Sara Benson Real Estate Expert and Consumer Advocate Delivers Advice

Top 10 Ways to Increase the Value of Your Home!

Posted in advice, condominium, homeowners association, money, Real Estate, Remodeling, value by sarabensonexpert on December 23, 2015

 

  1. Cleanliness is next to godliness. Clean everything. Keep floors and carpets clean and ask potential buyers to remove their shoes and boots at the door. Provide a basket of disposable paper booties so feet don’t get dirty and buyers won’t hesitate to look in the attic and basement.
  2. Declutter, declutter, declutter. Reduce knickknacks by 50 percent or more. Rent a storage locker if necessary. Make the home as “vanilla” as possible, depersonalizing it so buyers can “psychologically move in.” Pack up the kids’ art from the fridge and eliminate family photos.
  3. Put on a fresh coat of paint. Use neutral tones that have the largest buyer appeal. Strong and vivid colors are a no-no.
  4. Focus on kitchens and bathrooms. These are the most important rooms of all. To obtain the most profit, upgrade kitchens and baths. For every dollar you spend, you’ll get at least $1.50 to $2 in return. If your kitchen is older than 15 years, consider remodeling with new cabinet faces and new appliances. Don’t forget the impact of under- and upper-cabinet lighting—a must for task lighting and creating irresistible drama. Make the kitchen look spacious. Remove all visual counter clutter, from the toaster and butcher-knife set to the bread machine, the blender, and the coffee pot. The idea is to make your countertops look like they’re begging to be used. Leave out one or two essential items—a bowl of fresh fruit, or a wine bottle and two glasses.
  5. Make the master bedroom look sexy. Give the master suite the look and feel of a luxury hotel suite. Buy fresh towels and soaps for the bathrooms; hide everything else. No toothbrushes, toothpaste, toilet brushes and plungers, shampoo or body scrubs, bathroom scales, hairbrushes, or dryers. Next, bring out fragrant bars of bath soap, new bedding with plenty of fluffy pillows, a wine rack, candles, and—of course—plenty of fresh flowers. Bedrooms need to look sexy, voluptuous, and soft. A Rubenesque oil painting or print over the bed is a good start, followed by a satin negligee hanging in the closet.
  6. Upgrade old bathrooms. In general, if your bathrooms are more than 20 years old, consider remodeling them. Upgrade the tile, but stay away from fads. Use classic finishes. If your unit is in an upscale neighborhood and the standard is marble in the bath, use it, but don’t overimprove. If the norm in your area is laminate finishes, such as Formica, use that. Some pristine bathrooms from the 1920s are in high demand. If they’re in good shape, leave them alone. They will bring a better return than a bathroom remodeled in the 1970s or 1980s. If needed, consider reglazing the bathtub. Also, older marble that is in good shape can be refinished and restored to look brand new at a fraction of the cost of installing new marble.
  7. Create storage in dead spaces. Look for “found spaces” under staircases, in attics, and near the ceiling in loft areas. Adding extra storage creates value.
  8. Keep odors in mind. Animal odors and stale cigarette or cigar smoke is forbidden—as are artificial scents such as plug-ins and air fresheners. Some people are allergic to them, and most buyers will immediately question if the commercial air fresheners are being used to cover up a problem. Eric Spangenberg, dean of the College of Business at Washington State University, recently found that complex smells distract potential buyers as they subconsciously devote time to trying to figure out the scent. His recent study on the effect of aromas involved 402 people in a home-décor store in Switzerland. The study found that shoppers spent nearly 32 percent more on average, when the store was scented with a simple orange scent over a more complex blend of orange, basil, and green tea all combined. Stay away from complex aromas, such as potpourri, gourmet food, and baked goods, including chocolate chip cookies and apple pie. The best scents include pine, lemon, cedar, orange, vanilla, and lavender. Try a dab of vanilla on light bulbs. Also remember that healthy green plants clean the air. Speaking of plants, no sickly specimens or dried flowers are allowed. They are reminiscent of death and disease. Tasteful silk flower arrangements, however, are permitted.
  9. Lighting is essential. Make sure your residence has plenty of direct, accent, and incandescent lighting. Light opens dark spaces and highlights attractive features. Use mirrors to reflect light, especially in the entryway.
  10. Entrances welcome guests. The entrance to the home is the most important space of all. As the saying goes, you only have one chance to make a first impression. Examine the front door. Consider hanging a pretty wreath. Put fresh flowers in the foyer. A small table with a brass or silver tray may also work well. Remember the entry needs to be inviting and welcome the buyer into the home.

Excerpt from: Escaping Condo Jail: The Keys to Navigating Risks & Surviving Perils of the “Carefree” Community Lifestyle, By Sara E. Benson and Don DeBat. Now available on Amazon.

 

 

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Could your granite be radioactive?

Posted in advice, condominium, homeowners association, money, Real Estate, Remodeling, value by sarabensonexpert on January 4, 2015

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Radiation is everywhere: in the soil, rocks, and the air. It is the amount of radiation exposure humans receive that is of concern.

Because of the exceedingly high demand for natural granite countertops over the past two decades, manufacturers have imported the material from all over the world. Some of that granite has been professionally tested and found to be “hot” or “potentially hazardous.”

In July of 2008, the New York Times reported on a homeowner who found her granite was emitting radiation. The radon level in her kitchen was an astounding 100 picocuries per liter. In her basement, where radon readings are ordinarily at their highest levels, the readings were only six picocuries per liter. (Remember, anything over four picocuries per liter is considered hazardous.)

The owner, Dr. Lynn Sugarman of Teaneck, New Jersey, called out a radon technician to find the source. “He went from room to room,” said Dr. Sugarman. But he stopped in his tracks in the kitchen. His Geiger counter indicated that the granite was emitting radiation at levels 10 times higher than those he had measured elsewhere in the house. Sugarman immediately had all of her granite counters ripped out and replaced with different granite, which she had tested before installation.

The Marble Institute of America has said such claims of radioactive granite are “ludicrous” because, although granite is known to contain uranium and potassium, the amounts in countertops are not enough to pose a health risk.[1] However, the debate remains open, as Daniel J. Steck, a professor of physics at St. Johns University, has stated that approximately 5 percent of all granites will be of concern, with the understanding that only a tiny percentage of the tens of thousands of granite slabs in the country have been tested.[2] The granite-radon connection and amount of public interest is prevalent enough that the EPA has a dedicated webpage on the subject.[3]

“It’s not that all granite is dangerous,” said Stanley Liebert, the quality assurance director at CMT Laboratories in Clifton Park, New York, who took the radiation measurements at Dr. Sugarman’s home. “But I’ve seen a few that might heat up your Cheerios a little.”

– – – – –

[1]. Kate Murphy, “What’s Lurking in Your Countertop?,” New York Times, July 24, 2008.

[2]. Daniel J. Steck, “Pre- and Post-Market Measurements of Gamma Radiation and Radon Emanation from a Large Sample of Decorative Granites,” Physics Department, St. John’s University, Collegeville, MN., 2009.

[3]. http://www.epa.gov/rpdweb00/tenorm/granite-countertops.html.

Excerpt from: Escaping Condo Jail: The Keys to Navigating Risks & Surviving Perils of the “Carefree” Community Lifestyle, by Sara E. Benson and Don DeBat. (c) 2014 Now available on Amazon.

Condo Association Boards Have Duty to Be Transparent

Posted in advice, Chicago Real Estate, condominium, homeowners association, money, Real Estate, value by sarabensonexpert on July 27, 2012

The very word, secrecy, is repugnant in a free and open society, and we are as a people, inherently and historically opposed to secret societies, to secret oaths and to secret proceedings.

-President John F. Kennedy

Transparency is the heart of a board’s ethical standards.  So why would any association keep records and financials secret?  There are many reasons, but the first is power.  Organizations that hoard information have all of the knowledge–thus, all of the power.  Secrecy stands to maintain their powerful status quo. Board members may also suffer from an exaggerated sense of their mission.  They may forget their function is simply administrative.

A well run board should make transparency a firm priority. Florida attorney Jean Winters observes some boards are defensive.  “It is sad, but true, that most homeowners don’t care about seeing records unless they suspect something is wrong. So when boards are asked for records, a common response is evasiveness,” stated Winters.  “Unfortunately, when that occurs, there often is something wrong.”

Fear may be a motivator as well.  Some boards fear having their actions criticized noted Virginia architect Amy Reineri.  Boards fear someone may find something in the records to sue them for personally–or that they may be accused of doing things improperly. “When you remind them that not allowing review of their records is a legal violation, it simply makes the fear more concrete in their minds that you know more about how they should be conducting business than they do–and they will get in trouble if you see the records,” observed Reineri.

Another extremely prevalent reason is very simple lack of knowledge.  Some boards simply do not understand the legal requirements and their duty to provide records to the owners. Ignorance of the law, however, is no excuse.  Training is what is most needed.

“Most people mismanage their own money so, when they are elected to HOA boards, they mismanage the HOA’s money.  They are secretive because they are embarrassed,” noted San Francisco homeowner Daniel Howard.

All too often, association secrecy results in needless and costly litigation. Gary Palm, attorney and Emeritus of Law, University of Chicago Law School professor, sought production of his association’s financial records when certain issues became increasingly suspect.  The board refused to comply.  After a 10 year court battle, he finally won. In Palm v. 2800 Lake Shore Drive Condominium Association, # the court came down strongly on Palm’s side and granted him substantial attorney’s fees–nearly $100,000.

 Sunlight is the best disinfectant. 

-U.S. Supreme Court Justice Louis Brandeis

Keys to Transparency:

  • open communication
  • open records
  • open voting
  • open spending
  • secured open web portals

Florida’s nickname is the “Sunshine State” so it’s no wonder it has a “Sunshine Law”–an open government law.  What does it mean to hold a meeting in the “sunshine?”  Basically, Florida’s Sunshine law requires governmental agencies–including community associations–to hold their board meetings in an open and transparent fashion.  Boards of directors must not meet in the shadows. They must follow the law and not hold meetings behind closed doors.

The general exception is when the board directors need to meet with the board’s attorney to seek legal advice with respect to proposed or pending litigation, or, if the board is meeting to discuss employee and personnel matters.

All associations should operate in the “sunshine” and let their members know when, where and why the board is meeting and adhere to open meetings requirements.  One recent disturbing trend is directors that hold meetings via Skype or in a private chat room–or conduct business among themselves via email.  These are clear and notorious violations and do not conform to open government laws.  Again, directors should make decisions at an open meeting where owners can view firsthand the business operations of their association and how their money will be spent.

The following documents should be available to owners for inspection:

  • all financial records,
  • contracts, including the management contract,
  • minutes of both member meetings and board meetings,
  • names and addresses of the unit owners and their respective undivided interests in the common elements.

(Note that communication with legal counsel pertaining to pending litigation, contracts being actively negotiated and information that pertains to personnel matters should be excluded from owner examination.)

Financials should be disclosed at each board meeting. Approval for the expenditure of funds should always be a resolution of the board in an open meeting. (That means any association money spent should be voted on at the meeting by the board directors in front of all the members.) Contracts–including garbage removal, management, maintenance and landscaping to name a few–should also be voted on and approved in an open meeting of the board. Further, the vote should be recorded in the minutes and become a permanent record of the association.

If you believe that your board is not acting property, you can demand to inspect the minutes of their meetings and the records.  “You must allege that you suspect mismanagement, waste or misconduct and then the board is required to allow you to look at the minutes,” noted New York attorney Steve Wagner.

“The by-laws may also provide that you have the right to inspect the “books and records of account” which will let you look at the financial records of the condo.  If the board or the managing agent does not let you look at the records after a proper demand, you can compel them to provide the minutes and financial records through expedited court proceedings,” stated Wagner.

Insurance expert Joel Meskin notes that the key to successful board management is communication.  “Mystery is one of the board’s worst enemies as it only exacerbates membership concern and mistrust,” states Meskin.  The challenge of volunteer boards is that they often lack experience and communication skills.

Attorney Winters further notes, “Each board member is equally responsible and liable for the association affairs.  I cannot think of one good reason why any board member should not have access to records “at will,” as long as protections are in place to preserve the integrity of the records.”  

If a board is hoarding information and proper demand has been made for documents, one powerful tool is to copy both the association’s attorney and the association’s insurance carrier–via Certified Mail–advising them of the improper board behaviour.  If they investigate and find that an association’s directors are acting improperly, they can address the impropriety or choose to terminate their services.  Further, the association may be at risk of losing insurance coverage. Director’s and Officer’s insurance won’t cover them if they break the law. (The insurance carrier will wonder if they are ignoring state statutes, what other issues are they ignoring?) The association, although not for profit, is a business and must operate in a business-like manner to ensure protection from any insurance claim or litigation.  In many states, condominiums and HOAs are governed by separate legislation.  So not all homeowner associations have specific legislation pertaining to records inspections.  Many states such as Ohio and Florida have recent legislation that provides HOAs with similar rights to records inspection as existing condominium law.  Check your state statutes as it pertains to the type (condo, co-op or HOA) of property you own.


Secure Community Web Portals

Some associations have exceedingly transparent secured websites where owners can go for community information.  Quick 24/7 access is available to owners, board members, board directors and committees. Some associations and property managers use an integrated and secured community portal such as SenearthCo. Senearthco allows the poster of documents to assign levels as to who can view a document, public, owner, or board directors only.  Communities that utilize such software can have a user-friendly web presence at a fraction of the cost of developing a traditional website.

The benefits of utilizing a community web portal include:

  1. Maintenance requests can be handled smoothly with owners, service providers and property managers staying connected.
  2. Messages can be broadcast with ease.  The board can communicate with owners via email or USPS.
  3. Documents are made easily available to the owners, including financials, meeting agendas and minutes, board calendar and newsletters.
  4. Accounting can be integrated.
  5. Management reports can be seamlessly integrated.
  6. Shopping for vendors and service providers can be streamlined. A request can be created and the association can have a complete history of every job.
  7. Polls, surveys and voting information can also be utilized.
  8. Cost savings to associations can be substantial compared to doing things the way they were done in pre-Internet days. More and more people seek advanced, streamlined technology to receive information.

Many well-respected community managers and attorneys will refuse to work with a secretive board as it creates potential liability for all involved.  Some even try to educate the misled board members.  Unfortunately, there will always be the attorney or manager who looks the other way when the board of directors acts improperly.

If a board refuses to be open and “get with the times,” experts agree that the best course of action when dealing with secretive directors is to take over the board and elect new members.  It’s not easy, but it is possible with persistence and organization.

A veteran real estate broker and appraiser, published author and national speaker on real estate issues, Sara Benson, CRB, ABR, is president of Benson Stanley Realty in Chicago. Email: BensonStanleyRealty@gmail.com. www.bensonstanley.com Telephone: 312-337-4600

Consumers May Soon See Relief From Faulty Appraisals

Posted in Real Estate by sarabensonexpert on August 10, 2010

Appraised $500,000 Low

Foreclosures and tight money have undermined the national housing recovery for years. But in May 2009, a new Home Valuation Code of Conduct (HVCC) began a silent but powerful wave of faulty and inaccurately low appraisals which continue to flood the real estate market in 2010.

Not a law and not approved by Congress, the HVCC is a “settlement agreement” between New York’s Attorney General Andrew Cuomo’s office and the nation’s largest mortgage finance companies, Fannie Mae and Freddie Mac.

Simply defined, the HVCC is a set of “guidelines” for banks that sell their mortgages to the government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac.  Because the GSE giants now purchase only those loans that comply with the HVCC, the nation’s entire real estate market has been negatively influenced.

The HVCC supposedly was designed to protect consumers: it prevents banks from using their “preferred appraisers” and requires them to use, instead, generic “appraisal management companies.”   But the HVCC was poorly conceived. Its deleterious effects have caused (1) many qualified and experienced appraisers to leave the business, (2) appraisals to be performed by out-of area and unqualified appraisers, and (3) increased buyer’s closing costs.  The huge negative impact on the national real estate industry has served to encourage erosion of real estate values with severe consequences to both buyers and sellers.

A recent nationwide study of more than 100 real estate agents and brokers has charged that under the HVCC guidelines, the appraisal business has hit a new low for lack of quality, accuracy and professionalism.

Tim Kuptz, Broker Owner of ReMax Advantage in Las Vegas observes, “Las Vegas has had stable prices for twelve months now. The stability has been documented in trade publications and MLS statistics, and yet we are getting lowball values from appraisers.”  In 12 straight deals, Mr. Kuptz’s partner recently experienced appraised values coming in below contract prices at an average of 8.1% lower.

Kuptz noted with less than three month’s supply in inventory and despite multiple offers, “Appraisers are killing any real estate recovery in sight.”

What prompted the dramatic change in the appraisal industry? A lawsuit against a lender claiming “fraudulent, deceptive and illegal business practices” by allegedly permitting real estate appraisers to be influenced to increase real estate property values in order to inflate home prices.

Dave Biggers, Chairman of appraisal software giant, a la mode, inc., explains the HVCC originated when New York Attorney General Cuomo filed suit against the lender, Washington Mutual and the appraisal management company, eAppraiseIT. The lawsuit eventually escalated into an investigation of Fannie and Freddie directly.

According to Biggers, in order to stop the investigation into their practices, the GSE signed a settlement agreement with Attorney General Cuomo, agreeing to create new rules which would be embodied in the HVCC. At the last minute, the Office of Federal Housing Enterprise Oversight joined in and signed the settlement, which granted it federal rule status.  The HVCC became status quo for real estate appraisers and lenders.

The primary aim of the HVCC was a good one—to safeguard consumers against inflated home appraisals. A secondary goal was to insulate appraisers from pressure to hit a predetermined number by eliminating the relationships between mortgage brokers or real estate agents and appraisers. In order to achieve that goal, a third party middleman was introduced—a strong-arm “appraisal management company” (AMC) that demanded all appraisers conducting business with Fannie or Freddie hand over their client lists—and take a cut in pay.

While attempting to eliminate unethical practices, the HVCC caused a virtual maelstrom in the real estate industry.  In response to the implementation of the HVCC, one expert veteran appraiser states, “All of the experienced appraisers I know left the profession when they were told they had to surrender their client base of 20 years. Rather than take a 50% pay cut, intelligent appraisers have chosen to leave the profession to the newly licensed appraisers.”

Even if the HVCC were repealed tomorrow, the damage has been done.  Appraisers with 20 or more years of experience will never reenter the business. Once again the borrower will pay the price. “First the borrower is forced to pay 50% more for appraisals. Now they are guaranteed the worst quality appraisals on earth.”

Another New York 45-year old appraiser was so enraged by the HVCC he was arrested last December for threatening to kill Attorney General Cuomo.  His initial bond was set at $500 million.

Illogically, the HVCC mandates run counter to the absolute necessity of appraisers to interact with real estate agents. Appraisers must rely on agents and brokers for accurate verification of the very data they use to complete their appraisal reports.  The HVCC’s “do not touch” hands-off status of the newly “independent” appraiser virtually ensured failure.  One appraiser recently told a Chicago real estate broker, “You can’t talk to me. Do not call me.”

Many educated, well-counseled and motivated buyers and sellers have suddenly found their long awaited appraisal now comes in low—often much lower than the negotiated sales price.

Frequently, healthy owner-occupied homes with full warranties are compared—“comped”—to stripped naked, vacant and abandoned “as is” foreclosures or other distressed sales. Frustrated consumers have little recourse when the loan is denied.

Hope for relief from the HVCC debacle is on the horizon. On July 21, 2010, President Barack Obama signed the Dodd-Frank Act. The purpose of the new legislation is to reform the financial markets. Under the Dodd-Frank Act, the HVCC is officially set for elimination in 90 days. In its stead a new set of “appraisal independence standards” will be created by The Federal Housing Finance Agency.

The standards are expected to be written before September 30, 2010.  The good news is nothing in the standards will prohibit a person with an interest in the transaction from asking the appraiser to consider additional information, provide further detail or correct errors in the appraisal.  The bad news is the outcome is uncertain.

Part Two of this article will feature a step-by-step approach on how to get relief from a low appraisal.

A veteran real estate broker and appraiser, published author and national speaker on real estate issues, Sara Benson, CRB, ABR, is president of Benson Stanley Realty in Chicago. Email: Sara.Benson@BensonStanley.com. www.bensonstanley.com Telephone: 312-337-4600

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