Thursday, May 08, 2008

Common Home Insurance Coverage Misconceptions

I’m constantly amazed (and I don’t know why still) at how many people don’t know what’s covered and what’s not covered under their homeowner policy.  When someone calls us for a quote, I have a list of questions to go through to make recommendations and make sure someone isn’t paying for something they don’t need or want.  Often people tell us they have something covered and then when I point out in their policy it’s not, they’re shocked.  Here are a few of these common items that are NOT covered under your home insurance policy:

• ATVs & motorcycles. They have their own policy.  There isn’t any coverage for these on your home insurance, even when they’re parked in your garage.  If they’re stolen, you’re paying out of pocket to replace them.
   
• “Replacement cost” on home.  Chances are you’ll never have a total loss of your home.  If you do your home insurance will only pay up to the ‘dwelling’ limits plus a little extra, usually 20%-50%, to replace your home.  Anything above and beyond is your responsibility.  There are a few companies that offer guaranteed replacement cost but most people don’t have it, ask your agent if it’s available.
   
• Boats. They have their own policy, and are in the same category as ATVs & motorcycles above but you may have up to $1500 in coverage depending on the insurance company.
   
• Home based business.  If you’re self employed and have business “stuff” at your home, there is very little coverage for the “stuff.”
   
• Jewelry, silverware, guns.  There is a small amount of coverage for these items for theft in the basic homeowner policy.  It’s usually around $1000-$1500 max.  If you have more you can increase the limit or buy a ‘floater’ policy.
   
• Building code.  Your home policy says it will replace the home to similar construction standards when it was originally built.  Older homes were built with older building codes.  If your home is a total loss, and in some partial losses, you’ll have to pay the increased to upgrade your home for the new building codes.  For example, Scottsdale requires fire sprinklers in all new homes.  You would have to pay to put the fire sprinkler system throughout your home.

There are many other small items that aren’t as common but may affect you.  Call your agent.  Ask what’s covered and what’s not covered.  If there’s something you’re afraid of losing, ask your agent.  Remember, the cost of insurance is the premium you pay plus the cost of any unpaid claims.

		Written By:  Matt Fox President  - Fox Insurance Services, LLC (480) 699-7222 InsuranceRenegade.com
Click Here for an “Instant Callback” to speak with our office about your protection!

Posted by Matt Fox on May 8, 2008 | Permalink | Comments (0) | TrackBack

Sunday, April 06, 2008

Selling a Home in AZ and Not Sure What to Disclose to the Buyer?

I recently received an email with this question about disclosure of sex offenders when selling a home in Arizona:

"Recently in USA Today 3/20/2008 in an article written by Matt Reed, he stated  " Arizona has one of the nation's toughest laws, requiring sellers and agents to disclose neighboring sex offenders to potential buyers."

Yet Arizona real estate law attorney Richard Keyt stated on his website the following: " The presence of a sex offender in the vicinity of the property is not a fact that is required to be disclosed by law."  His web page was last revised 3/23/2008.

Additionally, a form from the Arizona Association of Realtors, Residential Seller Advisory version 02/2008 stated: "By law, sellers are not obligated to disclose that the property is or has been: ( I'll skip to paragraph 3: located in the vicinity of a sex offender."

My question is has the governor or the legislation changed this provision of law recently? Who is correct?"

First, I have to say that I'm not an attorney so I can only address this question in the general sense and from a Realtor's perspective.  So do not consider my answer as legal advice, and ALWAYS consult an attorney for questions about your own specific situation.

Second, don't believe everything you read in the mainstream media!  Of course, you can't believe everything you read on the internet either.  But I do know bloggers who are much more thorough about checking facts than some of the major media outlets.

Arizona legislators are constantly updating our laws, and real estate disclosure is a hot topic.  However, I don't think a change to the law is the source of confusion in this case.  From my experience, I'd say all of the sources quoted are technically correct.  I think this is the USA Today article that was referenced in the question, here's the AZ real estate attorney who was mentioned, and here's the Arizona Association of Realtors (AAR) Residential Seller Advisory form.

The AAR Residential Seller Advisory does indeed state, "By law, sellers are not obligated to disclose that the property is or has been... located in the vicinity of a sex offender."  But if you keep reading, it goes on to say, "However, the law does not protect a seller who makes an intentional misrepresentation."  And then the top of the next page says, "Sellers are required by law to disclose all known material (important) facts about the Property to the Buyer".

So what is considered to be "material" or "important"?  Generally, anything that may affect a buyer's decision to buy is definitely material and should be disclosed.  To be safe, I tell sellers that EVERYTHING is material to the buyer.  At least, a seller has to assume that everything is material because they don't know what's material to the buyer.  Every buyer is different... what seems minor and unimportant to the seller may very well be minor and unimportant to one buyer.  However, that same item may be extremely important, and thus material, to another buyer.  If it ends up in front of a judge, I would guess that anything and everything the buyers find out later, that the seller knew and didn't disclose, will be considered material!

The AAR Residential Seller Advisory reinforces this idea with it's heading, "When in doubt, disclose!".  If the sellers know there's a sex offender living down the street and the buyers ask, I would tell the seller to disclose it, in writing, to protect both the sellers and the buyers.  Even if the buyers don't ask, I would still tell the sellers to disclose it, in writing.  It doesn't matter if the buyers are older or don't have kids.  You cannot assume they don't care about a sex offender living nearby.  They may have grandchildren who visit and play outside, or friends that come over and bring their kids.  My point is, you shouldn't try to get inside the buyer's head and figure out what is, or is not material.  Only the buyer can decide that.  Just disclose it and let the buyers make that call... whether it's a maintenance problem, or something you know about the neighbors, homeowners association, schools, etc.  Disclose whatever you know.

I know many people are reading this thinking, "Disclose it, even if it they don't ask? That would probably kill the deal."  Well, it's better to kill the deal now than end up in court later.  And actually, being honest from the beginning by making full disclosure reduces the risk of a last minute deal-breaker, 29 days into the transaction.  As a seller, if the deal isn't going to close, don't you want to know right away instead of AFTER your house has been off the market for a month?

Full disclosure isn't just for sellers either.  It's a two-way street.  Buyers should also disclose anything that might be material to the sellers, like if they know something which may affect their ability to qualify for a mortgage.  The "golden rule" can (and should) be applied to real estate transactions, just like anything else in life.  Every transaction is smoother, less stressful and turns out better in the end if both parties are honest and upfront with each other from the beginning. 

But buyers, don't be naive!  You should NOT rely on the sellers to disclose all material facts about the property you're buying.  Even if the sellers are honest people, they may not know all the material facts.  So buyers must also do their "due diligence" by investigating everything that's important to them.  The AZ Department of Real Estate advises buyers to read and investigate the items on this checklist for Arizona home buyers.  While the law may require certain disclosures, "Buyer Beware" is a reality!

Written By: Shannon Hubbard Realtor®-Investor Great American Realty, Inc. Cell: (480) 695-6672 Email me

Posted by Shannon Hubbard, Arizona Real Estate Agent on April 6, 2008 | Permalink | Comments (8) | TrackBack

Monday, March 24, 2008

Homeowner Needs Help with HOA Issue

I get many emails from homeowners who are having problems with their Homeowner Associations, and are seeking advice.  I'm not an attorney, so I can't offer advice on how to handle specific HOA problems.  But I've been there myself, so I found the email below particularly interesting.  Without revealing any personal information, I'm posting the majority of the email along with my response:

"I don't know if you can help me with this but if you can offer some help or direction that would be greatly appreciated.  I have a truck that I have had parked on the side of my house for four (4) years.  Nothing was ever said.  Now, I have received a letter from my HOA telling me I can't park it there because it can be seen over the gate.  Maybe six (6) inches of the roof.  And, that it is parked in a "Landscaped Area", which it is not. It is a utility area that is not landscaped at all.

We buy these houses with big double gates so we can utilize the area behind these gates for things like this.  I can understand if it was something offensive, but no one has ever complained or said anything about the truck being there till this.  Any help?"

My Response...

"...I'm sorry you're having a problem with your HOA.  I had a similar problem myself and know first hand how frustrating it can be.  Obviously, every situation is different and your situation is probably based on very different facts, CC&R's, legal principles, etc.  And I'm not sure if you're in Arizona, but state laws also can affect your situation.  So the best advice I can give you is to seek advice from an attorney, which I am not.  From a homeowner standpoint, I can tell you that when I consulted an attorney in a HOA situation several years ago, the advice I was given was to work within the neighborhood to gain support and resolve the problem.  Here's what happened to me several years ago:

We had a nearly new pickup truck parked in the 'third-car' area of our driveway.  But it wasn't paved like the rest of the driveway, it was covered with rocks.  The truck was driven every day, and we had been parking it there for about 3 years or more when a certain Board member decided to make a stink about it.  Our attorney told us that in our case, by allowing us to park there for several years, the HOA had given us "constructive notice" that it was allowed.  Our CC&R's did not specifically prohibit it, however they did not specifically allow it either.  So our attorney claimed that in the absence of a restriction, it was permitted.  Then the Board member tried to use some vague landscaping clause to make us stop parking there.  Of course, there were others in the neighborhood who parked in a similar manner, so we found them and got them to show up at the next meeting for support when we addressed the Board.  Since only a few people usually showed up to Board meetings, we only had to get a few neighbors to show up to have overwhelming support.  We also went to each of our immediate neighbors and had them sign statements saying that we had been parking there for years and they had no problem with it.  Additionally we went door-to-door and asked other neighbors who agreed we should be able to park there to sign a petition so we could amend the CC&R's to specifically allow it.  We came up just short of the 2/3 required for an amendment to the CC&R's, but it was enough to make the other Board members agree to drop the issue.  Shortly thereafter, the Board formally adopted a policy which allowed parking on rocks with certain criteria, which we met.  End of story.

Again, your overall situation is different than mine, so you should speak to an attorney about the legality of your issues.  Much of the HOA's power comes from the CC&R's and an attorney can explain your rights under the CC&R's.  From a non-legal standpoint and from my experience as a homeowner, the power a HOA has comes from its members.  The unfortunate truth from my experience with HOA's is that in many cases, most members don't care and won't get involved in things they don't care about.  But if you can find those neighbors who are in similar positions, you may find strength in numbers.  Or you might find that others disagree with you totally and you are the minority in your neighborhood.  But chances are, there are others out there who recently got notices to stop doing things they've been doing for years also.  Did you recently have a new Board member elected who might be pushing a stricter agenda?

Again, other than telling you of my experience, you're in lawyer territory!  While I can't advise you on how to handle your situation, I hope my story helps.  And I wish you the best of luck in resolving your HOA issues.

Sincerely,
Shannon

Hope you found this interesting too.  Have a great day!

Written By: Shannon Hubbard Realtor®-Investor Great American Realty, Inc. Cell: (480) 695-6672 Email me

Posted by Shannon Hubbard, Arizona Real Estate Agent on March 24, 2008 | Permalink | Comments (8) | TrackBack

Tuesday, March 11, 2008

Foreclosure Rates and Neighborhood Crime

Here's an interesting statistic:

For every 1% increase in a neighborhood's foreclosures, violent crime increases 2.33%.

Written By: Shannon Hubbard Realtor®-Investor Great American Realty, Inc. Cell: (480) 695-6672 Email me

Posted by Shannon Hubbard, Arizona Real Estate Agent on March 11, 2008 | Permalink | Comments (6) | TrackBack

Saturday, March 08, 2008

Recent Changes to the FHA Loan Program

It seems like the FHA Loan program is being looked to by government leaders, consumers, lenders and anyone in between to save the housing market. As a result there has been a lot of changes to this program within the past few months.

1. FHA Loan Limits Increased: The loan limit has been raised across the entire country. For Maricopa and Pinal County (which includes all the major cities in the Phoenix Metro area) the new limits are as follows:

• One-Family is now $346,250 (was $263,150) = $83,100 increase
• Two-Family is now $443,250 (was $296,390) = $146,890 increase
• Three-Family is now $535,800 (was $360,100) = $175,700 increase
• Four-Family is now $665,850 (was $415,500) = $250,350 increase

2. Down payment Assistance Programs: While this is not a direct FHA feature, one of the major reasons to use the FHA program is because it allows third-parties to contribute towards a buyer’s down payment. The FHA loan limit is 97% of the value of the property but it allows the remaining 3% to be gifted from such non-profits as AmeriDream, Nehemiah etc. Recently HUD (which oversees FHA) challenged the legality of such gifts and threatened to shut them down. The down-payment programs fought back and recently won in court.

3. FHA Secure: This was an initiate from the White House designed to help subprime borrowers refinance into a FHA loan program. It is targeted to those on adjustable rate mortgages facing abrupt increases to their monthly housing payment. The HUD website  has addition information, but here are some high points on how you may qualify for FHASecure:

1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
2. Interest rates must have or will reset between June 2005 and December 2008;
3. Three percent cash or equity in the home;
4. A sustained history of employment; and
5. Sufficient income to make the mortgage payment.

There are further changes coming to the FHA program. Congress is working on a FHA Modernization bill which will decrease the down payment requirement but add risk based insurance (higher insurance for lower credit scores).

So, stay tuned, nothing stays the same in today’s mortgage market.

Shailesh Ghimire
CTX Mortgage Co.
www.aimeeloans.com
www.azmortgageguru.com
(480) 516-1851 / (480) 516-1819
Email me

Posted by Shailesh Ghimire, AZ Mortgage Guru on March 8, 2008 | Permalink | Comments (2) | TrackBack

Monday, February 25, 2008

AZ Home Inspector Licensing Board going away?

Arizona Home Inspectors need your help!

Arizona's home inspector licensing agency, the AZ Board of Technical Registration (BTR) is inefficient, expensive and allegedly corrupt.  In fact, Arizona lawmakers are thinking about eliminating the BTR altogether (SB1171), and moving home inspector licensing to the Registrar of Contractors (ROC).

As most of my readers already know, I'm co-owner of Homewerx Home Inspections, one of the Valley's leading home inspection companies since 1999.  As such, I sincerely appreciate your support on this matter.

While I do NOT support eliminating the BTR, it definitely needs some change - starting at the top with the guy in charge.  It's unfortunate, but AZ home inspector licensing seems to be alot more about money and power and industry organizations than it is about quality home inspections.  There are some real problems and conflicts of interest that have just been ignored at the BTR, and we all know that problems don't just go away when they're ignored...they get worse!  Now, the BTR is so inefficient and lacking accountability that I think the whole idea of protecting homebuyers got lost somewhere along the line.  Home Inspectors don't trust the BTR, consumers kind of laugh at them.

And the cost of inefficient government regulation is real... look at how much it costs to be a home inspector in Arizona compared to other professionals licensed by the same agency.  And look at how much Arizona home inspectors pay compared to home inspectors in other states.  "Wow" is all I can say!  Home Inspection companies inevitably pass these ridiculous costs onto the homebuying consumer, who is already strapped for cash in case the BTR hasn't heard.  And a home inspection is an out-of-pocket expense - those are the ones that really hurt and will be a deal-breaker alot quicker than borrowed money will.

So please Help support the 'little guy', and you will help keep Arizona home inspection prices down plus eliminate government incompetence at the same time.

Thank you again for your support!

Written By: Shannon Hubbard Realtor®-Investor Great American Realty, Inc. Cell: (480) 695-6672 Email me

Posted by Shannon Hubbard, Arizona Real Estate Agent on February 25, 2008 | Permalink | Comments (2) | TrackBack

Wednesday, February 20, 2008

Arizona MLS Listings I Don't Quite Understand

As I pull up various AZ properties on MLS, I'm frequently amused.  Sometimes it's the price that makes me laugh.  Sometimes it's the directions that get you nowhere near the home, which makes me go hmmmm.  And sometimes it's just a comment about the house that catches my attention.  Here are a couple that have recently caught my interest:

1.  Found in the comments of a MLS listing:  "Buyer proof of funds or prequalification letter from a Wells Fargo Mtg. Consultant must accompany all offers."

As a Realtor®, I would never dream of requiring a potential buyer to get prequalified or have their funds verified by a specific mortgage company.  I'm not sure if that's even legal from a mortgage perspective, especially if the mortgage company owns the house. According to the MLS, this property is "corporate owned".  Public records don't show the new owner yet, but the house was sold at auction in December to "US Bank National Association as Trustee Asset Backed Pass Through Certificates Series..." (that's a mouthful and doesn't really tell me who owns it!).  But the tax statements are being forwarded to "ASC for Wells Fargo Home Improvement".   Hmmmm....

2.  Found in a Flyer Heading:  "20% Co-Broke! / Attention All Investors"

Call me crazy, but I wonder if this agent ever thought about recommending a price reduction to their client, instead of a HUGE co-broke.  Perhaps, I dunno...maybe a 17% - 20% price reduction?  Work with me here...!  And what real investor isn't going to realize that a 20% co-broke means they're paying 20% too much?

These are just a few of my thoughts... enjoy your day!

Past BlogArizona articles you may also enjoy:
Funny Real Estate Listing
Funny House Picture
How Does Your House Look to Buyers, Lenders, Appraisers, etc?
Real Estate Cartoon
Unique Real Estate on eBay
Beware Of The Dog

Written By: Shannon Hubbard Realtor®-Investor Great American Realty, Inc. Cell: (480) 695-6672 Email me

Posted by Shannon Hubbard, Arizona Real Estate Agent on February 20, 2008 | Permalink | Comments (3) | TrackBack

Tuesday, February 19, 2008

Selling Your House? Don't Take the Curtain Rods When You Move.

By the title of this post, you might think I'm getting ready to talk about the difference between personal property and real estate fixtures, and what you can take with you when you move versus what has to stay with the house.  Nope.  This post is actually just something funny my Dad emailed me, which I thought my readers would enjoy.  By the way, don't do this!

She spent the first day packing her belongings into boxes, crates and suitcases.  On the second day, she had the movers come and collect her things.  On the third day, she sat down for the last time at their beautiful dining room table by candle-light, put on some soft background music, and feasted on a pound of shrimp, a jar of caviar, and a bottle of spring-water.

When she had finished, she went into each and every room and deposited a few half-eaten shrimp shells dipped in caviar into the hollow of the curtain rods.  She then cleaned up the kitchen and left.  When the husband returned with his new girlfriend, all was bliss for the first few days.

Then slowly, the house began to smell.  They tried everything; cleaning, mopping and airing the place out.  Vents were checked for dead rodents and carpets were steam cleaned.  Air fresheners were hung everywhere.  Exterminators were brought in to set off gas canisters, during which they had to move out for a few days and in the end they even paid to replace the expensive wool carpeting.

Nothing worked!!!  People stopped coming over to visit.  Repairmen refused to work in the house.  The maid quit.  Finally, they could not take the stench any longer and decided to move.

A month later, even though they had cut their price in half, they could not find a buyer for their stinky house.  Word got out and eventually even the local real estate agents refused to return their calls.

Finally, they had to borrow a huge sum of money from the bank to purchase a new place. The ex-wife called the man and asked how things were going.  He told her the saga of the rotting house. She listened politely and said that she missed her old home terribly and would be willing to reduce her divorce settlement in exchange for getting the house back.

Knowing his ex-wife had no idea how bad the smell was, he agreed on a price that was about 1/10th of what the house had been worth, but only if she were to sign the papers that very day.  She agreed and within the hour his lawyers delivered the paperwork.

A week later the man and his girlfriend stood smiling as they watched the moving company pack everything to take to their new home....

And to spite the ex-wife, they even took the curtain rods!!

I LOVE A HAPPY ENDING, DON'T YOU?

ORIGINAL SOURCE: UNKNOWN

Contributed By: Shannon Hubbard Realtor®-Investor Great American Realty, Inc. Cell: (480) 695-6672 Email me

Posted by Shannon Hubbard, Arizona Real Estate Agent on February 19, 2008 | Permalink | Comments (1) | TrackBack

Tuesday, January 22, 2008

Subprime Mortgage Problem Goes Global: Federal Reserve Makes 'Emergency' Interest Rate Cut

Ben Bernanke and the Federal Reserve made an 'emergency' rate cut to the key interest rate this morning, rather than waiting until their next planned meeting at the end of January.  The .75 basis point reduction in interest rates comes amid global economic fears.  The Asian markets have been down sharply in recent days, and European markets have followed (although they're not down as much as the Asian markets).  The fear is that America's subprime mortgage problem is now damaging the global economy.

Fortunately, the US stock markets were not trading yesterday due to the Martin Luther King holiday.  But DOW futures were down over 500 points until the announcement of the Fed's rate cut early this morning.  The DOW (futures) has since recovered by a couple hundred points, but it still looks like today will be a bad day for the stock market (which is already down for the year).  I guess we'll see when the markets open in a few minutes.

Just remember, it's only a paper loss until you cash out!

Written By: Shannon Hubbard Realtor®-Investor Great American Realty, Inc. Cell: (480) 695-6672 Email me

Posted by Shannon Hubbard, Arizona Real Estate Agent on January 22, 2008 | Permalink |