Monday, February 28, 2011

Get tenants to clean up before clearing out

Enforce the move-out rules

Q: What are the tenant's responsibilities for cleaning after moving out? Is it acceptable for them to leave trash and unwanted household goods behind? As a landlord, what legal rights do I have to enforce the proper cleaning of my property?
A: This is a very important question and a concern of all landlords. This is also one area where, with some advance notice and preparation, you can have a positive impact on your experience as a landlord.
No, it is not acceptable for your tenant to leave the rental unit full of trash and unwanted household items, and that is the simple answer to your question. But it is my opinion and experience that you can take steps to make this a more likely scenario than you might think.
I know there are some unethical landlords who actually want their tenants to leave the rental unit in less-than-perfect condition. They don't mind because they can then charge the tenant excessive fees for basic cleaning and simple repairs.
Some sneaky landlords will even upgrade the rental unit and improperly charge the tenant for work. I have heard of landlords who brag that they "never have returned a security deposit." This is wrong, and luckily those landlords are very few in number, but they make a bad name for all landlords.
So now that I have disparaged those few bad landlords, let me compliment you again for wanting to know how you can actually make minimal or even no deductions from the tenant's security deposit.
It starts at the time the tenant first visits your rental property as a prospect, and is reinforced at the time of move-in, by explaining your policies and procedures for handling the disposition of the security deposit. You also need to let them know your expectations about cleaning and repairs upon move-out.
It is the law of most states that your tenants need to return the rental unit in the same or better condition than when they moved in, except for normal wear and tear. Also, the cleanliness of the rental unit is not usually subject to wear-and-tear allowances so that means that if the tenant brought in any dirt during the tenancy then they must remove it before they vacate.
I think it is also very important to let your tenants know you are in the business of providing them with a clean and well-maintained rental unit at the time they move in. Of course, it is their responsibility, not yours, to keep the rental unit clean during the tenancy. But you retain responsibility for proper maintenance and repairs.
You should encourage them to contact you via phone or e-mail immediately, as you want to be made aware if there are any problems or concerns while they live there. Tell them that you will be glad to promptly investigate any items needing repair or replacement. You may be able to fix a problem when it is small and less expensive to address.
But you are also communicating to your new tenant that you want the rental unit to be in great condition during their tenancy and upon move-out. This lets your tenant know that you care about the condition of your property and could even be beneficial to discourage prospective tenants who know they aren't likely to keep the unit in good order.

Inman News™

Saturday, February 19, 2011

6 Real Estate Markets Poised for Recovery

While home prices continue to fall in many markets across the country... a list of cities that are expected to defy that trend. 

Here are six metro areas expected to record some of the largest price gains in real estate by 2012:

1. Tacoma, Wash.

Median home price: $240,000

Projected gain by September 2012: 11.8 percent

Tacoma is in the right location for growth: It’s situated next to the Washington capital and has a port, rail terminus, and access to the mountains and Puget Sound. It also offers plenty of developable land than it’s bigger neighbors, such as Seattle.

2. Palm Bay, Fla.

Median home price: $141,000

Projected gain by September 2012: 9.4 percent

This area was expected to become a popular retirement area but overbuilding caused prices of existing homes to sink 50 percent below replacement costs... The city is expected to regain some of its growth, now becoming an affordable place for retirees to settle down. 

3. Memphis

Median home price: $280,000

Projected gain by September 2012: 7.5 percent

Memphis has had a decrease in foreclosures and continues to add jobs, which are significant factors that are expected to help it climb into rebound mode. Plus, it has affordable housing: Homes can be purchased for $138,000...

4. Rochester, N.Y.

Median home price: $125,000

Projected gain by September 2012: 5.3 percent

Affordability ranks high here: The median home price in Rochester is $125,000, while the median family income is more than $64,000. Real estate prices remained low during the housing boom, and foreclosures aren’t an issue here: Rochester ranks 196th out of 206 housing markets for foreclosure filings...

5. Pittsburgh

Median home price: $133,000

Projected gain by September 2012: 4.6 percent

The Pittsburgh real estate market also remained relatively stable over the last few years with home prices having little fluctuation (it ranks 165th of 206 markets for foreclosure filings). Pittsburgh also has a low unemployment rate, and with a moderately high median family income of $62,400, homes are very affordable here.

6. Seattle

Median home price: $375,000

Projected gain by September 2012: 3.7 percent

Seattle is a hot-spot for well-paying jobs with Microsoft, Amazon, and Boeing, which is expected to help its recovery. Plus, the city has a limited housing supply because of it’s position between mountain and sea. 

Find out what other metro areas made the list at

Stop a nonjudicial foreclosure

HAMP can stall process, but affidavit hiccup could spell doom.

DEAR BENNY: I am writing to you to regarding the "nonjudicial" process of foreclosure. My wife and I received a repayment agreement for our original mortgage from a bank, whose name we won't disclose, as part of the loan modification program. This was a result of the bank initiating a foreclosure case toward sale and the temporary suspension of the sale, because we agreed to enter the Home Affordable Modification Program.
In any case, the bank is asking us "to acknowledge that they are the legal holder and owner of the note and security instrument and further acknowledge that if lender transfers the note, as amended by this agreement, the transferee shall be the 'lender' as defined by the agreement." It should be noted that this is not the original bank we signed the mortgage with.
The bank also proposed a three-month trial period where we would pay a slightly lower amount for the mortgage.
We obviously won't sign this amendment and supplement to the original mortgage until we have an attorney review the documents.
Unfortunately, the bank has given us less than two weeks to sign the amendment to the original contract and send the modified payment, and we don't have time to find an attorney who is who is fluent in foreclosure defense litigation.
We want to send a letter to the bank to inform them that we will not sign the letter without the benefit of having an attorney review the documents first. However, we want to make sure this is the proper procedure, as the bank can possibly get a summary judgment to foreclose on a technicality if this is not the proper procedure.
Because we are not exactly sure how to respond to the bank, your help in this matter would be greatly appreciated. --Brian
DEAR BRIAN: Unfortunately, by the time my answer is printed, it will be too late to assist you. But this has become a serious -- and significant -- issue in recent months, so I am writing to hopefully assist other readers in similar situations.
This is a nationwide problem. Banks go down two tracks: modification and foreclosure. And often the person at the bank who is working on a loan modification does not talk with the attorneys who are moving forward to foreclose.
Clearly, the best approach would be to hire an attorney who will try to get a judge to issue a restraining order to stop the foreclosure. But unless you can qualify for free (called pro bono) legal assistance based on your income, you will have to pay a legal fee.
Alternatively, there are local, state and federal agencies that may be able to assist.
Finally, when my clients have problems with national banks, I often file a complaint with the Office of the Comptroller of the Currency, a federal agency. I have found that agency to be fairly responsive, especially because the banks under its jurisdiction are required to promptly respond to the government agency. You can find that office on the Web at
In recent years, lenders who made mortgage loans would bundle them up and sell them to investors. This gave the lenders more money to lend, and gave the investors a possible profit. But as real estate prices fell and homeowners were being foreclosed upon, these investments turned sour. Oversimplified, this was one of the primary causes of the financial situation we currently are in.
But when the lender packaged its loans, included in the package was the original promissory note that the borrowers had signed.
In many states, judges will not allow a foreclosure to take place unless the foreclosing party can produce the original note. And the originals -- as a result of this bundling (called "securitization" in the financial world) -- are scattered all over the world. That's why your bank wants you to sign that affidavit, and you were correct to seek legal assistance before signing.
Obviously, it's a difficult decision to make; some people would call it a "Hobson's choice." You really have no alternative: Sign or lose your house.
If you are facing foreclosure, get help immediately -- whether that be from a lawyer, a government or private agency, or a combination of those.

Inman News

Overbidding on REO can backfire

Q: I'm trying to purchase a house in Nevada. The bid was accepted, but in the addendum it states that if the appraisal is lower than the offered price, the buyer will pay the difference at closing. Is that legal? Seems they should lower the price! --Joy

A: I often get questions asking whether thus and so is "legal," "allowed" or "standard" in the context of a real estate transaction, so your question creates a great opportunity to clarify. I define "legal" as allowed under the laws of the relevant jurisdiction, something that the courts would allow, if the matter were disputed in litigation.
In real estate, almost anything the buyer and seller agree to in the contract is legal. A contract term, closing-cost allocation or interpretation might be common or standard practice in a given state, but if the buyer and seller agree in the contract to a different arrangement, courts will almost always allow a written document that clearly expresses the mutual intentions of the parties to prevail.
In the situation you describe, it is true that a buyer might expect to be able to request a price reduction if the purchase price is not supported by the appraised price.
Fact is, most lenders will lend only the percentage they have agreed to lend of the appraised value of the home, if it is less than the purchase price. That is, if the lender has agreed to extend an 80 percent loan-to-value mortgage (i.e., a loan in which the buyer puts down 20 percent), that lender is actually only approving a loan for 80 percent of the appraised value of the home.
Until around 2006, it was common for the appraised value of a home to equal or even exceed the purchase price, so this issue was a rare one.
Once home values started to decline and appraisal and lending standards began to tighten, though, the situation you describe -- in which the appraisal comes in below the purchase price that buyer and seller have negotiated -- has become so common that in a recent survey of real estate brokers and agents, 40 percent said that a low appraisal or other appraisal-related glitch has caused the undoing of at least one of their recent transactions.
You wonder, well, why doesn't the seller just drop the price? Many sellers are already so close to the bone on their sale price compared to what they owe on their mortgage and closing costs that they stand to recover nothing after the sale in the first place; reducing the price would doom them to either pay money to close the deal (which they may not have) or to turn the transaction into a short sale, which neither the buyer nor the seller wants, in most cases.
The other reason I've seen a major uptick in this sort of "buyer agrees to pay the difference in the event of a low appraisal" clause you describe is that many sellers -- especially banks selling foreclosed homes -- have been burned by getting multiple offers on the property, accepting a very high bid, then having that buyer just turn around and request a price reduction when the home doesn't appraise.
In these cases, the bank fears it might have forgone a less extremely high offer from a buyer who would be willing to pay above the appraised value, or even from a cash buyer who didn't even need to have the place appraised for lending purposes!
As a result, it is very common in multiple-offer situations on bank-owned properties for the seller to require the buyer to agree upfront to pay the difference that their lender won't, if the place appraises low -- especially if the offered price is above the asking price, which most banks set right at what they predict the property will appraise for.
So, even some smart individual homeowners who receive multiple offers will discourage buyers from bidding high just to win the war on the assumption they'll be able to come back and get the price reduced when it doesn't appraise by requiring them to sign such a clause.
And some savvy agents have adopted this sort of clause into their standard practices, especially if they work in areas where infrequent closed sales or a foreclosure-riddled market make good comparables hard to come by for appraisal purposes, or simply make low appraisal values quite common.
And yes, this is legal, as long as the buyer agrees.
If you've received such an addendum, it's up to you to decide whether to sign off on it. Talk with your real estate broker or agent about how to manage your contingencies (rights to back out of the contract) vis-a-vis this addendum clause, before you sign.

Inman News™

Monday, February 14, 2011

Albuquerque Areas Home Sales Highlights

This report highlights some of the 2010 market trends for single-family detached sales reported in the Southwest MLS. The data included in the report are sold listings in the city of Albuquerque Market Areas (10-121). 
 Trend 1:Days on Market until sale
HighestArea #Area NameDOM
132Academy West57
250Northeast Heights57
390Near South Valley58
521ABQ Acres West64
6111Ladera Heights64
792Southwest Heights66
8110Northwest Heights68
1091Valley Farms69
LowestArea #Area NameDOM
131Foothills North115
210Sandia Heights111
3102Far North Valley108
460Four Hills Village94
520North ABQ Acres91
6100North Valley85
7101Near North Valley85
1080Downtown Area77
Trend 2: Percent of Original List Price Received
HighestArea #Area Name% of OLP
121ABQ Acres West94.2
292Southwest Heights94.1
3110Northwest Heights94.1
4120Paradise West94.0
532Academy West93.3
651Foothills South92.9
750Northeast Heights92.9
9121Paradise East92.8
1030Far NE Heights92.4
LowestArea #Area Name% of OLP
1102Far North Valley80.0
380Downtown Area88.8
4101Near North Valley89.7
6103West River Valley89.8
710Sandia Heights89.9
860Four Hills Village90.6
1031Foothills North90.7
Trend 3: Change in Average Sale Price from previous year.
HighestArea #Area Name% changeAnnual SP
2103West River Valley12.7%$439,162
331Foothills North11.3%$559,317
421ABQ Acres West8.6%$329,623
5102Far North Valley8.2%$300,809
690Near South Valley6.9%$118,884
751Foothills South3.9%$295,151
971Southeast Heights1.0%$187,180
1042UNM South0.8%$211,784
LowestArea #Area Name% changeAnnual SP
110Sandia Heights-10.9%$414,436
260Four Hills Village-9.5%$295,395
380Downtown Area-8.8%$187,209
4100North Valley-8.6%$297,045
5111Ladera Heights-6.1%$154,522
6121Paradise East-4.6%$212,224
750Northeast Heights-3.8%$163,502
8120Paradise West-3.7%$177,183
992Southwest Heights-3.4%$124,214
1020North ABQ Acres-2.7%$571,502
Trend 4:Price Per Square Foot
HighestArea #Area Name$/sqft
131Foothills North$188
210Sandia Heights$163
320North ABQ Acres$158
4103West River Valley$155
621ABQ Acrse West$143
742UNM South$138
8100North Valley$132
930Far NE Heights$131
10102Far North Valley$128
LowestArea #Area Name$/sqft
190Near South Valley$76
292Southwest Heights$80
491Valley Farms$89
5120Paradise West$95
6111Ladera Heights$95
8121Paradise West$100
971Southeast Heights$103
1050Northeast Heights$104
Notes: Data used in this report represents the 4,675 Residential Detached listings reported sold in the 2010 Gaar Annual Report.  The Areas represented include only the Albuquerque Market Areas 10 thru 121.  Data is deemed reliable but not guaranteed.
Notes on Table1: DOM is the Average Days on Market.
Notes on Table 2: In order to increase the accuracy of the OLP (Original List Price,) corrections were made to the original listing price on 12 MLS listings that had included data entry errors in the original list price.