What do you know more about home renovation

Question. We plan on adding two rooms and a bath to our house. What protection should we include in the contract with our architect and contractor?

Answer. I receive a number of questions on this topic every year. It is an area where an ounce of prevention can make a significant difference to the homeowner, and yet it always amazes me that homeowners will hire contractors for major renovations to their homes having only a loosely written one or two-page “letter agreement” or nothing in writing at all.

In my opinion, it is absolutely essential to have a written contract with your home improvement company (the contractor) that spells out all of the terms and conditions of the proposed renovation.

We lawyers have to be concerned with “horrible hypotheticals,” because all too often these turn out to be real situations. If they are anticipated, homeowners can avoid unhappiness and extra expense.

More and more homeowners are improving and adding onto their residences in lieu of buying new homes.

Selecting a good licensed contractor is often a difficult task.

Ask every contractor you interview for references. You also should inspect the contractor’s previous work, to assure yourself that he or she is right for you. It is also important to make sure that the contractor is licensed in your jurisdiction. Keep in mind that no contractor will provide you with an unhappy homeowner.

Once you have selected a contractor, it is extremely important to enter into a contract spelling out in detail all of the terms and conditions under which the remodeling or renovation job will be done.

Do not rely on good faith, promises, or a handshake.

Here are some suggestions for mandatory provisions in any contract that you sign:

Do not sign the typical one or two-page proposal submitted by your contractor. I call this the “two page special”. Although this is a contract — legally binding on you — these one or two-page proposals unfortunately provide very little, if any, protection for the homeowner. The American Institute of Architects sells standard form contracts you should use in your dealings with a prospective contractor. You may contact the American Institute of Architects, and ask for AIA document A107, entitled “Abbreviated Owner-Contract Agreement Form For Small Construction Contracts.” It is available to non-AIA members at a nominal cost.

The contract should contain a payment schedule that has been carefully worked out. Regardless of whether you or your bank will be making the actual payments, it is recommended that at least 15 percent of the payment be retained until the job is completed. All too often a contractor will leave a job unfinished after he has been paid in full, and homeowners are caught in a double bind. There is no money to pay anyone, including subcontractors, to finish the task, and you have already paid most if not all of the entire contract price.

What kind of warranty is the contractor willing to provide? This should be discussed in detail with the contractor before you sign, and the exact terms of the warranty should be spelled out in the contract itself.

The contract should state that “time is of the essence.” One common problem with remodeling contractors occurs when the contractor is unable to finish the job within the estimated time. It is also suggested that the contract provide for a daily penalty from the contractor for each day the work is not completed after the time specified for completion in the contract. This provision will give the contractor a real incentive to complete the work within the promised time period. As an additional incentive, many homeowners offer a bonus to the contractor for early completion.

Are you properly insured against possible claims by workers who may be injured on the job? Insist that the contractor be adequately insured, and check with your own insurance company to determine the limits and extent of your liability.

You should have the absolute right to terminate the contract if, after reasonable notice to the contractor, you are dissatisfied with the work. Of course, you have to be reasonable and cannot terminate the contract arbitrarily.

Arbitration must be provided for in the contract. You should not have to go to court to resolve any disputes that may arise. Legal fees, court costs and the time involved can be a deterrent to a prompt resolution of your dispute. Your contract should provide that all disputes be resolved through binding arbitration under the rules of the American Arbitration Association. I am not an advocate of arbitration, but it is certainly cheaper and faster than litigation.

How to cooling your home

When the temperatures spike, most families crank up the air conditioning to keep their homes cool. While blasting the AC is often viewed as the first step in cooling a home, there are a number of other ways to keep your home comfortable in the summer.

#1 Open Windows at Night

If you live in a region of the country where nighttime temperatures tend to dip into the lower 70s and upper 60s, open your windows at night and turn off the AC. Once the sun is down, that cool air can flow into your home overnight and help maintain a cooler starting point for the next day. Turning on any fans you have around the house will help circulate that cool air.

#2 Leave Interior Doors Open

During the winter months, it’s a good idea to close doors to unused rooms to avoid wasting money heating those spaces. But closed-off rooms can become heat blankets in the summer if you don’t open them up and allow for even airflow throughout your home. To help keep the house cooler, open your interior doors.

#3 Close Blinds During the Day

It’s nice to open the shades and let in some sunlight, but up to 30 percent of the unwanted heat in your home comes from windows. Shut your shades to limit the house-warming sunlight allowed into your home. Focus on closing only west- and south-facing windows to still give your home the benefit of natural light. This can help lower the mid-day temperature of your home by almost 20 degrees.

#4 Using Appliances at Night

Your oven, washer and dryer are the primary culprits when it comes to unwanted heat in your home. Using your grill to cook is a simple way of keeping unwanted heat outdoors. As for your chores involving laundry, leave those for the nighttime hours when temperatures are naturally lower.

#5 Keep the Furnace Fan On

The vast majority of thermostats give you the power to manually control the fan that blows hot air through your home in the winter. If you turn this fan on during the summer, it can help to distribute the cool air from your basement to the other levels of your home. This provides better airflow in your home and an overall cooler feeling.

#6 Leave the Bathroom Exhaust Fan On

The steam from your shower will create a pocket of hot air in your home that will exit the bathroom the moment you open the door. It’s already a good idea to run the exhaust fan while you’re in the shower, but consider leaving it on for 20 to 30 minutes after your shower to help blow out the hot air.

#7 Consider Upgrades Outdoors

There are two big things you could do to the outside of your home to help keep it cooler in the summer months. First, you could repaint the siding of your home with a lighter color to deflect more of the sun’s rays. The siding on your home is just like any dark surface or dark clothing. The darker it is, the more heat it attracts and retains. The same can be said for your roof. Slate, concrete, clay and various tiles offer better protection from heat than standard shingles.

Worth the Risk Of Real EstateThat You Should Know It

Many home buyers and real estate investors have been prompted by steadily increasing interest rates to be more aggressive in their hunt for bargain homes. Competition for the best priced and most attractive homes has only increased in most real estate markets and because of that intensity, foreclosures are drawing more and more interest from prospective home buyers and investors.

While foreclosures certainly offer some financial benefits, there are also risks involved, as you might expect. Not every foreclosure is the same and while the interest in them is growing, you need to be aware of what to look for when evaluating whether or not a foreclosure opportunist is right for you. Here are some things to look for.

Pre-Foreclosures
Pre-foreclosure properties can offer an attractive investment or home purchase opportunity to those willing to work for it. There exists a period of time in between when a home owner is notified that their loan is in default and when the bank actually seizes the home to put it on the market to recoup expenses. During that period of time, it is possible to purchase the home and satisfy financing requirements on it.

There are two negatives at play when going the pre-foreclosure rate and both discourage a majority of the potential investors that contemplate the pre-foreclosure route. One is the extremely brief period of time available to complete a deal. The period of time is regulated by individual states and usually consists of a couple months.

The other discouraging aspect is the necessity to deal with a home owner that is probably embarrassed by the foreclosure and may not even be aware that such information is made public. Knocking on a door or picking up a phone to contact someone that may not even be aware of pre-foreclosure purchases can be a difficult thing to do.

The Risky World Of Auctions
The best advice for those pondering auctions as a way to get in on foreclosed property is to simple not get involved at all. The risks are immense when dealing with a bank-run auction as you will most likely not have seen the house, have no way to protect yourself against title problems should they exist and must pay in cash.

That collection of traits discourages most investors and rightfully so. There is simply too much uncertainty when dealing with auctions to know for sure that the low sticker price is necessarily worth the hassle of going through title clean up issues and scraping together the cash for a purchase.

Foreclosed Homes
As the final step on a bank’s path of foreclosure, the home is put up for sale on the real estate market, though often for at least close to its market value. Because a home has traveled through a variety of steps and banks are in no hurry to lose money on any loan, savings are often slim on foreclosed properties that make it to this step.

Real Estate Aboout Pre Qualified and Pre Approved

It is becoming more and more common amongst potential home buyers to pursue the most efficient route possible to a brand new home. Instead of going through the process of scouting out a neighborhood or collecting flyers, intelligent buyers are instead making a lender their first stop. Instead of spending hours on the wrong home, getting the sale price first is becoming a much more popular and simpler way to pursue a home.

Indeed, getting a financial frame of reference for your home search first can greatly cut down on the amount of time you spend looking through ads and walking through properties with a real estate agent. These are often the most time consuming parts of a home search and by simplifying them at least somewhat, you can spend more time on homes better suited for your financial situation.

However, there has been some misconception over the difference between getting pre-qualified for a particular amount and getting pre-approved for a particular purchase price. These two terms mean very different things and as a seller is looking over your offer, each term conveys something different and has a very different impact on that offer.

What Is Pre-Qualification?
In both processes, a lender will take down your financial information and provide you a rough estimate of what you can afford to pay for a home. A pre-qualification exercise can be seen as more of a rough draft of what you might be able to afford. While a lender will ask for your financial information, the lender will not typically go through the process of verifying your information or doing more research into your financial viability.

If you tout that you have been pre-qualified for a particular amount, it is certainly better than not having any idea of what you can afford. However, it says nothing about your actual ability to get a loan for that amount and instead says that you could probably get a loan for that amount. If a seller sees that you are pre-qualified for an amount approximating the sale price of the property, that does communicate some amount of credibility but not the credibility pre-approval suggests.

What Is Pre-Approval?
In contrast to pre-qualification, pre-approval is given to a potential buyer by a lender that has done significant homework into your financial history and has agreed to loan you the amount you have been pre-approved for. This carries much more weight than pre-qualification and communicates very clearly that your finances are in order and you are in prime position to buy a property that falls within range of the pre-approved figure.

When a seller sees that you have been pre-approved for the amount of the sale price, that seller takes your offer as a much more credible prospect than a contract that does not have pre-approval attached. Not only can pre-approval save you time during the search for a home, it can save you time when you eventually find that property. Pre-approval saves the time typically taken to secure financing after an offer is made and can often deliver a home to a potential buyer quicker.

How to grow the real estate

unduhan-6There are times when the growth of the real estate industry has drawn the nervous energy of local or national media expecting a downfall after a period of prolonged growth. There are some serious flaws in the logic behind expecting a burst in the real estate bubble nationally and during any period of prolonged growth, you as a real estate investor should not panic in the expectation that a market fall will ruin your investment.

Of course, there are exceptions to every rule and there are times when a very localized market depression (such as the downturn of an area neighborhood) can profoundly affect a real estate investment. Extrapolating things like that into a national concern, however, ignores the fact that there really is no national real estate market.

The overall picture of the real estate market that the media uses to describe economic indicators is really made up of thousands of small real estate markets. Any time that a market is spread over that great of an expense, the chances of every tiny market failing at the same time are extremely slim. That is indeed what would be necessary for a national real estate market crash, making such an eventuality extremely unlikely.

To call something a “crash” takes an extreme drop off over a short period of time, something that would be difficult to accomplish in any real estate market. Pieces of information like population growth, new construction statistics and other economic measures can forecast a general trend for any real estate market well in advance.

Certainly, real estate markets will downturn from time to time, but no downturn happens in such a short period of time so as to trap investment money. Generally speaking, you can always get out if the writing is on the wall and that fact separates real estate markets from something like the stock market that can crash more easily.

The nature of real estate investment also provides some insulation behind any kind of dip in the real estate market. For those holding properties over a long period of time as investment opportunities, if a dip does happen in the local real estate market, the long term nature of your investment dictates that you will hold it long enough to see an upturn in the market. Real estate markets rarely stay down for over a decade and for a long term investment, that storm can certainly be weathered.

For short term flips, often the atmosphere of the local real estate market will not have time to change by the time you are looking to sell off your investment project. Fixer-upper properties and the like will often take a few months when the arrival of a market depression can take at least that long to show up.

Early economic indicators will tell you what the market may be like in a few months time and that is certainly something to look at when getting involved in a short-term investment. Simply put, by the time a market depression could affect your short-term investment, you’ll probably have sold it off.