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Reverse Mortgages Wrong for Some Seniors

by Allison Simson & Joyce Nenninger

Question: I am interested in a reverse mortgage but am not sure that this is my best option. Do you have any information on reverse mortgages?

 

Answer: Although reverse mortgages are an ideal fit for many senior homeowners, they are not the best option for all of them.

A reverse mortgage would not be in the best interest of someone who intends to make a move in the foreseeable future, the AARP and other sources note. Reverse loans usually come with stiff upfront fees and closing costs of up to 10 percent of the loan amount, which are distributed over the life of the loan. Owners who sell their homes quickly will also lose their equity quickly.

Reverse mortgages may not be suitable for seniors who want to leave a free-and-clear property behind as a legacy to their heirs. At the same time, some experts say elderly homeowners should consider a reverse loan as a way to meet living expenses or settle medical bills while they are alive, without worrying about what will happen when they die. Their offspring still can keep the property by paying off the reverse mortgage with funds from the estate or with their own money, or by taking out a new mortgage.

Experts warn that reverse loans may not be the solution for the youngest seniors, because longer life expectancy qualifies borrowers for less money, or for those in the midst of a temporary financial emergency, who might be better off taking out a home equity line instead.

Finally, another alternative, such as selling the property and using the proceeds to downsize into a smaller house or to rent, might make sense for some seniors.

For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.   

Books or other references for the first time- second home buyer?

by Allison Simson & Joyce Nenninger
Question:  Allison, do you have any books or other references that you recommend to the first time- second home buyer?
Answer: If you are thinking about buying a vacation or second home, first read "Second Homes for Dummies" by Bridget McCrea and Stephen Spignesi. It will alert you to many of the pros and cons of owning these unique properties, which are often hundreds of miles away from one's primary home and are frequently for personal use and renting to tenants.
According to Bob Bruss, formerly of Inman News, McCrea, a former real estate agent, explains virtually all the considerations of buying a second home. Although the book starts out very slow and basic, it picks up pace in the second half where the author gets away from the home-purchase basics and into the specifics of vacation homes, such as supervising from afar and avoiding costly mistakes. There is even a chapter about buying a foreign vacation home, but it is very incomplete and hardly worth reading.
The book could have used more personal examples, but the author shares her few limited experiences with vacation homes and managing rentals from long distances. She never really says it, but making sure renters don't trash your vacation home appears to be her theme of the sections about renting second homes.
About all McCrea can do is alert readers to the possible pitfalls and explain the importance of having reliable neighbor "informants" and possibly a property management company specializing in short-term rentals.
In the chapters about selecting a vacation or second home, the author spends considerable effort discussing the usual home-purchase precautions, including working with a local buyer's agent and other real estate professionals. Heavy emphasis is placed on hiring an experienced professional home inspector to alert buyers about possible undisclosed defects of the home under purchase contract.
However, one key topic that was missing was the vital subject of water and sewer connections. Because many vacation properties are not on community water systems and do not connect to a city sewer, these can be major problems for uninformed buyers.
Lack of adequate well water and/or a poor septic system is something most buyers of vacation homes don't think about until after they hold the title to the property. Detailed advice on this topic would have been invaluable, including the importance of well water and septic system tests.
Most of the book is about topics which first-time buyers of vacation or second homes might overlook. The importance of location is heavily emphasized, both for rentals and for potential resale appreciation in market value. McCrea explains the pros and cons of buying in a resort area where, if you plan to rent to tenants for part of the year, competition from other rentals is an important consideration.
Because the book raises so many topics that might easily be overlooked, it should be read from cover to cover, perhaps skipping only those topics in which the reader is not interested, such as buying a vacation home in a foreign country.
Chapter topics include "The Lowdown on Buying and Owning a Second Home"; "Figuring Out Whether You Can Afford a Second Home"; "Relying on the Experts When Buying Your Second Home"; "Inspecting Your Second Home Before You Sign on the Dotted Line"; "Setting Up Your New Digs"; "Renting Out Your Second Home to Pay for Itself"; "Handling the Maintenance and Upkeep on Your Second Home"; "What Uncle Sam Wants to Know: Important Tax Implications"; and "Selling Your Primary Home and Settling into Your Second Home."
One topic that looms in the background throughout the book is the possibility the reader will buy a vacation or second home now and later convert it into a retirement home. McCrea explains special considerations for buyers who may be thinking of future retirement use. On my scale of one to 10, this excellent new book rates a solid 10.
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

What should we look for in a final walk-through inspection?

by Allison Simson & Joyce Nenninger
Question: Allison, we have just put a contract on a place in Frisco and notice in the contract that it talks about a “final walk through”. What should we look for in a final walk-through inspection?
Answer: Basically, the property should be in same condition as day you signed the contract.
Most home buyers will have at least two opportunities to inspect their property before closing on the purchase.
First, most buyers will include a contingency in the contract that allows them to do a professional home inspection by the home inspector of their choice. This inspection typically happens right after the sales price has been agreed to, usually within a week or 10 days.
If the home inspector finds anything wrong in the property or decides further inspections (perhaps for radon, heating and air conditioning systems, or mold) are called for, the home buyer will be able to hire specialists to figure out if there is an insurmountable physical problem with the property.
Assuming those inspections go well, the second opportunity to inspect the property is just before the property closes. The pre-closing inspection, or final walk-through, as it is often referred to, is a home buyer's last opportunity to walk through the property before closing.
According to Ilyce Glick of Inman News, what you're looking for here is not at the same level as the initial professional home inspection. In a preclosing inspection, you simply want to make sure that the property is in the same condition as it was on the day you agreed to buy it.
To avoid getting burned, you schedule the walk-through as close to the actual closing as possible, certainly within the 24 to 48 hours prior to closing. If possible, the sellers should have already moved out.
The whole point of the walk-through is to protect yourself and your future property from sellers who aren't as nice as they seem to be or who are actually as nasty as they appear. By inspecting the premises, you're making sure the seller has lived up to his or her agreements in the sales contract. And if he or she hasn't, you want to know about it in advance of the closing so remedies (both monetary and otherwise) can be agreed upon before money changes hands.
What should you look for in a walk through inspection? To start with, you want to make sure that the condition of the home hasn't changed since you signed the contract several months earlier.
Believe it or not, a lot can change in the ensuing weeks. To make sure the home is in the same condition, you'll want to turn on every appliance, open every door, make sure nothing's broken (lights, fixtures, windows, etc.), be certain everything the seller agreed to leave is actually there and in good shape, and be certain that when the sellers moved out, they did no damage to the home.
Sometimes movers can accidentally scrape a wall or pull up carpet in the process of packing up the contents of a house. If you do your walk through inspection while the movers are there, you'll have a harder time getting around them to make sure that the property is in good shape.
If you get there before the sellers have packed anything up, you might wind up with some unpleasant surprises on the day you move into the property.
Ilyce Glick learned the hard way that sometimes sellers just don't want you to find out certain things until you've closed on the property.
Nearly 20 years ago, her husband and she bought their first place. It was a vintage co-op built in the 1920s. The sellers were seniors, and they were a bit quirky. The property hadn't been touched in years.
When they did our final walk-through, they noticed that the water was turned off in the kitchen sink. They wanted to run the dishwasher, which was really old, but didn't want to turn on the water if it was off.
“Looking back”, as she says, “it's hard to imagine why this wasn't a red flag for us. But we were really happy to be buying our first place, which was taking just about all the money we had in the world. We didn't question it. We just bought it and moved in.
The first night we unpacked the dishes and decided to run a load in the dishwasher. At well past midnight, my husband turned on the water and we put in the dish soap and turned on the machine. We went to bed.
We were awakened early the next morning with pounding on our front door. Our downstairs neighbors came into their kitchen and noticed that the liquid contents of our dishwasher had dripped down through the ceiling into their kitchen, ruining their window shade.
My husband and I looked at each other and we knew why the water had been turned off. Too bad we didn't find that out ahead of time. Still, the damage could have been worse.
As I recall, it cost us $600 to fix the damage in our neighbor's apartment.”
Take some time to do your walk-through inspection. It might just save you time and money later.
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Can a second home qualify for 1031 tax-deferred exchanges

by Allison Simson & Joyce Nenninger
Question: Allison, we’ve heard a lot about 1031 tax-deferred exchanges and would like to know if our second home would qualify for a like-kind exchange with another piece of property that is closer to our home. We have never rented our current property, but consider it an investment due to it’s appreciation the past few years.
Answer: Your question is a good one – and one that has been in the media and in the courts quite a bit in the past few months. To get an accurate assessment of your particular situation, I recommend you speak with a company that specializes in 1031 tax-deferred exchanges. According to Inman News, a similar case to yours was tried in court. Here are the details. In 1988 Barry and Deborah Moore purchased a second home on Clark Hill Lake. It included a home to which the Moores added a deck and other improvements.
The property was a three-hour drive from their principal residence. The Moores and their children visited the property two weekends each month between April and September each year.
But in 1995 the Moores changed their primary-residence location, making the drive to the Clark Hill Lake property a five- to six-hour trip. As a result, they used the property only a few times each summer.
The Clark Hill Lake property was never offered for rent to short- or long-term tenants. On their income-tax returns, the Moores deducted their mortgage interest and property tax payments as personal itemized deductions.
In 2000, the Moores found a five-bedroom, four-bathroom house on 1.2 acres of land adjoining Lake Lanier, just a few hours from their home. It has five screened-in porches, a party deck and veranda.
They decided to make an Internal Revenue Code 1031 tax-deferred trade of the Clark Hill Lake property for the larger and closer Lake Lanier property. They justified the exchange by stating both properties were held for "investment" rather than for personal use.
Upon audit, the IRS denied the IRC 1031 tax-deferral on the sale of the Clark Hill Lake property. The IRS auditor noted the property had never been rented and was used only by the Moore family on weekends. But the Moores argued they held the property as an investment for future appreciation in market value. They took their dispute to the U.S. Tax Court.
If you were the judge would you allow the Moores to defer the capital gains tax on the trade of the Clark Hill Lake property as an investment?
The judge said no!
To qualify for an IRC 1031 tax-deferred exchange, the judge began, both properties involved in the trade must be held for investment or for use in a trade or business. Although the Moores pointed to the appreciation potential of the Clark Hill Lake property, he continued, "It is a taxpayer's primary purpose in holding the properties that counts."
"Property held for investment is property held for the production of income," the judge explained. "We accept as fact the Moores hoped that both the Clark Hill and Lake Lanier properties would appreciate," he noted.
"Mere hope or expectation that property may be sold at a gain cannot establish an investment intent if the taxpayer uses the property as a residence," the judge emphasized. There was no convincing proof either property was held for the production of income as a rental since the family used both properties primarily as vacation retreats, he added.
Because the evidence strongly showed both vacation homes were held for personal use, rather than for production of income, neither property qualifies for an IRC 1031 tax-deferred exchange, and the Clark Hill Lake property sale is taxable, the judge ruled.
Based on the 2007 U.S. Tax Court decision in Moore v. IRC, T.C. Memo 2007-134.
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Don't buy home without checking title report

by Allison Simson & Joyce Nenninger
Liens and easements could make purchase a bad move
How would you feel if you bought a home that seemed perfect, only to find out you couldn't use the property like you thought you could?
One buyer bought a home with a good-sized yard that he thought would be perfect for his large dogs to roam free. Soon after the sale closed, he hired a contractor to construct a fence around the property. The day the work started, a neighbor showed up to inform the new homeowner that he couldn't completely fence the property because of an easement that ran across his property.
An easement grants property rights to someone other than the property owner. Common easements are for ingress and egress, utilities and sewers. Easements must be kept unencumbered.
In the case above, the easement provided the neighbors access to their property. A fence could not be built over the easement because it would deny the neighbor their rights to access.
The property owner had to revise his fence design, which was disappointing. But, easements can be even more problematic, particularly if you assume there is an easement in favor of your property but there isn't.
According to Dian Hymer of Inman News, A homeowner in the Oakland Hills (Calif.) subdivided his property and sold off the lower half to a builder who constructed a new home on it. The homeowner then put his home on the market and entered into contract to sell it.
The buyer's real estate agent reviewed the preliminary title report and found that there were no easements either benefiting or restricting use of the property. In particular, there was no sewer easement.
The agent asked the seller how the sewer line from the house connected to the main city sewer line. It turned out that the sewer line ran downhill across the portion of the property that had been subdivided and sold.
In this case, an error of omission occurred during the subdivision process. A sewer easement should have been granted in favor of the owner of the upper portion of the property. Consequently, the owner of the upper property no longer had a legal right to run his sewer line across the adjacent property.
HOUSE HUNTING TIP: Make sure you have a clear understanding of the title issues affecting a property before you buy it. In some states such as California, title companies check the record and issue a title report that includes such things as the recorded owner and liens, easements and encumbrances affecting the property. In other states, buyers hire attorneys to search the title record and produce a report.
In the aftermath of the subprime lending crisis, it's especially important to investigate the status of any liens secured against the property. A preliminary title report will give you the original amount of such items as mortgages and taxes owed. But, the preliminary report won't necessarily tell you the amount the sellers currently owe.
All liens secured against the property must be paid in full in order for the seller to pass clear title to a buyer. If the seller has an interest-only mortgage and has not made any payments toward retiring the principal amount borrowed, he could still owe the original amount he borrowed. If the mortgage was a teaser-rate adjustable with an option to pay the minimal amount due, the seller could owe more than what is indicated on the title report.
THE CLOSING: Problems that could delay or derail closing can develop when the owner of record is not the same person who listed the property for sale. Before concluding a home purchase, make certain that the seller has the power of sale and that the property you're buying is what you bargained for.
Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.
 
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Using Their IRAs to Make Home Loans

by Allison Simson & Joyce Nenninger
Question: Joyce, I’ve heard about using my IRA to make a loan…can you provide more information? 
Answer: Yes! According to Kelly Greene of the Wall Street Journal, investors can use self-directed individual retirement accounts (IRAs) to write short-term mortgages, primarily to buyers of fixer-upper properties or borrowers in need of bridge loans to cover mortgage payments on their old homes while they wait for them to sell. Most IRA investors impose interest rates of at least 10 percent, though the maximum is set forth by the state. Additionally, they typically do not lend more than 50 percent to 70 percent of the home's value. While some of these investors are willing to help homeowners encountering financial difficulties, others look forward to foreclosures because they can take ownership of properties at a dramatic discount. However, foreclosed properties can cost them so much money for legal fees and repairs that their IRAs could run out of money; and investors then would be forced to obtain a loan or shell out money for the taxes and penalties imposed when IRAs are closed.
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Damned lies and median house prices

by Allison Simson & Joyce Nenninger
Stats are often misinterpreted
Question: Allison, the average home prices in Summit County are very strong, but we notice that we’ve seen lots of different numbers. What should we look at when trying to get average sales price:
Answer: Good question. One of the most commonly referenced statistics in the real estate industry is the median sales price of homes. According to Stephen Bedikian, many articles are published in newspapers the day after the National Association of Realtors releases its quarterly Metropolitan Area Existing-Home Prices report with conclusions about the healthy or unhealthy state of the local real estate market. Unfortunately the median sale price is frequently taken out of context and misinterpreted.
Even someone who slept through most of their math classes will remember that the arithmetic mean and median statistics are different for the same data set. The average is the sum of the numbers divided by however many numbers you started with. The median is the number in the middle, when the numbers are listed in order.
The reason that the mean or average sale price for a market area can be misleading is intuitively obvious and that's why it's rarely cited. A few sales in the extreme luxury segment of a market -- think $30 million or more in Bel Air -- can push up the average for the entire local market area.
The median sale price can also be misleading particularly in down markets. Let's consider the San Francisco market. The median home price reported by NAR in the first quarter of 2007 was $748,100. In the second quarter it was $846,800 -- a jump of more than 13 percent. Wow, that appears to be a sure sign of a healthy market. Or is it?
To get a truer picture of market conditions, let's consider a few more statistics: price indexes (using a repeat-sales price methodology), the number of sale transactions, price reductions and inventory growth. From April to June 2007, the S&P Case Shiller Home Price Index showed a decline of just less than 1 percent, not an increase of 13 percent. Likewise the home-price index published by OFHEO showed a decline of just less than 1 percent for the second quarter. The S&P Case Shiller index covers only resale transactions while the OFHEO data covers multiple sale types but only for conforming loans.
FIS Data Services reports that sale transactions increased about 25 percent between the first and second quarters, which is to be expected given that period corresponds to the spring selling season. However, according to Altos Research data, the market inventory level increased almost 40 percent during the second quarter and the percentage of houses listed with a price reduction increased from about 33 percent to 43 percent.
So what actually happened? Sales transactions increased with a greater proportion on the high end versus the previous quarter. There appears to have been little actual appreciation as evidenced by the Case Shiller and OFHEO numbers, while inventory increased and prices of many listed properties were reduced. So next time you read that median house prices have increased in your area, don't celebrate prematurely. Conduct more research before you reach a conclusion about market conditions in your area.
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Homeowner’s living trust became nearly worthless

by Allison Simson & Joyce Nenninger
Homeowner makes big mistake after refinancing
I recently came across this article by Bob Bruss that I thought would be extremely helpful to anyone who owns property in a living trust. It’s a good reminder to pay attention to the trust a regular intervals.
“Nobody, including me, likes to think about death. But it is inevitable, as I was reminded during a recent hospitalization for major surgery. Thankfully, because of the excellent surgeons, nurses and my friends, I came through the experience successfully.
After I recovered, I learned from the doctors I had been very close to death. When I got home and was feeling better, one of the first things I did was review my estate plan.
In the process, I discovered my old living trust had become nearly worthless. The primary reason was, like most real estate owners, in the last few years I refinanced my properties to take advantage of lower mortgage interest rates. As part of the process, the lenders required me to take my property titles out of my living trust, record the new mortgages, and then put the titles back into my living trust.
But I carelessly didn't follow up and the title companies failed to re-deed my properties back into my living trust. The result was my living trust had become virtually empty because it was "unfunded." If I could make that mistake, think of how many other homeowners and realty investors also have worthless, empty living trusts.
Especially because I wanted to revise my estate plan and change my beneficiaries, I decided to hire a trusts and estates attorney. The total cost, including recording fees, was about $1,300. That is far less than the 3 to 10 percent of gross assets it costs to probate a typical estate.
Frankly, although I am an attorney and could prepare my own living trust to avoid probate costs and delays, I'm glad I hired another attorney.
Among the extra improvements he suggested were (1) a durable power of attorney for lifetime asset management (in case I become unable to manage my assets); (2) a "living will" (also called an advanced health care directive) so the designated person can make health care decisions, such as taking me off life support if there is no reasonable hope for recovery; and (3) a "pour-over will" for any assets omitted from my new living trust. The attorney also made certain all my property titles were correctly transferred to fund my living trust.
EVERYBODY NEEDS A WILL. Shockingly, less than 20 percent of U.S. residents have a written will. For those who have a will, after they die their assets will be distributed according to their wills by the local Probate Court. Probating an estate, even a modest one, usually takes six to 18 months or longer before the heirs can receive their inheritances.
For individuals who die without a written will, the state law of intestate succession determines who will receive their assets. Especially in second marriages, the result is often not what the decedent would have wanted. Again, the local probate court supervises intestate succession distribution, subject to costs and delays.
However, if no written will and no relatives can be found, a person's assets "escheat" to the state. That means the probate court will sell the assets and deposit the proceeds into the state treasury. That is not the result most people want.
HOW TO AVOID PROBATE. Even if you have a written will, it usually won't avoid probate costs and delays. Well-known methods of probate court avoidance include holding real estate titles in joint tenancy with right of survivorship (or as tenants by the entireties between husband and wife) and holding bank accounts or stock brokerage accounts with "payable upon death" designations.
But all these methods have major drawbacks, especially when two or more persons own an asset but one becomes incapacitated such as by Alzheimer's disease, a coma or a severe stroke.
A better alternative to avoid probate costs and delays for most individuals is a revocable living trust. This is simply a method of holding title to major assets, such as a home, investment property, bank accounts, common stocks, mutual funds, and other major assets.
When a living-trust grantor creates a living trust, he is its initial trustor, trustee and beneficiary. That means he can buy, sell, refinance and manage the assets as before.
However, if he becomes incapacitated, then the named successor trustee, such as a spouse or adult child, takes over management and can even sell the assets if necessary. There is no necessity to have a conservator appointed by the probate court. Husband and wife can either have individual living trusts or a joint living trust.
After a living-trust grantor dies, the successor trustee then distributes the living-trust assets to the individuals and/or charities named in the document. The local probate court does not become involved, so distribution usually is completed within six months.
ADVANTAGES OF LIVING TRUSTS. Among the many advantages of a revocable living trust are (1) easy amendments or revocation as desired by the trustor; (2) ownership benefits remain unchanged, including income-tax deductions and the principal-residence-sale tax exemption; (3) avoidance of multistate probates if real estate is owned in more than one state; (4) privacy because living trusts do not become public, as do written wills filed for probate; (5) the successor trustee manages the living-trust assets if the trustor becomes incapacitated; and (6) the successor trustee distributes the assets after the grantor's death.
DISADVANTAGES OF LIVING TRUSTS. Among the few disadvantages of revocable living trusts are (1) no statutory period to limit creditor claims (as occurs in probate court); (2) the cost and inconvenience of "funding" the living trust (usually far less than the cost of probating an estate); (3) when refinancing mortgages, lenders usually require taking real estate out of the living trust for a moment while the mortgage papers are signed and recorded; and (4) a living-trust trustor needs a "pour-over will" or a "back-up will" for any assets that were not included in the living trust.
SUMMARY: Revocable living trusts offer many advantages and few disadvantages to avoid probate costs and delays for heirs as well as conservatorship during the grantor's lifetime.
By avoiding involvement of the local probate court, living-trust beneficiaries usually receive their assets within six months after the decedent's death. More details are in the new special report, "Pros and Cons of Living Trusts to Avoid Conservatorship and Probate Costs and Delays for Your Heirs," available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.”
 
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.   

Things to know before buying a vacation home

by Allison Simson & Joyce Nenninger
Question: What are some of the major items one should consider before buying a vacation home?
Answer: According to Inman news reports, market conditions, taxes and hazard insurance are among the top concerns for buyers of second homes. Although there are other considerations.

Nationally, home sales declined 4.1 percent in 2006 from 2005. But, vacation-home sales rose 4.7 percent in 2006 to a record 1.07 million sales, according to the National Association of Realtors (NAR). The increased interest in buying vacation homes for personal use rather than rental is expected to continue throughout this decade.

The annual Investment and Vacation Home Buyers Survey from NAR found that vacation-home buyers intend to hold on to their property for a median of 10 years. Thirty-eight percent of respondents plan to keep their property for 11 years or more.

With a long-term horizon in mind, it's important to make sure that the home you buy lives up to your expectations. To complicate matters, residential real estate is an intensely localized business. Many vacation-home buyers buy outside of their local area.

The NAR survey revealed that the typical vacation-home buyer in 2006 bought a property that was a median of 215 miles from his or her primary residence. Forty-two percent bought a vacation-home within 100 miles of their home; 32 percent of the properties were 500 miles or more away.

Even vacation-home buyers who purchase within 100 miles of their primary residence are likely to find that real estate custom and practice might differ considerably from what they're used to. And market conditions are so variable today that you can find different forces at play even within one community.

Buying outside of your local area requires diligent pre-purchase investigations to make sure that you end up with a home that brings you pleasure. Here are the sorts of things you should look in to:

Check out the condition of the local market. Is it a buyer's or a seller's market? If the area is flooded with inventory, find out which homes are selling and why. You usually can't go wrong if you buy the type of home that is in high demand. It may be worthwhile to wait for such a property to come along.

Are there any natural hazards to be aware of such as forest fires, flooding or hurricanes? Can you get insurance for these hazards to protect your investment?

If you're buying in a rural community and you've experienced only urban living, you may need to familiarize yourself with such things as septic systems and percolation tests.

With this in mind, you'll probably have the best success if you choose a real estate agent from the local area to represent you in your vacation-home purchase. Ask acquaintances who own in the area for recommendations. Or, have your real estate agent at home find a competent agent to work with.

After you decide on an agent, ask for a list of all the fees that will be levied in connection with your out-of-area purchase. For example, some communities have transfer taxes and others don't. Find out how much your property tax will be and how much they are likely to increase over time.

Buyers who purchase a vacation home a long distance from home should investigate what local resources are available for property management. You may purchase in a planned-unit development that includes onsite management. If not, can you hire someone to look after your property when you're not there?

It's a good idea to take a few vacations in the area where you think you want to buy -- and at different times of year -- before you actually purchase. You may find after spending more time there that you really don't want to own a property that you may only visit infrequently.

THE CLOSING: It might make more sense to continue renting if you plan to spend only a week or so a year there.

 

 

For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Finding perfect house is all about timing

by Allison Simson & Joyce Nenninger
Question: Allison, We want to buy a home in Frisco, Colorado, and have been looking for only a week or so.  Our Realtor tells us the second home market in Summit County- and especially Frisco is moving very briskly and we’ll have to act quickly. My question is, have I been looking long enough?

Answer: It's not uncommon for buyers to look for six months or more before finding the right house or condo to buy. Sometimes, it takes even longer if listings are in short supply. Lucky are the home buyers who find a great property that suits their needs soon after they start their search. But, finding the right property earlier than anticipated can pose a problem for some buyers.

Common concerns are: Have I looked long enough to understand the local market and the range of housing options available? Could there be another, even better listing on the market, perhaps at a better price? Will an upcoming listing be more appealing? Should I wait and see what else might come along, or should I go for it?

HOUSE HUNTING TIP: Don't pass over an ideal property just because you found it quickly. Instead, complete due-diligence investigations to satisfy any concerns you may have about the property before you make an offer. You could regret it if you don't buy the listing and it takes years to find another suitable property.

First, search the Internet, if you haven't already, to see if there are similar listings on the market in the area where you want to live. Ask your agent to show you as many of these as possible, unless you can rule out a listing based on your criteria without having to a look at it.

For example, you may need a main-floor bedroom and bath for an aging parent who visits frequently. You can usually get a sense of the floor plan of a house from the information provided on the Internet. If critical information isn't provided online, your agent can check for you. Look at as many homes as possible that might suit your needs. This will help you to decide whether to go ahead or wait for something better.

A critical variable to consider before making your decision is how often listings like the one you're considering become available. Ask your agent to provide you with a list of similar listings that sold within the last six months or one year.

You won't be able preview these listings. So, ask for your agent to give you as many details about the properties as possible, including how long they took to sell and whether they sold for more or less than the list price. You might want to drive by the listings so that you can at least get a curbside impression of how they compare with the listing you're considering.

You may find that listings similar to the one you like come along frequently. They don't sell quickly and rarely for over the list price. In this case, there's no urgency to buy quickly.

However, if you discover that listings like the one you covet come on the market infrequently, you should seriously consider going ahead with an offer. Certain kinds of properties in certain areas are always difficult to find. An example would be a charming home in move-in condition in a popular neighborhood that is within walking distance of great restaurants.

When these homes come on the market, there is often pent-up demand. You may not be the only buyer who has been waiting for just such a listing. This means that you could end up paying more than the asking price if you end up bidding in competition with other buyers who want the same kind of a property you do.

THE CLOSING: Don't pass up a good listing because you don't think you know enough to make an informed decision. Instead, accelerate your due-diligence investigations so that you are prepared to make an informed decision.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.


 

For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

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Summit Real Estate
The Bright Choice
330 Dillon Ridge Way, Suite 10
Dillon CO 80435
970-468-6800
800-262-8442
Fax: 970-468-2195

Allison Simson, Owner/Broker, is a licensed Colorado Real Estate Broker