Will you recoup your investment?

Take a look at this useful report from Remodeling magazine entitled, "Cost vs. Value Report." The report estimates how much of the cost of a remodeling project can be recouped if the home was sold immediately after the improvement.

American Dream Down Payment Initiative

Don't know much about the specifics but saw this program mentioned on the Cook County government Website:

American Dream Down Payment Initiative Program Launches To make the “American Dream,” of home ownership a reality for first-time home buyers in Cook County, this program provides financial assistance to income-qualified families who are first-time home buyers to purchase single family housing that will serve as the family’s principal residence in suburban Cook County.Click here to link to the Department of Planning and Development website for more information on the ADDI program.

Here's the link directly to the program:

http://cookcountygov.com/agencyDetail.php?pAgencyID=6

Government assets for sale

Ken Harney, Washington Post Writers Group, had an interesting piece in the February 12, 2006 Chicago Tribune Real Estate section about buying various government assets, including homes. It's a great point to remember the various alternative ways of buying real estate such as this through the Department of Housing and Urban Development and other federal agencies as well all of the various for-sale-by-owner groups and private offerings. Whether you're buying or selling, there's obviously a premium when there's a 6-7% commission on a property, even if you're not paying it directly.

Here's the link on HUD's website that lists homes for sale throughout the federal government:

http://www.hud.gov/homes/homesforsale.cfm

I know I saw an article recently where a gentleman had purchased a lighthouse off the coast of Virginia...sounds cool!

Tax smart mortgages

I had a real estate closing the other day where the buyer had gotten a mortgage through Chicago's Tax Smart mortgage program and it's intriguing.

Doing a little research I note that both the City of Chicago and the State of Illinois have programs that allow qualified buyers to either get a nice tax credit or a lower interest rate. Income and price limits do exist. The income maximums are upwards of $60,000 so a lot of middle-class families should consider these programs.

Two New Real Estate Sites

I'm going to link to an article from the New York Times Business section regarding a couple of new Web sites in the general real estate sales market. Quoting the article:

One site, Zillow.com, which will be introduced today, will help consumers obtain more accurate real estate sales information — to the consternation of some real estate agents.

A smaller site, Redfin.com, introduced an unusual new service last week that might be even more disruptive to the real estate industry: the feature automates the process of bidding on a house online.

Some additional competitors in the real estate arena, although at first read it doesn't appear that Zillow provides any brokerage services.

It will be interesting to see how things shake-out over the coming months and years. Can real property transactions become nearly totally Internet based or might the huge sums of money involved require more personalized service? Obviously as a lawyer we're still bound by the Statute of Frauds and there must be written contracts.

Know your mortgage!

I've been reviewing details of a recent class-action legal settlement regarding Ameriquest Mortgage Co. that gives excellent guidance to all potential home-buyers. Here are some points I pulled out:

1. Anything you want to enforce, get it in writing. As an attorney this is sort of rule one regarding most contractual transactions. However, a lot of what Ameriquest was accused of dealt with oral promises regarding closing costs and prepayment penalties. Although not a great law, the Good Faith Estimates must be provided within 3 days of application...hold your lender to their estimate. Second, the prepayment penalty stuff is right in the note and mortgage on the first 1-3 pages typically. If there's a prepayment penalty in your document you're stuck.

2. Loan officers cannot influence appraisers. This is a hard area. Obviously inflated appraisals put home buyers into homes they can't afford and saddle them with debts that often push them into foreclosure or bankruptcy. However, lets not kid ourselves, buyers are usually a party to these distortions and want their property to "appraise out" so they can get their mortgage. I would simply suggest that people need to get a copy of their appraisals. Also, ask the loan officer about appraiser independence.

3. Inflated or fabricated income is not allowed. Ameriquest is no longer able to issue the "stated income" mortgages that require no hard documentation of borrower assets or income. Why are these mortgages allowed, period?