Shopping For Homeowners Insurance

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There’s a Problem with the House – Can We Get Our Deposit Back? Q: After putting down a $2,000 deposit and offering the seller the full asking price, we found severe water damage and fungus under all the siding of the home during the professional investigation process. Now we feel the price is way too much. The seller won’t lower the price and we don’t want to continue with the deal. How do we get the $2,000 deposit back? A: A real estate purchase involves more than price and your situation proves this point.You had a right to inspect the property after the purchase offer was accepted. However, did you also have a right to demand repairs up to a certain dollar amount? If the owner declined to pay could you then withdraw from the agreement without penalty? Alternatively, did you have a home inspection clause that said the examination had to be “satisfactory” to you or the transaction was finished and your deposit would be returned? Please see an attorney immediately.Ask for your deposit back. If it is not returned have the lawyer review the agreement language and any seller disclosure forms you received. Q: I am selling my home by myself. What is typically fair courtesy to a buyer’s agent? A: A buyer broker represents a purchaser.Your goal is to sell the property thus it makes sense to allow brokers to see the home. The buyer, in turn, is responsible for the payment of the buyer brokerage fee. However, when purchasers make an offer they may have a variety of stipulations. They could say they will buy your home if you will pay the first x percent of their closing costs, if you will reduce the price, if you paint the living room, etc. One possible part of an offer is a requirement that you pay some or all of their brokerage costs. You have the right to accept, reject or counter any buyer offer. However, in this circumstance you are at a disadvantage because the purchaser has a professional advocate. For this reason you should engage a broker or attorney before signing any offer to make sure that a host of costly “gotcha” clauses are not hidden in the fine print. Q: I purchased a house from my sister. Who should inform our Homeowners Association See ASK OUR BROKER, Page 2

Not your parents’ prefab home: a series of interior courtyards, flexible walls and ecology-minded features distinguishes Sunset Breezehouse, a modular home designed by Michelle Kaufmann Designs.The house is delivered on flatbed truck, 90 percent complete.

‘Pre-Fabulous’: New Generation of Prefabs Rises Above Modest Origins BY PAUL

ROGERS Content That Works The word “prefab” conjures up all kinds of negative connotations: cheap, trailer parks, shoddy construction, poor quality materials and dull, boring design.Well, some of those may have applied 25 years ago, but these days,“manufactured housing” oftentimes meets or exceeds on-site construction in terms of quality, durability and cutting-edge design while still boasting construction time and cost advantages. Skeptical? Talk to Nathan Wieler. In 2002,Wieler and his wife Ingrid were

looking for a new home in North Carolina. Like many young homebuyers, high prices, small lots and cookie-cutter designs quickly discouraged the couple.Then he talked to a builder friend of his who told him about prefab. “He said prefab quality was just as good if not better than site-built homes, and actually offered some advantages in terms of cost and timing,” says Wieler. The conversation ultimately spawned a prefab design contest in conjunction with Dwell magazine, put the Wielers in the winning home, the Dwell Home designed by New York-based Resolution 4:Architecture,

and convinced Nathan to go into the housing development business, focusing on prefab. Recently,Wieler purchased 100 acres of land in Henley, N.C., that he is dividing into 20 lots for Rapson Greenbelt prefab homes. Architect Ralph Rapson designed the Greenbelt in 1945 for the groundbreaking Case Study House Program, a project of Arts and Architecture magazine that sought to develop alternatives to tract housing. Rapson then submitted the design to the Dwell contest last year, and it caught Wieler’s eye. The Greenbelt’s distinctive design feature

See PRE-FABS, Page 2

Once is Not Enough to Consider Insurance Needs BY CHARLES SCUTT Content That Works

It’s easy to take for granted the tools we rely on to protect ourselves, from an umbrella to fend off a rain shower to anti-

lock brakes that prevent skidding on a wet road. Like umbrellas and anti-lock brakes, homeowner’s insurance often goes underappreciated. Once it’s in place, we often forget about it unless a misfortune happens.

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Apparently, many Americans forget about homeowner’s insurance altogether.According to results of a nationwide survey released in May 2005 by New York City-based advertising agency JWT, only 53 percent of

2,568 respondents have homeowner’s insurance. “Having appropriate coverage in place will protect the single largest investment that most peo-

See Insurance, Page 2

Tom Story – Sunset / Michelle Kaufmann Designs

PRE-FAB

Tom Story – Sunset / Michelle Kaufmann Designs

CONTINUED FROM PAGE 1 is a glass atrium spanning the center of the home, but it also boasts floor-to-ceiling windows, indoor/outdoor fireplaces and 9foot ceilings.And it comes in a variety of designs: one-story, twostory, walkouts, townhomes, courtyards and others, ranging in size from 576 to 2,660 square feet. A far cry from trailer parks and cookie-cutter boxes – as are the 90-percent prefab Glidehouse and the Sunset Breezehouse (the latter built in conjunction with Sunset magazine) from Michelle Kaufmann Designs, Oakland, Calif.The genesis of Kaufmann’s prefab designs was similar to the Wielers’: She and her husband Kevin Cullen were looking for a new home but were unable to find a place they liked and could afford. So architect Kaufmann designed her own. True to its name, the Glidehouse features gliding glass doors, gliding glass walls and clerestory windows that allow the homeowner to maximize breezes, and gliding wood doors in front of an area that transforms from solid wall to storage bar. Glidehouse floor plans range from 672 to 2,016 square feet. A major feature of Kaufmann’s designs and prefab in general is the environmental friendliness. The Glidehouse utilizes bamboo flooring; indirect lighting to minimize electrical usage; a proprietary energy recovery system; and countertops made with recycled paper, fly ash (a byproduct of coal combustion) and lowVOC (volatile organic compounds) finishes. “Buildings built in the controlled environment of the factory like the Sunset Breezehouse have much more quality control, more accuracy, less waste and result in a stronger building that is built in a lot less time than site-built buildings,” says Kaufmann.“It takes less fuel and electricity to create a building in 24 days vs. seven months.”

Ask our broker CONTINUED FROM PAGE 1

about the new owner?

A: Most likely either the buyer or seller is fine. Check your Homeowner Association (HOA) rules to see if there is a form to fill out or some other requirement. The HOA secretary is probably your best source of information. Q: What is a mortgage broker and what, exactly, do they do for a person? Are they salaried or do they work strictly on commission?

Glass doors in the prefab Breezehouse fold to one side to open the central living and dining space to the terraces and deck on the front and rear. Homes like the Greenbelt, the Glidehouse and the Sunset Breezehouse provide the benefits of mass production with individual design. Kaufmann is finding that the greatest advantages to her clients are in the process: “Predictability in costs, shortened timeframe and reduced hassles,” she says. Some of the main target markets for modern prefab are “younger people with a good eye but either insufficient financial resources or insufficient time” for a site-built home, says Kaufmann, or middle-age children looking for a cost-effective home for their parents. Prefab eliminates most design service fees.Architectural services usually account for 8-15 percent of construction costs, says Wieler.“And houses tend to be over budget when you’re working from scratch.”

Oregon Yurtworks Inc., Eugene, Ore., offers custom prefab designs ranging from about $90-$115 a square foot, while the standard Glidehouse plan runs about $130 per square foot. Neither includes the land. Depending on the choice of design and lot,Wieler’s Rapson Greenbelt homes run between $150,000 and $600,000, including land. Wieler and Kaufmann both see prefab taking an even bigger role in the housing market in years to come. Now is the time for non-traditional homebuyers, people looking for something economical but different, or simply people looking to live a “greener” life to get in on the ground floor. © Content That Works

A: Mortgage brokers provide two-thirds of the nation’s residential mortgages, according to the National Association of Mortgage Brokers, the industry trade association. In his book The Language of Real Estate (Dearborn Real Estate Education, 2000), John W. Reilly defines a mortgage broker is “a person or firm that acts as an intermediary between borrower and lender; one who, for compensation or gain, negotiates, sells or arranges loans and sometimes continues to service the loans; also called a loan broker.” A mortgage broker scouts the loan market and looks for the best possible rate and terms. Mortgage brokers are generally paid by wholesale lenders rather than by borrowers – but they are not paid at all unless loans close and that brings us to an important point.As a borrower you are best served by shopping around, speaking with a number of local lenders and letting them fight for your business. Q: My home was built in 1979 and now needs new siding and other repairs. I am wondering if it would be more feasible for me to sell this house and put my monthly payments into a new house instead. A: Before going further, have a few local brokers estimate the market value of your home – “as is” and also with new siding and other repairs. Have them also show you how much cash you would likely receive at closing in both situations.Then look at the cost of replacement properties and see if the purchase of a new home makes sense in your situation. Be sure to consider such issues as the cost of moving, the pros and cons of your current location and your long-term financial goals. Is there an alternative rather than new siding? Could you paint or otherwise repair what you have at less cost? There may be a more cost-effective solution if the issue is simply cosmetic, and not a physical problem with the siding. © Content That Works Do you have a question or a quandary about buying, selling or renting? Peter G. Miller, author of The Common-Sense Mortgage, specializes in providing real solutions to real estate dilemmas. E-mail your questions to [email protected].

INSURANCE CONTINUED FROM PAGE 1 ple make: their homes,” says Tom Milana, chief executive officer of Boca Raton, Fla.-based Milana Real Estate Investment Group. “Without sufficient homeowners insurance a person can lose everything they have, says Diana Brodman Summers, author of How To Buy Your First Home (Sourcebooks, 2005). “Considering the small premium paid for most policies, insurance is a great buy for the dollar.” Most people want the peace of mind that their insurance will “put them back” to the same standard they enjoyed before suffering a loss, says John Luttrell, agriculture account executive with Smith-Feike-Minton Insurance, Wilmington, Ohio.“This not always a guarantee,” says Luttrell. “Insurance coverages change over the years, so updating your policy is also a good idea.” Whether you’re shopping for your first policy or haven’t reviewed your coverage in years, it’s important to scrutinize your homeowner’s insurance carefully, say the experts.

FIND THE RIGHT COMPANY According to Milana, the single most important step in shopping for homeowner’s insurance is selecting an agency or direct carrier that offers you a wide variety of choices and one that is respon-

sive to your service and claims needs. Compare prices among several companies. Remember that price is important, but so is reputation and speed and quality of service if you ever need to make a claim. Opt for a reputable, well-known insurer.Ask friends and family members for a referral. The agency should be able to share with you the financial standings of the carriers and underwriters it represents and supply ratings when applicable, says Milana. Company ratings should be at least a B+ or higher and be an admitted carrier.AM Best, Standard & Poor, Demotech, and Weiss are well-known rating services.

WHAT TO COVER? One of the first choices you’ll need to make is deciding if you want an insurance policy that pays losses based on actual cash value or on replacement cost, says Summers. “If you select actual cash value then you will be paid the depreciated value of the damaged property for any loss. If you select replacement cost, you will be reimbursed the amount needed to replace the property with something of similar type and quality at the current market price,” she says. To properly evaluate a home’s replacement cost,“you first must be working from a recent

appraisal,” Milana says.“Taking the home’s value, less the land value, will give you the appraiser’s estimate of the building costs.This helps the agent validate his or her calculations as to the estimate of value.” Another key decision is between an “all risks” insurance policy or a “named perils” insurance policy.All risks policies cover losses due to any peril except those specifically excluded in the insurance policy. Named perils policies cover losses due only to the perils listed in the insurance policy. A homeowner also must determine the amount of policy limits for insurance coverage.Your policy limit “should not be less than 80 percent of the replacement cost of your home,” says Summers. Many homeowners mistakenly believe that they should ensure for the amount they paid to purchase their home.“This is usually too much coverage and too much cost to the client,” says Milana. “The carrier wants to ensure the cost to rebuild, not the market value, which includes land, landscaping, amenities from the development, etc.” Too little coverage could leave the client a ‘co-insurer’ at the time of a claim, Milana notes. “Because property values continue to rise, it is easy to not maintain sufficient coverage on your home to replace damage or

rebuild,” Summers says. He recommends that homeowners review their insurance annually. Homeowners can choose to pay more for special coverage for events such as floods or earthquakes (usually not included in a basic policy) and additional personal property insurance: jewelry, garage contents, computer equipment and any other possession that is not a permanent part of your dwelling.

MONEY-SAVING TIPS If you’re on a tight budget, consider increasing your insurance deductible, which will reduce your premium, says Luttrell. One of the best ways to get a low quote and decent coverage in homeowners insurance is to qualify for available discounts offered by the insurance company, suggests Summers. Discounts may be available if you have your car or another structure insured with the same company. Other reductions can hinge on certain safety devices in the home, such as deadbolt locks, smoke detectors, alarm systems or exterior fire retardant materials. If you smoke, consider quitting. Smoking leads to thousands of residential fires every year, and many insurers will reduce insurance premiums for non-smokers. © Content That Works

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