wife, who moved from St. Louis County to the Edison Condominiums a year ago. Their home is a combination of three units and has 6,200 square feet, with views overlooking the city.

By Tavia Evans
ST. LOUIS POST-DISPATCH
11/11/2005

Housing prices may go way of pork bellies

Worried that the value of your house may fall?

Go ahead, bet on it. If you don't, perhaps your mortgage holder will.

The Chicago Mercantile Exchange, a financial marketplace dealing in the value of everything from interest rates to foreign currencies to pork bellies, plans to offer trading next year in a category many consumers take personally: sky-high U.S. house prices.

Housing-price futures, based on the median house price in each of 10 U.S. cities, aren't tailored specifically for individual homeowners.

However, they may provide some protection for mortgage companies, house builders and anyone else with a large stake in residential real estate if housing values slide, while giving other investors a way into a lucrative market.

The novel investment product is set to debut in April 2006, based on a final go-ahead given by the Merc this fall after months of exploratory work.

"There really is no way (now) for anyone to hedge home prices," said Sam Masucci, the chief executive of Macro Securities Research of Morristown, N.J., a research firm that's developing the contracts with the exchange. "Or for institutional investors to gain exposure to the market without going out and buying homes.

"Housing is one of the largest asset classes in the world (and) we thought it made a lot of sense to give people access to it," he said.

While unusual, it won't be the most exotic contract offered by the world's largest futures exchange. That distinction has been held for six years by weather futures, which are based on regional temperature indexes and enable utilities and others with a lot riding on the weather to hedge their risk.

The concept of real-estate futures has been discussed since the early 1990s, but it took a boom in housing prices to propel it to reality.

House values appreciated 65 percent nationwide from 2000-04 and more than doubled in some areas, according to the National Association of Realtors. U.S. residential real estate was valued at $18.6 trillion at the end of last year - more than the amount in equities.

The price run-up has meant a huge increase in wealth. A negative sales forecast from house builder Toll Brothers Inc. on Tuesday sent stocks falling by fueling fears of a slowdown. Such recent evidence of cooling may only have fueled interest in protecting the market.

"One never knows when you launch something like this, whether it's going to be successful or bomb," Masucci said. "But all the elements are there for it to be successful."

Investors will be able to trade contracts electronically based on median house prices in Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco or Washington - or a composite index of the 10 cities. The indexes were developed by the real-estate research firm Fiserv Case Shiller Weiss Inc.

Those who are optimistic that prices will continue their double-digit rise can simply buy contracts, making a profit if the increase exceeds their costs by the expiration date.

Investors who want to soften the potential blow of a steep decline, on the other hand, can buy versions of the contracts called put options that will pay them money if the price drops, ensuring that they recoup some of their lost house profits.

That strategy is akin to taking a short position in a stock, according to Felix Carabello, Merc associate director for alternative investments. But "instead of shorting IBM, you're shorting your house," he said.

For example, a Los Angeles homeowner looking to hedge the value of his $1 million house could buy "puts" linked to that city's housing index, at a cost of several thousand dollars.

If Los Angeles housing prices are higher by the time the quarterly contract expires, the puts have no value and the investor is out the costs. If prices go down, the puts enable the investor to sell the contracts for a gain.

While there has never been a nationwide decline in housing prices, there are precedents for sharp declines in regional housing values. Los Angeles house prices fell 41 percent in real terms from 1989-97, and Boston's dropped 29 percent from 1987-94.

Outside experts have mixed opinions about the extent of demand for housing futures.

Anthony Sanders, a professor of real estate finance at Ohio State University and former investment banker, called them long overdue.

"There's a huge demand out there on behalf of financial institutions to hedge their housing exposure, so this should be able to take off," he said.

Robert Hartwig, chief economist at the Insurance Information Institute, a trade group, was more skeptical. He said insurance companies are unlikely to get involved in anything as speculative as housing futures or develop house-price depreciation insurance based on them, as has been suggested. The overheated housing market could make the product too expensive anyway, he said.

"While I think that theoretically it's a good idea, I'm not sure how much the market is going to materialize," Hartwig said. "It's like offering to insure stock prices in early 2000. Real estate prices are super-inflated right now."

By Dave Carpenter
THE ASSOCIATED PRESS
11/12/2005
CHICAGO

Pending Home Sales figures are released

According to a recent study of Pending Home Sales data, the real estate market throughout the country continues to be strong. Specifically for the Midwest, the index rose 0.3 percent in September. This number was 0.4 percent lower than a year ago.

Pending Home Sales Index Close to Record

WASHINGTON (November 3, 2005) – Pending home sales, a leading indicator for the housing sector, eased slightly but is at the second highest level on record, according to the National Association of Realtors®.

The Pending Home Sales Index,* based on contracts signed in September, slipped 0.3 percent to a reading of 128.8 from a record of 129.2 in August, and is 3.3 percent higher than September 2004.

The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing.

David Lereah, NAR’s chief economist, said the index shows a lot of momentum. “We’re still seeing a post-Katrina boost in home sales activity, where the needs of displaced residents are supplementing a fundamentally strong market,” he said. “Aside from this temporary lift, the market is entering a period of transition in which we will see a somewhat slower but more sustainable pace of home sales–a period that is expected to be historically healthy. This will help to create a better balance between home buyer and sellers, so price appreciation should be cooler as well.”

View PHS Index:

Many post-Katrina sales in the region surrounding the disaster zone were bulk sales by companies that were obtaining housing for employees; some of those sales closed quickly in September with others expected to be recorded in data for October and November.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined. 2001 was the first of four consecutive record years for existing-home sales, with activity in that year being fairly close to the higher level of home sales projected for the coming decade relative to norms during the mid-1990s. A Pending Home Sales Index of 100 coincides with a historically high level of home sales.

Regionally, the highest PHSI was in the South where the index slipped 1.6 percent in September to 139.1 from a record in August, and was 6.3 percent higher than September 2004. In the Northeast, the index rose 1.8 percent to 110.4 in September and was 0.8 percent above a year ago. The Midwest index rose 0.3 percent to 119.7 in September, and was 0.4 percent below September 2004. The index in the West held even at a level of 136.7, and was 3.6 higher than a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.
# # #

* The Pending Home Sales Index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 closely parallels the level of closed existing-home sales in the following two months.

Existing-home sales for October will be released November 28; the next Pending Home Sales Index will be on December 6.

For more information contact:

Walter Molony (202) 383-1177
wmolony@realtors.org

Housing Bubble about to Burst???

A new study by the National Association of Realtors (NAR) shows that an analysis of the nation's top markets do not support concerns about a possible burst in the real estate bubble. For details about the St. Louis market, click below.

St. Louis Real Estate Market

Why search for your favorite Blogs each day?

Despite having a passion for technology, I find it difficult to keep up with the latest upgrades to our methods of acquiring information. It seems that everytime I turn around, there is a new technology that I "have" to integrate into my business. Unfortunately, some of these technologies take time to learn and require a great deal or skill.

I enjoy publishing this blog each day, but I have become concerned that my readers find it tedious to check in with my site each day. So today I announce a website that will check for you. Bloglines is a blog-aggregator which will collect the latest entries from all of your favorite blogs. By the way, the best news is that Bloglines is free. So if you want to keep up with Nolting Real Estate's Blog without visiting the site each day -- try Bloglines.

Yours,

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Nolting Real Estate

Top 10 Reasons Loan Applications Are Rejected

As interest rates rise and rising housing costs swells lenders' portfolios with riskier loans, lenders will tighten underwriting rules making it tougher to buy a home.

Still -- in hot markets and in cool ones -- the fundamentals apply.

Getting a loan application approved is often knowing how to keep lenders from saying "no." To that end, here are the Top 10 reasons loan applications wind up the circular file. There are more, but these top the list.


Being in denial about what you can really afford. Apply for too much and you could be out the door faster than you went in. Let the lender decide what you can afford to borrow. From that, you decide what your budget will realistically let you afford to pay each month Get preapproved with a bona fide, carved-in-stone preapproval that guarantees in writing a loan amount, interest rate and as much of the other loan terms as possible.
"It makes your offer more attractive to sellers," said Jeff Lyons, general manager of RealEstate.com a Charlotte, NC-based subsidiary of LendingTree, LLC.


Poor preparation. Get all your docs in a row. The more information you have available at application -- proof of income, investments, assets, debts, tax returns for the self-employed, even addresses, current and past -- the more complete the loan officer's analysis can be in a more timely manner.
"A thousand and one little things go a long way toward ensuring the client has a good experience," said Bill Emerson, Livonia, MI-based Quicken Loans' CEO and co-author one of eight co-authors of the new "Homebuying By The Experts" (Quantum Leaves Publishing, $14.95).


Misunderstandings. You may need loan programs explained. Industry jargon about an "index," "margin," "T-bills" and other terminology is familiar to real estate and mortgage professionals, but likely not you. Your loan representative can help you with any terms you may not be familiar with, you can visit many online glossaries or pick up one of many real estate mortgage books, virtually all of which contain a glossary.

Not realizing you are self-employed. First-time buyers who are self-employed (which can include working at home, being paid by commission only, or owning 25 percent or more of a business) often need to show tax returns as a proof of income. Communicate your employment status before the loan hits the underwriting process and avoid snags later.

Over looking property repair problems. Government loans on homes in need of repair need to come with instructions explaining who is responsible for repairs and when. Ask the loan representative for assistance.

Third party vendor problems. Credit reports and appraisals typically come through on time but other documents -- tax returns, home inspections, investment reports -- may require extra early efforts to get them to the table on time.

Lack of understanding about the loan process. A working knowledge of what happens during the processing, underwriting and closing of a loan is crucial. Understanding time frames, documentation and the responsibilities of all parties is also key.
"Despite our efforts to simplify the mortgage process, it is still a very complicated process," said Emerson.

Lyons advises, "Make sure that you get a Good Faith Estimate of your closing costs to ensure that you understand everything that will be paid at closing. This document will also be a great reference when closing arrives to make sure everything is as it should be."


Undocumented explanations for credit problems. Check your credit report before you apply for a mortgage. You need to know before the lender about errors you can correct, problems you may need to explain, and delinquencies you can clean up.

Unverified closing funds. If your loan requires funds from you to close (down payment, gifts, cash to keep the loan from exceeding 80 percent of the value, etc.), you may have to show bank statements or documents that prove how long the funds have been in place, the source of the funds, your asset level, etc.
"Do not be afraid to read the closing documents and statements carefully. Whether buying or selling, you've got a lot on the line with these documents and want to make sure that the figures are correct and as agreed," said Lyons


Poor communications. There are many parties involved in a residential real estate transaction -- buyer, seller, real estate agent, mortgage banker, home inspectors, appraiser, attorney and settlement or escrow agent -- and each must have complete understanding of what is going on at any given time. A good loan representative, broker or real estate agent will help keep the lines of communication open.
"A lack of communication is the number one reason deals fall apart based on 15 years in the business," says Rob McCarthy a senior mortgage planner with American Family Funding in Campbell, CA.

"An agent fails to let the lender know there is Section I work to be completed. The client fails to tell the lender they just got laid off. A large percentage of the down payment is a gift that has not been seasoned for 60 days. All of these can be resolved as long as everyone is communicating and not making assumptions that everything will be okay," said McCarthy.


Written by Broderick Perkins
August 19, 2005

Your front door -- the gateway to your home

Q: I have an oak front door that has been stained a reddish color. It is covered with shellac that has been peeling. I removed most of the shellac with a razor and discovered scratches on the door. Most of these scratches are not deep and would probably disappear with sanding. What grade sandpaper should I use, and will it alter the stain color? Also, what should I use to protect the door after sanding?

Source: Inman
Date: 11-09-2005 12:00 AM


A: The front door is the gateway to your home. A well-maintained one leaves a first and lasting impression of either "wow" or "yuck."

To do the job right, strip the entire door. But please put away your razor blade. Use a chemical stripper instead to remove the remainder of the finish.

We don't think the finish is shellac. Shellac is an alcohol-based resin used to finish interior woodwork and furniture. More likely, your front door is finished with either varnish or polyurethane. Shellac is much softer than either varnish or polyurethane and does not tolerate water very well. Polyurethane and varnish are harder and stand up better to the weather and the wear and tear a front door gets.

You can buy a chemical stripper anywhere paint is sold. It is available in two consistencies, liquid and semi-paste. We recommend the semi-paste because it tends to stay where you brush it and you should not have to take the door off its hinges and lay it flat to do the job.

Apply the stripper with a paintbrush you don't mind throwing away. Wear rubber gloves and eye protection. Use drop cloths to cover the floor and anything near the work area in case some of the stripper misses the door.

Once the door is stripped and dried, do a careful inspection. You may find that the scratches you thought were there are gone. If so, they weren't in the door but in the finish.

If the scratches are still there, however, it's time to sand. Go gently. Hand sand only--no power sanders allowed. Sand only enough to remove the scratches. Too much sanding will remove too much of the stain.

Start with No. 150-grit aluminum oxide paper. Finish the job with No. 220-grit sandpaper to remove marks left by the 150-grit paper. To double-check if the scratches are gone, wet your finger and rub the area. The moisture will highlight any defects that are left.

When the sanding is done, the stain will probably vary in color. The easiest way to restore a uniform color is to re-stain the door. For an exact match, take the door to a paint dealer for a computer match. If you don't want to go through this bother--and we wouldn't--use color chips and a sample can or two to get as close as possible to the existing color. Stain is available in 4-ounce cans for a few bucks. Two or three cans won't break you and will ensure a close, if not perfect, match.

Apply the stain with a rag in a light, even coat. Let it dry for a few minutes and then wipe it off. If the sanded areas are a little lighter, apply another coat there, blending it into the surrounding area. After the stain is dry, apply the finish.

We recommend polyurethane as a clear finish on a door exposed to weather. Polyurethane is available in a variety of sheens from matte to gloss. Two coats will do on a front door.

With a clean, dry paintbrush, working from the top of the door to the bottom, apply the first coat and let it dry for at least four hours. Sand the surface with No. 220-grit sandpaper. Wipe the surface with a tack rag to remove the dust. Apply a second coat of polyurethane and you're done.

Follow these steps and you'll have an entry to be proud of for many years to come.

***

New Survey Shows Dangers of Banks Entering Real Estate

A new survey by Bankrate.com—that shows banks are boosting their fees faster than the interest rates they offer customers—illustrates why banks should not be allowed to broker real estate, the president of the NATIONAL ASSOCIATION OF REALTORS® said Thursday.

“Banks have once again demonstrated their incredible ability to find ways to charge customers record fees," said NAR President Thomas M. Stevens of Vienna, Va. "Banks that once touted warm, fuzzy customer relations now are brazenly charging nearly $3 to use an ATM and more than $26 for a bounced check. Imagine what they will do to the real estate customer if they are allowed to broker real estate. Banks will control the real estate transaction end-to-end, creating virtually unlimited opportunities for extra charges and add-ons.”

The Bankrate.com survey found that:

The fee for using the "wrong" automated teller machine—one owned by a bank where you don't have an account—hit an all-time record high. You’ll be hit twice for a single withdrawal—once by that other bank's ATM fee and once by your own bank, for a total average fee of $2.91.

Bankrate.com estimates that American consumers will pay more than $4.3 billion in withdrawal fees for using ATMs not owned by their own bank in 2005.

Bounced-check fees have gotten sneakier. While the average insufficient funds fee fell a few cents, from $27.13 to $26.90, Bankrate found more banks are instituting tiered fees that ramp up the more often you bounce a check or leave a check uncovered. Even at $26.90, the bounced-check fee remains the second-highest recorded since Bankrate began surveying checking accounts in 1998.

Interest-bearing checking accounts remain an unattractive option, where you have to pay a lot more to open an account and lock up a lot more money to gain a pittance in interest.

Since 2001, NAR has successfully opposed a rule promulgated by the Federal Reserve and U.S. Treasury Department that would allow federally chartered banks to enter real estate brokerage and property management. Some 250 members of the U.S. House of Representatives and 27 U.S. Senate members support the Community Choice of Real Estate Act, which would bar federally chartered banks from entering real estate.

—NAR

HomeTRACKER technology added at NoltingRealEstate.com

Nolting Real Estate is proud to announce the latest enhancement to www.NoltingRealEstate.com -- Introducing HomeTRACKER . . . In an effort to make your real estate search more productive, I have teamed up with HomeTRACKER to give potential buyers the ability to conduct their own searches of the St. Louis Multiple Listing Service databank of homes for sale.

HomeTRACKER is a personal, password-protected website where you can do your own personal search of every listing available. HomeTRACKER allows you to search for listings based on location, city, zip code, MLS number, type of home, price range, number of bedrooms, bathrooms, garages, school district, and more. The service is FREE and you can do as many searches as you want. Once you have done a search you will be able to save listings as your favorites, delete listings, request to be shown a listing, contact me, or view a map of the listing. HomeTRACKER will also update your searches daily with any new listings that come on the market and track your favorite listings for price changes and contract pendings. If you would like, HomeTRACKER can even send you e-mail notifications with updates every day!

Visit Nolting Real Estate now to start using HomeTracker.

Title Company Executive Pleads Guilty

On Wednesday, Thomas B. Kurzenberger, Jr., former VP of Title Insurers Agency, admitted to taking $2.8 million from escrow accounts at Title Insurers Agency.  In September 2005, former Capital Title president Peter M. Shaw pleaded guilty of fraud, admitting he took $3 million from his company.  In August, former Phoenix Title president James A. Thurman pleaded guilty of fraud for taking $1.6 million from Phoenix Title escrow accounts.  

What does all of this mean to St. Louis real estate buyers and sellers?  
You have to get Title Insurance, but you have to be extra careful:  
1.  Check the St. Louis Better Business Bureau website before taking your realtors advice about which Title Company to use.  
2.  Consult the Missouri Attorney General's website.  
3.  Don't accept a Title Company suggestion that places you with a company you never have heard of.  You have to do research.  Your Realtor must defend his/her recommendation.  From www.Stewart.com
Protecting your Home Investment

A home is usually the largest single investment any of us will ever make. When you purchase a home, you will purchase several types of insurance coverage to protect your home and personal property. Homeowner's insurance protects against loss from fire, theft, or wind damage. Flood insurance protects against rising water. And a unique coverage known as title insurance protects against hidden title hazards that may threaten your financial investment in your home.

Protecting Your Largest Single Investment

Title insurance is not as well understood as other types of home insurance, but it is just as important. You see, when purchasing a home, instead of purchasing the actual building or land, you are really purchasing the title to the property - the right to occupy and use the space. That title may be limited by rights and claims asserted by others, which may limit your use and enjoyment of the property and even bring financial loss. Title insurance protects against these types of title hazards.

Other types of insurance that protect your home focus on possible future events and charge an annual premium. On the other hand, title insurance protects against loss from hazards and defects that already exist in the title and is purchased with a one-time premium.

Two Kinds of Title Insurance benefit You in Two Ways

There are two basic kinds of title insurance:

Lender or mortgagee protection,
Owner's coverage.
Most lenders require mortgagee title insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection. When title insurance is provided, lenders are willing to make mortgage money available in distant locales where they know little about the market.

Owner's title insurance lasts as long as you, the policyholder - or your heirs - has an interest in the insured property. This may even be after you have sold the property.

Depending on local practices and state law where the property is located, you may pay an additional premium for an owner's policy or you may pay a simultaneous issue charge - usually a smaller amount - for the separate lender coverage. You may even split settlement costs with the seller for the lender or owner's policy.

What does Your Premium Really Pay For?

An important part of title insurance is its emphasis on risk elimination before insuring. This gives you, as the policyholder, the best possible chance for avoiding title claim and loss.

Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by the title agent or attorney on behalf of its underwriter to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all "material objections" to the title. Frequently, documents that don't clearly transfer title are found in the "chain," or history that is assembled from the records in a search. Here are some examples of documents that can present concerns:

Deeds, wills and trusts that contain improper wording or incorrect names;
Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes;
Easements that allow construction of a road or utility line;
Pending legal action against the property that could affect a purchaser; or
Incorrect notary acknowledgements.
Through the search and the examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.

Hidden Title Hazards - Your Last Defense

In spite of all the expertise and dedication that go into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises. Some examples of hazards include:

A forged signature on the deed, which would mean no transfer of ownership to you;
An unknown heir of a previous owner who is claiming ownership of the property;
Instruments executed under an expired or a fabricated power of attorney; or
Mistakes in the public records.
Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims. All for a one-time charge at closing.

Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner's title insurance policy.

A Humorous Look at St. Louis

"Like every other population center in the country, St. Louis has some very unique characteristics. Visitors might find some of these a little bit on the strange side and yes, unique to our fair city. This is a humorous look at some of the things that make St. Louis unique." (Article by Richard Green for stlouis.about.com)
Click here for full article