You’ve done your comparative market analysis (CMA) and know the price where the property should sell. After making your case the seller pulls out a Zestimate for the property and says, “Well, Zillow says my house is worth …!” What do you do?

Today, most sellers will search for their home’s value online. One of the most popular destinations to obtain this information is Zillow, which has a great series of apps for mobile devices that allow you to see its “Zestimates” (automated valuations) simply by pointing your mobile device at a specific property.

Pricing properties in many areas is pretty straightforward. If you have comparable sales in the same subdivision with comparable amenities, the most recent comparable sales are good indicators as to what the ultimate selling price will be.

In other areas, it’s not as clear. In some areas you can have a large, new McMansion next to a 100-year-old teardown. In other areas, the same floor plan can sell for 50 to 100 percent more depending upon the view, the location, or in the case of a high-rise, the floor upon which it is located. The question you must face is how to cope with this issue when it comes up in a listing presentation.

 DEAR BARRY: We bought our home about a year ago. When the first rains came, our family room was flooded, and the insurance company refused to pay the claim because the patio was sloped toward the building and because the pavement was above the weep screed on the stucco wall.

We paid a contractor to replace the patio. He sloped it away from the building, but it is still above the weep screed, so rainwater still leaks into the house. Thus far, our costs for flood damage, including mold removal, are nearly $30,000. It seems unfair that we are stuck with these expenses.

Nothing about faulty drainage was mentioned by our home inspector, the termite inspector, the sellers or the real estate agent. The agent recommended the home inspector but now disclaims liability because we were the ones who scheduled the inspection. Is anyone liable for nondisclosure, or are we left holding the bag? –Gary

DEAR GARY: Your situation raises a number of issues. So let’s start with who may be liable.

The home inspector and the termite inspector are both at fault for not disclosing the slope of the pavement and the fact that it covers the stucco screed. Any home inspector worthy of the title routinely looks for drainage problems of this kind.

Pest control operators (termite inspectors) routinely disclose such conditions because they are classified as “section two” issues — that is, conditions that can lead to infection by wood-destroying organisms. The home inspector and termite inspector can point fingers of blame and denial at each other, but they were both professionally negligent when they overlooked apparent faulty drainage.

Your agent may also be liable if he gave you the name of one home inspector only. If he gave you a list of names from which to choose, he may be off the hook. However, the list that he gave you may or may not have included the best home inspectors available. Some agents place their preferred inspector at the top of the list, but the top position is not always reserved for the best.

If the sellers owned the home for at least one rainy season, it is reasonable to assume that they knew about the drainage problem. It may be difficult or impossible to prove that they knew, but if they owned the home for several years, it is unlikely that they never had water intrusion.

Next in line is your contractor. If the pavement he installed covers the stucco screed, then the work he did was substandard. Installing pavement without clearance to the screed is a violation of the building code. Every building contractor should know this.

Finally, there is the denial of your claim by your insurance company. Homeowners insurance policies typically exclude the water source from coverage but pay for the resultant damage to the building. You should have your policy reviewed by an attorney to see if the carrier is unfairly denying the claim. At the same time, you can get a legal opinion regarding liability of the inspectors, the sellers and the agent.

To write to Barry Stone, please visit him on the Web at www.housedetective.com.

 DEAR BENNY: I am in the process of preparing my income taxes, and heard that I may have to pay a tax on the moneys that my lender canceled when I sold my house via a short sale. Is this correct? –Theresa

DEAR THERESA: I have to give you a good lawyer’s response: “It depends.” Usually under the tax laws, if your debt is canceled or forgiven, that is taxable income to you.

However, Congress thought this was absurd: You lose a house by foreclosure (or short sale), and to add insult to injury, you have to pay tax on this phantom income. Accordingly, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million — if that debt was on your principal residence.

If the debt was on a second home or an investment property, then you are out of luck; the amount that was forgiven (or canceled) is taxable income to you.

If your canceled debt was on a refinanced loan, the law is murky. If you used the refinance proceeds to substantially improve your house, then there is no tax to pay. But if you used those proceeds for other purposes — regardless of how significant the investment may have been — the cancellation creates a taxable event for you.

The IRS has an excellent, free, publication on this topic, called “Canceled Debts, Foreclosures, Repossessions and Abandonments.” It is Publication 4681, and will soon be published at the following link on the IRS website — http://www.irs.gov/pub/irs-pdf/p4681.pdf — or by calling (800) 829-3676, or (800) TAX-FORM.

DEAR BENNY: I am a senior citizen whose house is completely paid for, but would like to move to a senior community. I’m getting tired of the steps, grass-cutting, gutter-cleaning and other maintenance tasks. Do you know of any type of program that will let me move into the new house before my present house is sold? I need to sell my present home to purchase the new home. I don’t want to take on another mortgage when I’m mortgage-free now.

I can put my house up for sale now, but the way the real estate market is, there is no telling how soon it will sell. I don’t want to face the possibility of my house being sold before I close on the new house or the possibility that the new house is ready before my present house is sold.

That’s why I’d like to move into the new house and deal with a higher monthly payment until the time when my home is sold, at which time I will refinance my new home with the proceeds from the sale. Hopefully from that sale and refinancing, I won’t have a mortgage at all.

I have thought about doing a reverse mortgage, but that won’t give me quite the amount that I’d like to have — but it’s a possibility. –Ronald

DEAR RONALD: To my knowledge, there is no formal program that addresses your needs. However, here are some suggestions:

First, in your case, a reverse mortgage may be an answer. If that does not generate enough money, perhaps the company (or person) who will sell you the house in the senior community will be willing to take back the difference by giving you a second trust (mortgage). In other words, they will lend you the money, which you will pay back when you sell your present house.

Another suggestion: Consider a bridge loan. This is a mortgage on your current house. It is called a “bridge” because it is used to cover the gap between the time you buy the new house and sell your present one. Most banks should be willing to make such a loan to you, especially because you now own it free and clear.

A third suggestion: Sell your house, but arrange with your buyers to allow you to stay in the house until your new house is ready for occupancy. This is known as a “post-settlement (or post-escrow) arrangement.” You will get all of the sales proceeds; your buyer will own the house and will have to pay the new mortgage, real estate tax and insurance. (In technical terms, this is known as PITI — “principal, interest, taxes and insurance”).

You (or your attorney or financial adviser) can determine what the daily PITI will be for your buyer, and you can pay the buyer a monthly rent based on what they have to pay. The buyer may also want a small security deposit, which will be refunded to you when you vacate — assuming that the house is in the same condition as when he or she bought it.

But, one more word of advice: You are correct that the real estate market is very uncertain. Don’t jump into buying that new house until you are absolutely sure that you will be able to sell your current one, and will get the sales price you need. Perhaps you can sign a contract with the new house, contingent on your selling your present one. Some sellers may object, but others may be happy to have found a potential buyer and may accept this contingency.

DEAR BENNY: We bought a foreclosed house in 1995 in which the garage had been converted to an illegal family room. At closing, we had up to 60 days to have the garage brought up to code either by putting it back to a garage or making it a legal family room. We changed it back to a garage in 30 days. We got all the proper permits and a new certificate of occupancy to give to the town. We did everything right. Well, 16 years later, I am on a website for our county and find out that they have us down for the extra 550 square feet of living space that we had taken off.

I called the town, and was told they will come out to measure. The tax assessor then told us that we cannot get back taxes that we paid. However, he did say that we were charged for the extra 550 square feet plus a basement that I do not have (we have a crawlspace) for all this time. Do we have any legal rights? –Name withheld on request

DEAR NAMELESS: Let me address this in two parts. First, the future. I strongly suggest you take immediate steps to at least have the assessor’s records changed as soon as possible. If the assessor’s records are incorrect, they must be corrected.

Second, the past. It is often very difficult — if not impossible — to get refunds from local or state governments. They are often extremely bureaucratic, and because their funds are low, are reluctant to part with a single dollar.

You should, however, talk with a local attorney. You may have the right to challenge the assessor and get a refund. That will depend on state law in the jurisdiction where your property is located.

DEAR BENNY: I was wondering if you could list your top five to 10 real estate or real estate finance or real estate -elated books. –Tom

DEAR TOM: Interesting question. I have many friends and colleagues in the real estate community — many of whom have written books. Accordingly, if I merely list five or 10 such books, I am afraid that I may be overlooking someone and thereby insulting him or her.

Furthermore, quite often books such as “get rich on real estate using other people’s money” or “walk away from your house” (not real titles) go on the market, and they give erroneous and misleading information. And over the years, some of these authors actually had to file for bankruptcy relief. So I won’t list any such books.

I do, however, have one book that I strongly recommend on tax-related issues. That is “Tax Guide 2010,” Publication 17 by the Internal Revenue Service. You can download it (or order it) free from this link: http://www.irs.gov/pub/irs-pdf/p17.pdf.

In fact, the IRS has many excellent publications on a number of tax-related issues that you can find on their website, by clicking “forms and publications.”

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

 

Book Review
Title: “Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier “

Love and economics. Outside of marital economic conversations, like dowries, prenuptials and divorce settlements (and maybe even inside them!), the two seem to be strange conceptual bedfellows.

Apparently, someone forgot to mention this to economist Edward Glaeser, whose book “Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier” is a veritable love letter about the metropolis, laden with economic proof points that cities deserve not just Glaeser’s, but the undying affection of every world citizen — rich and poor, laborer and businessperson, suburban and rural alike.

Glaeser’s central theory — which he proceeds to prove and prove again throughout the book with vivid case studies of slums, skyscrapers, asphalt and sprawl from Detroit to Dubai, from Bangalore to Singapore — is that large cities the world over have a strong track record over history of improving the lot in life of both their residents and their fellow non-urban countrymen.

This, he holds, creates opportunity, economies of scale, and even concentrates brainpower at a scale and so efficiently and synergistically that citizens and residents become wealthier, up their intellectual games, live more eco-friendly lives, and on many other levels are happier and healthier than they would have been living elsewhere.

Glaeser is a Manhattanite, born and raised, so his love for cities does not surprise; most native urbanites I know, from Manhattan to London to Vancouver to San Francisco, need very little prodding to start reeling off the reasons they live, work and play in their town. Usually, this list includes a few names of restaurants, retail centers, a university, library or park, and a blurb or two about how diverse/creative/smart their neighbors are.

However, having personally grown up in a distant suburb with many semi-rural neighborhoods, only moving to an urban area as an adult, I was fascinated by Glaeser’s various economic/philosophical definitions of what exactly a city is that renders it worthy of his designation as humanity’s greatest invention.

In fact, that is a large part of what Glaeser does in “Triumph of the City” — he tweaks the most elemental way in which readers understand what a city actually is. Viewed though Glaeser’s learned, well-documented, inspired lens, a city is much more than buildings and people crammed together. In fact, one of his earliest definitions of a city is “the absence of physical space between people and companies,” which facilitated factory productivity in the last century, and facilitates knowledge sharing today.

Throughout the love letter to and about cities that is “Triumph of the City,” Glaeser defines and explores cities variously as hubs for productivity and prosperity, gateways to ideas and innovation; as people, not buildings; as cultural centers and luxury resorts; and as the home to slums that, while seemingly impoverished, actually offer economic, sanitation and health care opportunities to their residents totally unavailable to their non-urban counterparts.

Glaeser defines cities as the locations that power the lowest rates of gasoline consumption and lowest carbon footprints of any human living pattern.

He then segues into a sharp critique of seemingly “green” public policies mandating greenbelts and imposing “draconian” caps on urban development, as overly simplistic (“California would have more than enough water for its citizens if it didn’t use so much of it irrigating naturally dry farmland”) and having the undesirable effects of keeping property prices prohibitively high for all but the elite economic classes and encouraging sprawl to the suburbs (and the corresponding, higher carbon footprints that go along with commuting and big suburban houses on big, grassy lots).

The book also offers a nuanced contrast between cities that work and cities that don’t. In fact, Glaeser uses the contrast between New York City — with its troubled past and triumphant present — and Detroit — with its troubled past and even more troubled present — to isolate and explore what he deems “the essential ingredients of urban reinvention.”

It made me want to run for mayor — it seems there is a handbook for smart transformation of a city, and a set of cautionary tales about what doesn’t work, all to be found inside “Triumph of the City.”

Whether you live in a city, troubled or triumphant, or are one of the millions of Americans whose disgust with $4-plus per gallon gas prices has you contemplating the sometimes intimidating move to your area’s big city, this book will restore your faith in what cities can be, and inspire and energize you to play your role in manifesting that possibility in your own city, if you choose to.

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

       

      

    

    

     

      

      

   

  

Economies of scale are well understood. Bigger factories are more efficient, bigger distribution networks are more efficient, bigger ad campaigns can be more efficient. It's often hard to defeat a major competitor, particularly if the market is looking for security and the status quo.

But what about the economies of small? Is being bigger an intrinsic benefit in and of itself?

If your goal is to make a profit, it's entirely possible that less overhead and a more focused product line will increase it.

If your goal is to make more art, it's entirely possible the ridding yourself of obligations and scale will help you do that.

If your goal is to have more fun, it's certainly likely that avoiding the high stakes of more debt, more financing and more stuff will help with that.

I think we embraced scale as a goal when the economies of that scale were so obvious that we didn't even need to mention them. Now that it's so much easier to produce a product in the small and market a product in the small, and now that it's so beneficial to offer a service to just a few, with focus and attention, perhaps we need to rethink the very goal of scale.

Don't be small because you can't figure out how to get big. Consider being small because it might be better.

Apr 19 2011

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Search Engine Journal Looking for Editor-in-Chief: Are you the one?

We have big plans for SEJ this year! We are excited to announce today that we are searching for a new editor-in-chief. Our EIC will be in a highly visible role as the voice and face of SEJ. This U.S-based individual will be breaking exclusive news, procuring the best guest bloggers for unique and thought-provoking posts, and covering search conferences to interview the most-recognized personalities and experts in search marketing.

After building this community from the ground up 8 years ago, I’m looking to step down from Editing and overall day to day operations with SEJ and looking for someone to fill my big shoes!

[Ann Smarty will be assisting us in our search and will continue with SEJ.]

SEJ’s Editor-in-Chief is a highly visible, part-time role that will put you in front of the industry’s movers and shakers as well as those looking to learn more about search marketing. We are looking for someone who has bright ideas and a strong ability to execute on taking SEJ’s brand to the next level in reporting, insights, exclusives and search conference coverage.

If you…

• are always coming up with killer ideas for articles
• are a newshound and usually the first to know about the latest industry updates
• get excited about watching your website traffic trend upwards
• love networking and reaching out to expand the sharing of Search Marketing knowledge …then we need to hear from you!

Must-haves

• Lives in US
• At least 5 years in the Search Marketing industry, either as a journalist or professional
• Amazing creative writing skills
• History in blogging, writing or reporting about search marketing
• Ability to curate content and attract guest contributors
• Ability to review search company embargoes and prepare news and articles on events before they happen
• Organization and planning skills
• Extensive industry connections
• Ability to travel to industry conferences 1-3 times a year
• Experience in industry-related journalism, including newsroom, interviews and editorials
• Very responsive to email and requests

If you are interested in becoming the face of an internet marketing institution, please send the following to info@alphabrandmedia.com:

• your current resume
• links to 5 of your published posts

 

Written By:

Loren Baker | Search Engine Journal | @lorenbaker

Loren Baker is the Editor in Chief of Search Engine Journal, Partner at BlueGlass Interactive & the CMO of Alpha Brand Media, the parent company of SEJ. Involved in SEO for more than a decade, Loren launched SEJ in 2003 with the goal to share search marketing information and reporting on happenings in search.

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