Monthly Archives: February 2004

$500 Discount Real Estate Listings Grow

The number of “discount” limited service listings has increased greatly. A seller lists his or property with a real estate agent who does one thing only: enters the data in the multiple listing service. This gets more exposure for the property and the owner deals directlyu with other agents wanting to show the house. Most also offer a sign and a lock-box for an extra fee. The charge is about $500 to the listing real estate agent up front (but 2.5% is charged by the selling real estate agent at closing). No open houses are conducted and there is no assistance in negotiating the sale contract.

In the last month I have had several clients do this. It seems to be internet-savvy clients under age 35 or so who really like this way of selling.

The only problems are:

1. The listing agents do not take calls and that seems to frustrate other agents trying to show the property;
2. There is no “buffer” when an offer comes in (because the agent doesn’t help with the offer) and negotiating the contract is harder;
3. I had one client who signed up with a southside discount broker who did not list the home in the listing services (MAP and MLSNI) that everyone uses here and no one saw the house. He cancelled the listing when he found out.

This is part of the “unbundling” of real estate services that will continue to unfold.

Medicaid for Those Between Home and a Nursing Home

There is a fairly new program called the Supportive Living Program. This is a program that “waives” the requirement of skilled nursing care normally required for medicaid. It allows low-income seniors to qualify for medicaid-paid “assisted living,” where they otherwise would not qualify because of lack of medical need (medicaid otherwise requires full-time nursing care). The senior must have income of about $900.00 per month; all but $90 of which goes to Medicaid. The “asset” levels are the same as regular medicaid ($2000.00 cash, prepaid funeral, a car etc.) It can be a great alternative for a senior who needs day-to-day help and can’t stay home alone anymore, but doesn’t need the care of a full-time nursing facility.

Click here for more information.

Will Your Homeowner's Insurance Hold Up if Your Property is Vacant?

If your house, or a house you inherited, is left vacant, you must be careful and do the unthinkable, that is, read your homeowner’s insurance policy. In handling estates and trusts, frequently the deceased’s home is empty and must be sold. Another circumstance that pops up alot is a client moving out of his house to rehab the house.

Most times you will find that the insurance still covers you, but theft and vandalism are not covered if the house is vacant more than 30 days.

If you are rehabbing your house, and move out, many policies still cover you for everything including theft and vandalism.

Some insurance agents state in a blanket fashion that there is no coverage on an empty home and then try to sell you a policy for $4000 or more per year in premium.

Do yourself a favor and check the terms of your insurance policy. It will give you peace of mind and save some cash.

(Credit to Terry Griffin Esq. for the above)

One of the Best Elder Law Sites on the Internet

In my opinion is one of the best elder law site on the internet. It has general information on estate planning, medicaid planning, and an interactive section in which an elder law attorney answers questions for the public.

There is a simple, but very useful, half-a-loaf calculator that I use frequently. (Half-a-loaf is a medicaid gifting strategy in which a person, usually already in a nursing home, gifts some of their assets, knowingly creating a penalty period, but saves the rest of the funds to private-pay in the nursing home until they can apply for medicaid– after the penalty period expires- whew, that was a mouthful..) The half a loaf calculator is very helpful, as is the site itself. I do not suggest using this calculator without consulting an elder law attorney:)

Mold is in the Air

Mold cases are increasing. More and more, home inspectors find mold in attics during the inspection.

In the last year, I have had about 10 mold cases: In onecase, the Buyer backed out of the contract. A few days later the Buyer reconsidered and signed a new contract, for $5,000 less than the last one, but accepting the property “as is.” In another case, a mold remediator was called in, the seller cleaned up the mold for about $2500 and the Buyer closed. The cost of remediating the mold is between $1500 and $8000, I have found.

If the inspector finds mold, a mold remediation company is called in to examine it, clean it up and stop the leakage that caused it in the first place. Generally, home inspectors will not do mold remediation; they just indentify a mold problem.

If you are thinking of selling a home it may be wise to inspect your attic for mold before it goes on the market. Click here for a good mold primer.

Illinois Security Deposit Hassles

I just finished a rather bitter case involving a security deposit. The rules on security deposits are as follows:

1. If the property is in a complex of 5 or more units (this does not mean that the landlord has to own all 5 units, but that the complex has 5 or more units); then,

2. The landlord has 30 days to give the tenant an itemized list of damages;and,

3. The landlord must return the security deposit within 45 days of the tenant moving out.

If the landlord does not do #2 and #3 above, the tenant can file a court case for two times the amount of the deposit plus costs and attorneys fees.

If the property is a single-family house or in a complex of 5 or fewer units the above rules do not apply; you will have to look in your lease for the rules on returning your deposit.

The City of Chicago (click here for a pamphlet on the Chicago rules or here for a good summary of the Chicago ordinance)and some other suburbs including Evanston have their own very specific rules on this topic.

What to Do if Your Mortgage Lender Bails Out on You

Recently, as interest rates rose and the number of files on their desks exploded to record levels, some mortgage companies bailed out on clients and failed to close. In two cases I was involved in (both of which are new construction) the mortgage companies literally “forgot” about the client. The loans were not ready to close because no one paid attention to the file for months. The other problem is that some lenders blow the “lock-in” period. The client is left with a lame promise that the mortgage company will do a “free refinance” later to cure the problem.

How can you prevent this? Pick a reputable lender in the first instance; not one from the internet or your brother-in-law who thought he would try out mortgage brokerage. Stay in touch with the lender. If all else fails, file a complaint with the office of banks and real estate. Here is the form to file the complaint:

It rarely pays to file a lawsuit against the lender. Attorneys fees are cost prohibitive and your damages are hard to prove.

Truth about Annuities

Many clients buy annuities. I think it is fair to say that most clients do not understand the annuities and, in many cases, the annuity purchase was an inappropriate choice. In my opininion annuities are appropriate when:

1. The client wants to save more for retirement and already puts the maximum in his or her IRA/401k;

2. The client is in a high tax bracket and wants to reduce taxes;

3. The client won’t need the principal for quite a long time and the annuity makes up a small portion of the client’s total investments.

I have one client who paid no income tax, was 85 years old, had been retired for 20 years and purchased 4 annuities with all of her liquid assets; her only other assets, after the mass annuity purchases, were her condo and a checking account. The annuities were “unsuitable” for her, but were perfect for the annuity salesperson who netted at least $20,000 in commissions.

See the annuity truth web site for some interesting reading on annuities and whether one is right for you