Saturday, December 22, 2007

Don't Let Your Fireplace Steal The Heat From Your Home

On a cold winter day, there's nothing quite like snuggling by a cozy, wood-burning fireplace -- right? It's comforting and when you go to resell your home it can add value depending on how your particular fireplace is set up.

If it's a traditional, wood-burning fireplace like the kind you'd find in a living room, den and some bedrooms, then it could be costing you money. Your fireplace could simply be posing as an effective way to warm your home, when in reality it may be robbing your home of its heat by sucking the warm air up the chimney and causing you to have to run your heater as well. It's also polluting the air!

"The number one pollutant in the winter time is wood-burning fireplaces," says Kaye Thornton of Brower Mechanical, Inc in Rockland, California.

Some states are beginning to regulate what days you can use wood-burning fireplaces because of the Particulate Matter 10 (PM10) that is given off from them. PM10 is a mixture of materials such as smoke, dust, salt, soot, metals, and acids. It is considered to be among the most harmful of all air pollutants because, once inhaled, the particles get lodged deep in the lungs. Health problems start occurring as the body begins to react to the foreign particles.

Homeowners who still want to have the charm of fires burning but not the pollutants are converting to gas fireplace inserts that use ceramic wood-like pieces to create the illusion of a real fire.

"They have fireplace inserts that you can slide right into your existing masonry fireplace. Most of them are in sealed-combustion chambers so they don't rob the air in the house in order to keep the fire burning. The venting system is such that it expels the bad gasses and brings in the fresh air to keep the fire burning," explains Thornton.

A layer of air surrounds the inner firebox and a second metal layer contains the air that is warmed by the inner firebox. Once the fire is lit, the fireplace insert works to draw in fresh air, warm it up between the layers and then, as hot air rises, it's sent up through the top and out into the room. The inserts can be designed to look like the surrounding fireplace. They can be made to resemble real brick and also act as extremely good insulating material. Adding a fan to this type of unit can also help to generate more warmth into the room. But the fans aren't always necessary. One of the greatest features of a glass-front fireplace is warmth that permeates the room from these decorative logs and jets that are contained in the metal firebox.

"The heat just radiates out into the room," says Thornton.

These aren't new devices but they are gaining in popularity as homeowners realize what a drain on the wallet a real wood-burning fire can be. So, converting your existing fireplace to a gas-unit type can be more cost-effective, much cleaner, and easier to use.

If you install a wood-burning fireplace insert to improve your fireplaces heat efficiency, it must meet the Environmental Protection Agency certification requirements to ensure that it is clean-burning and highly efficient. These devices are basically a wood-stove design that fits into a conventional open fireplace.

If you don't have a chimney then you might opt for a direct vent fireplace. This is a sealed gas fireplace that takes fresh air and pulls it into the house through a pipe in the flue and then burns it in the combustion chamber. The bad gasses are taken from the home through an outside wall or the roof. These are often used in bedrooms and bathrooms because no combustion by-products spill out and there is no backdraft that escapes into the house.

Vent-free fireplaces operate without the need to vent to the outside. These are installed against a wall that has access to a gas line. They can also be recessed into a wall. For combustion, they draw room air and then convert it to warm air that is delivered into the room. There are no drafts which is why these types are considered to burn at an efficiency rate of more than 90 percent. However, there is an ongoing debate about the quality of indoor air that's associated with these models. Some argue that, since fresh air must be exchanged in order to compensate for the room air that is used during combustion, the air quality is compromised.

Converting your fireplace can be a bit costly (maybe thousands of dollars depending on your needs) but experts say in the long run it is worth the money spent. So, if warming your feet by the fire sounds appealing, make sure that you're burning a fire in a highly-efficient fireplace; otherwise it may end up burning a hole in your wallet too.

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source: realtytimes.com

Loan Contingencies Require Careful Attention

When directors of the California Association of Realtors® meet for the conduct of association business, there are always "hot topics" being discussed in the hallways, at regional caucuses, and in the meetings of various committees. At their recent meetings in Anaheim, one of the topics d'jour -- especially at committees dealing with legal and transactional issues -- was that of loan contingencies.

The standard California purchase contract provides for a variety of contingencies. The purchase agreement is typically contingent on such things as the buyer receiving satisfactory inspection reports, a termite clearance, acceptable governing documents if an association is involved, etc. Some contingencies have to do with financing. There may be a contingency that the property must appraise for the agreed purchase price. In the case of loans, the contract language is this: "Obtaining the loans [specified in the offer] is a contingency of this Agreement … [unless agreed otherwise]."

For most contingencies, by default their removal is to occur within seventeen days, although the time period may be changed by agreement. For example, a buyer might need 28 days before he could remove a contingency regarding a geological inspection.

The loan contingency is different in this regard. The contract specifies: "(i) Within 17 (or  __) Days after Acceptance, Buyer shall, as specified in [a following section], remove the loan contingency or cancel this Agreement; OR (ii) (if checked) the loan contingency shall remain in effect until the designated loans are funded." There is a third option. The contingency may be removed within 17 days, or it may last longer, OR it may run until the loans are actually funded -- essentially, until the close of escrow.

In "normal times" -- whatever exactly those may be -- the third option is seldom agreed to by the seller or insisted upon by the buyer.

If an escrow is 30 to 45 days or more, the seller doesn't want to wait until the end to be assured that the buyer is able to get the loan. The contingency is typically the default 17 days, or maybe up to 25. Generally, it is no problem for a buyer to remove this contingency, given that they will receive loan approval within that time.

These days, however, receiving loan approval -- even "formal" loan approval – doesn't carry the weight that it traditionally has. (People who were around in the early 1980s will remember this phenomenon.) Today, a lender may approve Mr. and Mrs. Jones for a $350,000 loan at x% interest, but, two weeks from now, the interest rate may have changed, or the loan program no longer exists, or (it happens) the lender may no longer exist.

Clearly, this is a problem for both parties. The lender wants to sell, but now his buyer doesn't have financing. The buyer wants to buy, but now he doesn't have a loan. Moreover, for the buyer, if he has removed his loan contingency, his good-faith deposit may be at risk also.

Many brokerage counsels are advising buyers' agents that their clients ought not to remove loan contingencies prior to the close of escrow (i.e. until funding). They should take the third option. If the seller won't go for this, perhaps the buyer can negotiate a modification of the terms, so that their deposit won't be at risk in the event of "lender failure." Or, buyer and seller might agree that, if there is "lender failure," the buyer will have an additional amount of time to secure financing elsewhere.

The problem here is that crafting the language of such agreements can be tricky. In many cases it is probably something most agents shouldn't try to do on their own. They should be consulting with their managers and/or company attorneys.

Other practices that some brokerages are now insisting on include (1) Don't use lenders that are unknown to the brokerage and its agents, (2) Require that buyers make applications with two lenders, so that there is both a back-up available, and a double check on qualification, and (3) insist on a true commitment letter from the lender, not just a contingency-laden approval letter, before a buyer removes the loan contingency.

There are no perfect answers here. There are risks for both sides. But buyers want to buy and sellers want to sell. Both agents need to work together to make that happen.

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source: realtytimes.com

How Will Realtors Advertise In The Future?

After two years of depressed housing sales, Realtors have cut their print budgets and put more money on the Web. The result has been a slingshot effect for online advertising, says a new report by online consulting firm Borrell Associates.

Total ad spending on real estate is down three percent this year, while spending online has grown 25.8 percent, hitting $2.6 billion. At this rate, online real estate advertising will grow 12.4 percent next year, while other avenues will lose advertisers. In three years, predicts Borrell, agents and brokers will spend more money online than with the newspaper.

Economic uncertainty makes it probable that the number of listings will decline and advertising budgets will also decline.

After average annual increases of about nine percent in total real estate advertising during the housing boom of 2001 and 2005, the market flat-lined in 2006 and is likely to fall by over three percent by the end of 2007, mirroring housing sales. This trend will likely continue into 2009.

This is bad news for newspapers, which hit a high of $5.2 billion in print advertising, now expecting a nearly 7 percent decline. Borrell's research suggests that 2008 will be the same and that ad sales will fall 16 percent in 2009 and 13 percent in 2010.

Going forward, online aggregators such as Yahoo! and Zillow will be closely watched by the real estate industry. Yahoo! is the second-most trafficked real estate site behind Realtor.com, and Zillow holds the No. 5 spot.

Since Borrell's report was completed, Zillow has announced partnerships with several franchises and brokers including ERA, and has launched a listings feed for brokers and aggregators. In addition, real estate agents can market themselves and their listings for free.

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source: realtytimes.com

Salt Lake City: Hottest Economy in the Country

What do you get when you combine affordable living, a high quality of life, 4.4 percent job growth and an unemployment rate of 2.7 percent? Answer: Salt Lake City real estate.

A recent report from the Utah Department of Workforce Service says the state is on track to add 53,500 jobs this year. Salt Lake City -- the center of Utah's economic growth -- reflects what happens with this type of job growth: an average price increase of 14 percent to more than $246,000. When you look at the market zip code, by zip code, it's even more jaw dropping.

Salt Lake Board of Realtors reports the hottest zip code in the city grew the third quarter by more than 24 percent. In fact, 14 zip codes enjoyed a double-digit rate of growth compared to the same quarter in 2006.

Out of the 30 reported zones, only two communities experienced a drop in prices for the third quarter. Since 2004, Salt Lake City average home prices have shot up more than 54 percent.

Utah Business Magazine reports the state's strong economic position has enabled them to "attract larger, more prestigious companies as possible move-ins." Projected growth keeps on coming. A University of Utah report released this week takes a look at Kennecott Land's planned development in Salt Lake County of more than 200,000 residential units in the coming years.

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source: realtytimes.com

Washington Report: Legislation Finally Passes

After months of doing nothing, the Senate finally got its act together last week and passed two important housing bills in a single day!

Both pieces of legislation have potentially important roles to play in the mortgage industry's relief efforts for hundreds of thousands of homeowners now struggling with subprime adjustable-rate loans.

First the Senate passed the FHA Modernization Act -- a bill you've heard a lot about since September here at Realty Times, when the House passed its version by a big margin.

The Senate's bill is a little less generous than the House's -- FHA's new maximum mortgage amounts would be capped at $417,000, whereas the House's version allows loan amounts to rise according to local median price levels.

Under the House bill, FHA's limits would be well over $500,000 for much of California -- and over $700,000 for super-expensive local markets such as San Francisco and portions of the Bay area.

The final dollar limit will need to be hammered out in negotiations between the House and Senate early next year.

The House version also allows zero downpayments, while the Senate sets a 1 and a half percent minimum. Both would be improvements over the current 3 percent minimum.

The Senate also finally got around to passing the Mortgage Forgiveness Debt Relief Act that's been sitting on the agenda for months. That's the one that prohibits the IRS from demanding income taxes from financially-stressed borrowers whose lenders forgive a portion of their principal balance as part of a "short sale" or loan modification agreement.

The same bill extends the deductibility of private and FHA mortgage insurance premiums through 2010-another plus for homeowners trying to make ends meet in a tough market.

Better late than never seems to be this year's working motto in the Senate when it comes to dealing with the housing crisis.

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source: realtytimes.com