Understanding Real Estate Jargon

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WITH PETER G. MILLER

What’s the Deal with Credit Repair Companies? Can One Work for Me? Q: I’ve heard about credit repair companies. How do they work and are they worthwhile? A: In the same way that you can’t change history,you can’t undo past credit problems.What you can do is start a new pattern of credit responsibility by spending less, reducing debt, paying on time and paying in full. There are organizations that will seek to renegotiate balances and terms with credit card companies and other creditors.Whether non-profit or for-profit,it’s important to ask about fees and charges.For instance, how much of your first payment will go to creditors and how much will go for credit repair services? What about other costs? First though, start by reviewing your credit report. Get a copy without cost by going to www.annualcreditreport.com or call 1-877-322-8228. Look for out-ofdate items and entries that factually are incorrect. In terms of credit reports,“out-of-date”typically means seven years old for most items, 10 years for bankruptcies.Inform credit-reporting agencies by certified mail with a return receipt requested if you find negative items that are factually incorrect or out-ofdate. Send copies of receipts and checks and other evidence to support your claim. Keep the originals for your records. No matter how bad your credit,don’t fall for credit repair schemes.No, your credit will not be improved if you complain about every negative item on your credit report.No, you can’t apply for credit using an employee identification number instead of a social security number. Such “file segregation“ schemes are illegal. If bankruptcy or foreclosure looms, contact an attorney or legal clinic immediately.

Q: My lender has suggested a loan program that includes both a mortgage and a home equity loan. I would borrow $308,000 in the form of a fixed-rate first mortgage plus I would get a home equity line of credit. As the mortgage is paid down, the amount I can borrow on the home equity loan increases. Is there a pitfall here that I am missing? A: You need to look at the specifics of the program. Is the fixed-rate interest level the best available? How does the rate for the home equity line of credit comSee ASK OUR BROKER, Page 2

Real Estate Shorthand

Understanding What those Ads are Trying to Say BY CHARLES SCUTT CTW Features

The shortest distance between two points may be a straight line, but the shortest way to stuff as much information into a real estate advertisement is to use acronyms.

Take one look at a home for sale ad or listing and you’ll quickly discover an alphabet soup of abbreviations and truncated terms—from FDR to FSBO. But if this industry idiom makes you feel like an idiot, take heart – it’s easy to learn the short-form lingo commonly used today to market

and sell homes, say the experts. “In any profession, there is a ‘shortcut language’ in use,” says Larry Schooler, a trainer with Wealth Intelligence Academy, Cape Coral,Fla.“No matter what the industry, jargon exists to some degree.With the increasing popularity of the Internet, text-

and instant-messaging, wireless devices, and other abbreviated forms of communication, a corresponding increase in real estate acronyms is natural and expected. “More people are writing ads

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The Big Ideas Behind Small Houses BY PAUL ROGERS CTW Features

F

ive words you never thought you’d hear from a homeowner: I need a smaller house. Yet the concept of downsizing a home – or doing more with less – has been gaining favor since the publication of architect Sarah Susanka’s “The Not So Big House” (Taunton,1998). Susanka espouses the belief that when smaller-scale homes are done right,they are more livable,enjoyable and socially responsible than the ever-expanding floor plans of today’s developments. (The size of the average site-built home grew 8 percent from 1998 to 2004, rising to nearly 2,350 square feet,according to the U.S.Department of Commerce.) Jay Shafer has been a longtime small-house devotee.Shafer, owner of Tumbleweed Tiny House Co., Sebastopol,Calif.,has been building and living in houses ranging from 50 to 750 square feet since 1997. He lived in the original 100-square-foot Tumbleweed model for seven years before switching to the smaller 70-square-foot XS House in 2004.The homes, he say s ,n o t only suit a pared-down lifestyle, they’re affordable,ecologically responsible and simply easier to care for. “For me personally, my biggest reason for living in a tiny house is that I haven’t got the time or patience to paint or maintain a larger house,” he says. A strong mix of practicality and idealism lies behind the drive toward smaller homes. Indeed, Shafer says about half of the houses he builds are for people who intend to live in them full time as their primary structure. But half the buyers purchase the structures to supplement their current

Tiny houses offer socially conscious living by using less building materials, land and energy. homes. People buy them as inexpensive vacation cabins or put them in their backyards and use them as art studios, writer’s garrets, home offices, guest rooms or close-but-independent living quarters for a college-age child or an aging parent.Tiny House Co., Buena Vista,Va., built one home for a day nurse to have a private spot to stay overnight, and another for a mother who wanted her handicapped son to have his own

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place but still live nearby. On the idealistic side, they truly do afford more socially conscious living, using less building materials, less land, less energy. Fully insulated, tiny houses are easy and inexpensive to heat and cool, and they’re relatively inexpensive to buy. Shafer’s models range from about $23,000 to $42,000.A typical 20-foot by 24foot model from Tiny House Co. runs about $39,000. (Those prices are for materials and con-

struction only, not for land.) The drawbacks of a tiny house are obvious:It’s tiny – “great personally, but not as good for guests,” Shafer says. That being said, many of the structures sound smaller than they feel. Opening the center of the houses, using a lot of windows and maintaining unobstructed throughways for traffic, means they maintain a sense of

See SMALL HOUSES Page 2

SHORTHAND CONTINUED FROM PAGE 1 using the same language they use in these other forums.This is a general societal trend that is naturally expanding into the business and investing world,” Schooler says.“Why use 15 characters when three will get your point across? At the same time, ask yourself,‘Will those three characters really get your point across to the audience you are trying to reach?’ Brevity is only efficient when it works.” Diane Saatchi, senior vice president with residential real estate firm The Corcoran Group, East Hampton, N.Y., says “The use of acronyms and abbreviations in real estate ads is largely the result of the cost of ad space.The high price has caused us to use shortcuts to get lots of information crammed into a few ad lines.”

The downside, says Schooler, is that if prospective buyers don’t understand the acronyms, “they might just skip over the ad or misunderstand the actual deal being offered. Buyers and sellers need to be aware of the meaning of various acronyms and abbreviations so they don’t waste their time on properties or deals that don’t meet their needs.” To help decipher the vernacular, there are several recommended real estate resources, including the free online acronym guide at www.acronymguide.com,“Dictionary of Real Estate Terms” (Barron’s Educational Series, 2004), and “Realty Bluebook” (Dearborn Real Estate Education, 2003). Schooler says you also can use any search engine and type in the acronym followed by the words “stands for real estate.” For example, typing in “FROG stands for real estate” will yield “finished room over garage.”

Additionally, a professional real estate agent should take the time to explain these common acronyms, says Jonathan D. Nicholas, regional director for RE/MAX of Indiana, Indianapolis. They also should make it a practice not to speak these acronyms but alter their language to speak the words in order to be more easily understood, he says. “Instead of telling a client that he will ‘drop off the CMA prior to putting the listing into the MLS,’ he should say,‘I’ll drop off the comparative market analysis prior to putting your listing into our Multiple Listing Service.’” Lastly, Schooler warns that acronyms and abbreviations should never be used in contracts or any other official, legal document. Before you close the deal,“make sure everything is spelled out and completely clear,” he says.

© CTW Features

Real estate acronym cheat sheet Here’s a list of common abbreviations and acronyms used in real estate ads and listings: CAM – common area maintenance ECOA – Equal Credit Opportunity Act EAL – exclusive agency listing EMF – electromagnetic field from power lines EMP – electrical, mechanical, plumbing ERV – estimated rental value ESK – eating space in kitchen FDR – formal dining room FMV – fair market value Frplc – fireplace Gar – garage Gard – garden GFE – good faith estimate Grmet kit – gourmet kitchen

Hdwd – hardwood floors Hi ceils – high ceilings IOM – interest-only mortgage Lsd pkg – leased parking area LTV – loan to value Nr bst schools – near the best schools PITI – principal, interest, taxes and insurance PMI – private mortgage insurance Pvt – private SFT – single family detached TOD – time of delivery UST – underground storage tank WBF – wood-burning fireplace WI – walk-in

Ask Our Broker CONTINUED FROM PAGE 1

pare with other home equity lines? Is there a prepayment penalty for either loan? If yes,how much? As well, consider your comfort level. Do you really want so much debt – or potential debt? While the idea of instantly available credit is attractive, the thought of instantly available debt should be sobering. Consumer Alert: Be wary if you receive an unsolicited e-mail “IRS notification” stating that you’re owed a refund.The IRS says,“do not click on links contained in possibly questionable e-mails; instead,go directly to the site already known to be genuine. For example,the only address for the IRS Web site is www.irs.gov – any other variations on this will not lead to the legitimate IRS Web site.”For refund information, contact the IRS directly at 1-800-829-1040 and ask for assistance.

Q: We want to buy a new house directly from a builder. The house is a spec house with certain upgrades. The price listed and quoted was discounted and we signed a contract. Now the builder says we have to use their mortgage company to finance the home or pay a higher price for the house if we use our own financing. Our financing is a better deal for us. What can we do? A: The builder cannot force you to use a specific lender or closing company, and likely did not.What often happens is that a builder will say “we’ll offer a discount of x dollars if you’ll use Smith Lending and Jones Settlements.”You don’t have to take the discount, but if you do then you also have accepted other term s .H ave an attorney look at your contract and see if includes a trade. Q: Does a private unit development have the right to charge late fees? A:If the CC&Rs – the covenants, conditions and restrictions – allow it, then yes.A PUD really is like a type of government, and like any government it uses certain tactics to protect group interests.A late fee actually is far better than foreclosure, something else likely to be allowed when late fee notices are ignored. If a PUD says you owe a late fee,take it seriously, just like a tax notice. © CTW Features

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to [email protected].

SMALL HOUSES CONTINUED FROM PAGE 1 spaciousness.The structures maximize every square foot through a variety of design tricks,like turning otherwise unusable space under stairways into storage. “The secret to a great tiny house is knowing what’s necessary and eliminating all the rest … necessary for happiness, because all those extras get in the way,”Shafer says.“A sense of space has much more to do with the quality of a place than with the quantity.A well-designed little house can feel roomy and a poorly designed mansion can feel crowded.” And if the space does get too cramped,both Tumbleweed and Tiny House models are designed to be expanded easily. The only real problems Shafer has encountered in building tiny houses are zoning restrictions and building codes that sometimes set minimum size limits. Many of the structures,however, are sold on wheels, which oftentimes puts them outside the jurisdiction of local housing authorities. To be sure,there likely isn’t to be a rush of consumers looking to ditch their bungalows and ranches for the square-footage equivalent of a modern master bathroom. But Shafer, who handcrafts all his structures, has seen a significant increase in his business.Tumbleweed builds about five homes per year, up from one per year when he started the company. And he sees more potential in the future because of their versatility.

Tiny houses, ranging from 50- to 750-square feet, sound smaller than they appear.The houses maintain a sense of spaciousness with open centers, windows and unobstructed throughways. One Tumbleweed home was erected on a city rooftop,and they easily could be used as infill on small lots or clustered on a roof. “I figured at some point somebody out there would want smaller houses and it seems like that’s

the case,” Shafer says.“When I built the first one, it seemed novel, but now there are a lot of books out there on the subject and a lot of people interested in small houses.”

© CTW Features