Copper and chalky black. The warmth of copper is always a welcome sight during the autumn months, and chalky black keeps the metallic vibe from looking too polished and sterile. The large copper sideboard is impressive, but this move may be easiest to incorporate with chalkboard paint and copper accents.

Vanilla, toffee and amethyst. If you like neutrals but want to add some energy, try mixing in pieces in varying tones of an accent color. These translucent purple vases add just enough punch to liven up this room.

Charcoal and orchid. These deeply saturated hues look great next to the contrasting white. If you’re looking for a great fall color pairing that will easily carry into winter, this may be the one. (I’m sorry to say the “W” word. I’ll try not to do that again for a few weeks.)

Black and almond. Softer on the eyes than black and white, this color duo creates calming atmosphere and the perfect spot to relax on a cool fall day with a soft woolen blanket and a tall cup of chai.

Pear and walnut. Of course, it helps if you already have gorgeous dark wooden floors to pull off this soft palette, but if you don’t, a nice walnut-stained table will work just as well. Bring in some white for a touch of crispness.

Shadow plum and candy pink. This smokey purple looks great in a room flooded by the warm autumn sun. The jewel-toned pink, stronger than its pastel cousin, adds life and energy to the space.

Feather gray, straw and rust. This beautiful gray wall complements the neutral tones of the woven headboard. Rust-colored bedding warms up the room and gives it a cozy feel.

Black and moss. The mossy green on the table may be difficult to see, but it looks great with the black hutch. Wooden tones throughout tie everything together.

Crisp apple and caramel.When deciding on a fall palette, take a hint from your favorite things about this time of year. Being a huge fan of candy apples, I immediately noticed that these two hues look great together.

If I can help you with any of your home buying or selling needs, please visit my website www.AdrienneFrancis.com or contact me at 201 259-4449. I look forward to helping you.

Tags: Designing Your Home, Household Tips by Adrienne // Add Comment »

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Has your lawn grown up around that “For Sale” sign? Have the wasps moved into the lock box on your front door? Did you just receive an invitation to your real estate agent’s retirement party?

If so, chances are your home sale fizzled.

Here are the six most-common reasons why homes don’t sell and what you can do about it.

Your home is overpriced

Optimistic home sellers love to parrot the old adage, “There’s a buyer for every home.” But they often leave off the qualifier: “at the buyer’s price.”

The fact is that buyers, not sellers, ultimately determine the market value of a home. You can ask for the moon and set your listing price well above comparable properties in your neighborhood, but at some point it will be up to you, the seller, to accept what the buyer thinks your home is worth.

Overpricing is the most common reason homes don’t sell. When you ask an unrealistic price, it sets in motion a process that often works against you. Here’s why:

Most real estate agents, and hence most qualified buyers, will see your new listing within 30 days. If it is overpriced by as little as 5%, it will be duly noted and interest in your property will wane, especially if you show no intention of coming off your asking price. You likely already priced out buyers who might have qualified for financing at a more reasonable price. Even if you manage to find a buyer at your inflated asking price, the property may not appraise at that figure and the financing will fall apart.

Your real estate agent may have approved or even suggested the inflated asking price to secure your listing. Conversely, other agents often use overpriced properties like yours to help sell their own listings. (“Here’s what they are asking. Now would you like to take a second look at that first house I showed you?”)

“If you have a house that really should be priced at $200,000 and you’ve got it listed at $260,000, you are trying to compete against homes that really are worth close to $300,000 and all of a sudden your home really is not competing well,” says Jeri Fisher of Jeri Fisher Real Estate in Missoula, Mont. “You want to compete with what is available out there among homes similar to yours.”

If your home remains on the market for too long, agents and buyers may begin to wonder if there are other, perhaps more serious reasons why it isn’t selling.

“It becomes shopworn, the same as a jacket hanging in the store week after week,” says Fisher. “People are aware that it has been on the market a long time and agents stop showing it.”

Your home doesn’t ‘show’ well

Your home is competing against shiny new houses in those pristine subdivisions out in the suburbs with their attractive prices, incentives and community amenities.

Face it: Even the best old house needs a little makeover if it hopes to attract a qualified buyer.

The good news is most of the work will be cosmetic and relatively inexpensive: a new coat of paint, a few attractive window boxes, a thorough cleaning of floors and carpets. Voila! The place may look good enough to reconsider.

A good real estate agent can advise you on where your time and money are best spent.

“Price and condition are two things that the seller can do something about,” says Fisher. “I always give people my ‘honey-do’ list. I think paint is probably a seller’s best friend because it makes things smell fresh and look fresh. If it’s time to paint, it’s time to paint. It’s the best return on investment.”

You’re in a bad location

Nothing has a greater effect on your home’s value than its location. Your humble abode might be worth a king’s ransom were it located in Palm Beach, Aspen or San Francisco. It might even jump thousands in value just two streets over in the next (and far superior) school district.

“If you’re in one of the higher-ranked schools around here, you’re going to add $50,000 to $100,000 to the price of the same house,” says Lenn Harley, a broker with Homefinders.com Inc. in Maryland and Virginia.

The point is, location rules in real estate.

If your home’s location is less than desirable, your options are somewhat limited. A good real estate agent will do his best to help you accentuate the positive and eliminate the negative of your circumstances, say by using foliage to screen off offensive adjoining properties or dampen traffic noise.

The best way to compensate for a poor location is to reduce your asking price or offer attractive incentives such as seller financing or a lease option with rent credit.

You have a lousy listing agent

Yep, they exist: Real estate agents who mislead, misfire and misbehave.

Their bad advice can cost you plenty in time, money and the sheer hassle of keeping the place show-ready 24/7.

The agent from hell will allow you to overprice your home (“Here’s what I can get for you if you list with me!”), not market it properly, fail to screen for qualified buyers, be unresponsive to interest from other agents (if they sell their own listing, they don’t have to split the commission) and keep you totally in the dark throughout the process.

What’s more, if your agent is abrasive, arrogant or otherwise difficult to work with, other agents may not want the hassle of showing any of their listings to prospective buyers.

You are battling competition or market conditions

We’ve all heard the terms “buyer’s market” and “seller’s market.” In real estate, market conditions are affected by any number of external forces, some of them predictable (the weather, sort of), some of them unpredictable (the local economy, interest rates, public optimism or pessimism).

In a “hot” or seller’s market, homes go fast. Inventory (homes on the market) may be low, meaning less competition for you. Chances are better that you will get your asking price in a hot market; in fact, it is not uncommon to even be offered more than your listing price.

But in a “flat,” “cold” or buyer’s market, sales slow to a trickle, inventories grow and buyers can find bargains, especially when they know the seller is motivated (i.e., paying on two mortgages).

If you’re trying to sell in a flat market, you’re not only competing against all that vacant new construction, but against rentals as well. In this case, be prepared to settle for less than top dollar, or wait to sell until the pendulum swings once again in your favor.

You have ineffective marketing

Gone are the days when an agent could simply place your listing with the local multiple listing service, hold a halfhearted open house and wait for another agent to bring forth a buyer.

Today’s top performers launch a multilevel marketing plan that includes listing tours for area agents, newspaper and even TV ads, weekend open houses, listing fliers and placements in local real estate publications.

Computers and the Internet also have changed the face of real estate. According to the National Association of Realtors, today more than one-third of all home buyers use the Internet for house hunting. The best real estate agents are computer-savvy. They have your listing in color on their laptops to show clients and communicate frequently via e-mail, a particular boon when working with out-of-town buyers.

Suffice it to say that if your real estate agent isn’t listing your home online through the company Web site as well as with the local MLS, you may not be getting the exposure necessary to find a buyer.

“There are those who just put the listing in the multiple and pray it will sell and those that put a lot of effort into marketing their listings,” says Fisher. “Unfortunately, with this weird system of compensation we have, they all get paid the same, whether they know nothing or have many years of experience.”

I specialize in getting homes sold that have not sold previously with another agent, and I do it quite well. If I can help you get your home in shape to sell it quickly and for the most money possible, don’t hesitate to contact me at 201 259-4449 or visit my website, www.AdrienneFrancis.com. “The Home Selling Expert”

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Getting a jump on your online holiday shopping? Those free shipping offers are sure tempting. But before you click “buy,” be sure to click over to the return policy page. If your giftees aren’t giddy about your presents, they certainly won’t be happy if they have to shell out to return or exchange them.

With holiday shopping expected to be slightly higher this year than last, it’s important to weigh the pros and cons of a return.

FreeShipping.org, a service that lists e-commerce sites with free shipping offers, this week released its list of return policies at 10 popular e-commerce shopping destinations. Here’s a quick peek at the list and some additional thoughts to keep in mind when returning items with a receipt:

Online shoe retailers Endless.com, Shoebacca.com, and Zappos.com all offer customers a 365-day return policy for unwanted, unworn, or defective footwear. In addition, the companies offer free shipping for returns, as well as a full refund.

Clothing retailer Overland.com has no restrictions on when an item must be returned in order to receive a full refund, although its preference is within a year. The company also provides free shipping labels to mail the merchandise back via FedEx.

Big-box retailer Costco(COST) allows customers to return most items at anytime, provided the original receipt and packing material are enclosed, notes FreeShipping.org. And return shipping is free no matter the size or weight of the item — they’ll even send a shipper out to pick up that big and bulky French door refrigerator ordered online that needs to be returned. Electronics, however, are on a shorter tether and must be returned within 90 days. Costco also provides full refunds.
While these five companies offer the easiest return policies, FreeShipping.org has another five that made their top 10 list as well.

L.L. Bean doesn’t have any time restrictions on returns, but return shipping is only free for L.L. Bean Visa Card members. Other customers will see their refund reduced by $6.50 when they use a prepaid return label.

Lands’ End also doesn’t have a deadline for returning merchandise. And although returns are free when exchanging merchandise, the retailer will deduct $6.95 if it’s a straight-up refund request.

Macy’s(M) allows for a full refund or exchange within 180 days after purchase, but jewelry is on a tighter time frame of only 30 days. Customers absorb the cost of mailing merchandise back.

Kohl’s(KSS) has a more lenient return policy with no deadline for mailing back merchandise. And it sometimes offers free shipping for returns.

Toys R Us and Babies R Us accept online returns within 90 days after purchase, but customers are on their own for shipping costs unless the item is damaged or defective, according to the retailer’s website.

If I can help you with any of your home buying or selling needs, please visit my website www.AdrienneFrancis.com or contact me at 201 259-4449. I look forward to helping you.

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Actor Jack Nicholson finally can put a “sold” sign outside his Malibu beach ranch, although he’s certainly going to be depositing a whole lot less cash than he was hoping for. He’s had it listed at $4.250 million and it sold for just $3.5 million according to the MLS.
Nicholson didn’t live here — the multiple Oscar holder also holds multiple homes — and in fact, he rarely even slept here. The secluded house that’s nestled in 28 acres functioned more as a place to shower off after the beach or hold the occasional party. It’s just two miles away from Neptune’s Nest, a local dive restaurant popular with the few zillion motorcyclists who roar up to it each Sunday for a fried seafood brunch.
The house has 2,300 square feet, not nearly enough for a celebrity of Nicholson’s status, but includes a tennis court, pool, putting green, miles of hiking trails and a separate caretaker’s home.

If I can help you with any of your home buying or selling needs, please visit my website www.AdrienneFrancis.com or contact me at 201 259-4449. I look forward to helping you.

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Here is some good information if you are considering buying a home. You will need additional cash set aside for these.

If I can help you with any of your home buying or selling needs, please visit my website www.AdrienneFrancis.com or contact me at 201 259-4449. I look forward to helping you.

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The new kid on the block has done it again. Gained market share and sales in one of the worst Real Estate Markets of all time! Congratulations Keller Williams!!

If I can help you with any of your home buying or selling needs, please visit my website www.AdrienneFrancis.com or contact me at 201 259-4449. I look forward to helping you.

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Everyone should have proper representation when purchasing a home and that often means – NOT the selling agent.

This is a good article that gives insightful advice on the subject. If you have any questions or would like some additional insightful information on the home buying or selling process, please visit my website, www.AdrienneFrancis.com or text me at 201 259-4449.

By SUSAN STELLIN

Published: September 15, 2011

IN this do-it-yourself era of online real estate listings, it is easy to find out what is on the market, visit open houses and even research sales data to come up with a reasonable price to offer for a home.

So why should a buyer bother using an agent?

In a nutshell: to protect his or her interests in an expensive, often complex purchase that can become even more complicated by the labyrinthine co-op approval process in New York City.

A buyer who relies on the seller’s agent to handle both sides of the deal may not hear about problems with the apartment or the building, or have a real advocate during contract negotiations.

“When you work with a buyer’s agent, their fiduciary responsibility is to you as a buyer,” said Walter Molony, a spokesman for the National Association of Realtors. The organization has helped establish state laws that require clearer disclosure to consumers about which party in the transaction an agent represents.

In New York, real estate agents must have clients sign adisclosure form that explains the difference between a seller’s agent, who provides undivided loyalty to the seller, and a buyer’s agent, who represents the buyer’s interests. A dual agent can represent the buyer and the seller, but both parties must consent to the arrangement and acknowledge that they are giving up the benefits of exclusive representation.

“Obviously if you’re representing a buyer and a seller in a transaction,” said Neil B. Garfinkel, the residential counsel to the Real Estate Board of New York, “you can’t have undivided loyalty.”

A dual agent can maintain each party’s confidence, Mr. Garfinkel said — for instance, by not disclosing to the seller that the buyer just received a big bonus check, or by not telling the buyer that the sellers are divorcing and want a quick sale. But things get murky when it comes to negotiating a price or discussing a home’s flaws.

“Perhaps it’s a defect in the property or potential financial issues in the building,” said Gea Elika, the founder of Elika Associates, a real estate agency that works exclusively with buyers. “Or maybe the resale potential is terrible. Buying a home is an emotional thing, so buyers may not see what’s wrong.”

When the market was booming, it was sometimes difficult for buyers to find a broker to show them properties unless they had millions of dollars to spend. That is because properties were selling so fast that agents preferred working with sellers rather than buyers who might take months to make up their minds. But agents say that with listings taking longer to sell, there is generally more willingness to work with buyers.

Noah Rosenblatt, the founder of the real estate data site Urban Digs, is among the agents who focus exclusively on the buy side of the deal.

“The buyer clients who come to me tell me that they’re not interested in someone to show them what’s on the market,” Mr. Rosenblatt said. “Once they find a property they like, my services really kick in at that point.”

Those services include providing a market analysis, evaluating comparable sales, coming up with an offer based on the value of features like outdoor space, and handling the back-and-forth of negotiations and contract terms. The role of a buyer’s agent may also involve preparing a co-op board package and navigating speed bumps that can derail deals, like delayed seller responses to a bid.

“I would not allow my client’s offer to be used as leverage by a seller who might be entertaining two or three other deals on the side,” Mr. Rosenblatt said. “I would put a deadline on the offer.”

A common uncertainty is at what point a buyer should start thinking about bringing an agent into the picture. Many savvy shoppers are happy to visit open houses on their own, and many even acknowledge, when signing visitor’s logs, that they are not working with an agent. But brokers recommend finding a buyer’s agent before making an offer or scheduling an appointment for a second viewing.

Engaging a buyer’s agent later in the process opens up the potential for a dispute over whether the new hire is entitled to a portion of the selling agent’s commission. Also, by this point in the proceedings, a buyer may have chatted too much with the selling agent, revealing information that could influence the outcome of the deal.

“You may have already lost your negotiating power because you’ve already told them what you’ll spend,” said Kimberly Kahl, the executive director of the National Association of Exclusive Buyer Agents.

Although the seller typically pays the agents’ commission, that fee comes from the purchase price of the home — in other words, out of the buyer’s pocket — so buyers who think they have no financial obligation to an agent are deluding themselves.

“You’re paying for it,” Ms. Kahl said. “You might as well hire someone to represent you.”

Some buyers worry that if they work with a buyer’s agent, their offer may be less attractive to the seller, whose fee to his own agent could be smaller than the full 6 percent if that agent represented the buyer too. In many cases, the listing agreement stipulates a 6 percent commission if the deal is split between brokers and a 5 percent commission if the listing agent represents both buyer and seller.

But with financing tight and qualified buyers scarce, Mr. Rosenblatt said, for the seller to be swayed on this issue, he would have to receive two very similar offers, with similar terms and financing conditions, and both buyers would have to have similar appeal to a co-op board.

“How often does that really happen?” Mr. Rosenblatt asked. “It happens, but the stars do not align that perfectly often enough that it’s something buyers should be paranoid over.”

If I can help you with any of your home buying or selling needs, please visit my website www.AdrienneFrancis.com or contact me at 201 259-4449. I look forward to helping you.

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Source House appraisals have been and are increasingly becoming a big issue and a problem. But I thought this article was insigtful and worth the read. If you have any questions don’t hesitate to give me a call and if you ar looking for sound advice on buying or selling a home in this difficult market, please visit my website www.AdrienneFrancis.com or text me at 201 259-4449

By PAUL SULLIVAN

Published: September 16, 2011

I RECENTLY decided to refinance a condominium my wife and I owned in Florida and quickly got caught up in the frustrating and often baffling world of real estate appraisals.

The appraisal for the condo initially came in at exactly the dollar amount we needed to refinance it without putting up any more money — something I found fishy but did not question since it worked to our advantage.

But a week later, the appraisal management company that had sent out the appraiser reviewed his valuation and revised it downward, determining that instead of 20 percent equity in the condo, we had only 10 percent.

That’s when I called up the loan officer at the bank and basically asked the question homeowners everywhere are asking: How are you determining the value of my home? After all, both numbers seemed to me to be rather arbitrary.

I eventually prevailed and got the refinancing.

But around that time, I got the renewal letter for the homeowner’s insurance on our house in Connecticut and was shocked to see that it was being insured for a value 14 percent higher than we paid in 2008. I know homeowner’s insurance is meant to cover the cost of replacing the house, but the price we paid for our home in 2008 was not just for the house but included the yard, the street where we live, the property taxes, the schools and other intangibles. And the price I could get for the house now is less than I paid back then. So why the high appraisal?

The question isn’t a new one. After all, appraisals seemed to be just as subjective when the market was moving up. Why is the process so opaque? I set out to try to figure that out. Here are a few things I’ve found that can improve the outcome, though I can’t promise that you’ll be entirely satisfied.

SELLING AND BUYING

One component of selling a home has always been gauging the emotion of a prospective buyer. But several brokers told me that buyers and sellers who need financing for a home should be concentrating instead on the temperament of the bank lending the money.

“Over the past two years, houses are not worth what the owners want or what the buyers will pay for them,” said Peggy Bates, a broker with William Pitt Sotheby’s International Realty in Stamford, Conn. “A house is worth what the appraiser says it is.”

She says she makes prospective clients have their house appraised before she will list it. If they insist on determining their own value, she said, she makes them sign an agreement to drop the price in four weeks if the house does not sell.

Her tough-love approach may be hard for some to swallow but it just reflects banks’ caution in making new mortgages with so many bad ones on their books.

But don’t assume that the appraiser will return with a value for your house that you agree with. First, banks are increasingly bringing in appraisers from other towns, if not other states. While this is done to comply with provisions in the Dodd-Frank act aimed at establishing objectivity and preventing agents and mortgage brokers from influencing the outcome, it often produces results that fail to fully account for the central tenet of real estate: location.

Joseph C. Magdziarz, president of the Appraisal Institute and an appraiser outside of Chicago, defended his industry’s work but said many appraisers were now pressed to write their reports more quickly and for less money. In cities like Chicago, he said, local knowledge is crucial because prices can vary from block to block and also floor to floor in high-rises.

Even if the appraiser is local, Mr. Magdziarz advises people to review a copy of the report. “The appraiser who did my house talked about my fireplace, but I don’t have one and he got the size of the living area all wrong,” Mr. Magdziarz said.

REFINANCING

The lure of incredibly low mortgage rates has piqued interest in refinancing existing mortgages. After all, going from a rate of 6.5 percent to 4.5 percent means significantly lower payments each month.

But lending requirements are strict even for people with an existing mortgage who have no problem making their current payments.

Frederick Peters, president of Warburg Realty Partnership, spends his days dealing with appraisal problems on sales in New York City. But he said he was baffled when he tried to refinance his weekend home in Litchfield County, Conn.

The first appraisal in February was what he called an “absurdly low number even knowing the impact of the past few years,” so he asked the bank to send out another appraiser. That came in only slightly higher and left him unable to refinance.

So he waited until this summer, when the flowers were blooming, and he and his wife walked the appraiser around the property. And that one? “It came in 50 percent higher than the previous ones,” he said.

Stan Humphries, chief economist at Zillow, the Web site known for its real estate estimates, said people should not be shocked by wide ranges. The company’s “zestimates,” which are reached through a proprietary algorithm, currently have a range of accuracy of plus or minus 8.5 percent when compared with actual sale prices.

Mr. Humphries said he experienced this firsthand when he refinanced his home in Seattle last year. The Zillow value was $530,000, which a broker said he could get if he waited up to six months. If he wanted to sell it immediately, she told him to price it at $500,000. The appraisals for the refinancing were $570,000 and $581,000.

“It was interesting to see it arrayed against my own home,” he said. “It made sense to me. Appraisals generally come in a little bit higher than zestimates because an appraiser is trying to think of longer-term value.”

Such a wide range also shows just how important it is to educate appraisers when they come to your home. Owners, the experts said, should provide comparable listings, walk appraisers through the house, and point out improvements and unique features.

INSURING

The appraisal for insurance purposes is perhaps the most enigmatic. While a mortgage for buying a home or refinancing is based on some combination of market pricing and a lender’s stomach for risk, the insurance appraisal is based on the cost of rebuilding the home from scratch.

In some cases, this number is pure fiction. Mr. Peters’s house was built in 1796, so how do you value materials you can no longer buy? Add to this that the insurance appraisal is likely to be higher than a home’s market value.

“There’s a lot of confusion about this issue,” said Stephen R. Bitterman, vice president in the private client group at Chartis, an insurance firm. “We are appraising the house for rebuilding cost. Our promise is we’re going to put you back exactly the way you are.”

But what irked me with our house was that the initial coverage was for the exact amount we paid for it, and it has only gone up. Yet none of the insurers I spoke with would explain how that worked. When asked to address the discrepancy between rising insurance prices and falling home values, they attributed it to increasing costs for raw materials.

In our case, the insurance company actually raised the replacement cost of our home even more after the appraisal. To add insult to injury, the appraiser noted in his report the market value of our house: 31 percent less than the replacement cost.

Please visit my website www.AdrienneFrancis.com or contact me at201 259-4449. I look forward to helping you.

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This makes all of use very angry so I just had to post the article. It’s bad enough that so many people have no choice but to loose their homes but this should be outlawed. If you have any questions about selling your home in this market, please visit my website www.AdrienneFrancis.com or call me at 201 259-4449.

Gene Kessler, 67, may be the new face of mortgage default. The tech industry retiree is in the process of walking away from the home he purchased for $166,000 in 2004 in a small town 75 miles southwest of Minneapolis.

Its value has plummeted to $111,000, wiping out Kessler’s $45,000 down payment and leaving him with a mortgage that’s more than the home is worth. He stopped paying the loan six months ago, and estimates he’ll have to vacate by March 2012.

But Kessler isn’t in financial trouble, and he could afford the monthly payments. He has no other debts and two pensions from former employers, as well as Social Security. He also has a woodworking hobby, and runs a small business selling the artisan lamps he makes in galleries. He’s single now, and his two children are grown and gone.

“I was looking for a way to get back to a larger city, and this was the only way I could get out of this house,” says Kessler, who paid $800 to YouWalkAway.com to help guide him through the process known as strategic default. He’s anticipating a move to a warmer climate and a more active art and dating scene in Santa Fe, N.M.

First notices of default jumped 33% in August, a nine-month high and the biggest month-over-month increase since August 2007, according to figures by RealtyTrac released Wednesday.

“There are 3 million to 4 million seriously delinquent mortgages that under normal circumstances would be in foreclosure but have been kept out by procedural delays and paperwork problems,” says Rick Sharga, RealtyTrac senior vice president. The recent spike in foreclosure starts suggests lenders are “hitting the restart button” on cases that were delayed by documentation problems such as robo-signing, he explains.

There’s no data on the demographics or financial histories of the people receiving recent default notices. But among them are some homeowners who have never defaulted on a loan before, at least according to one poll. YouWalkAway.com surveyed several hundred of its clients earlier this year, and just 23% said they had previously shirked a financial obligation.

“The people we are now seeing are nearing retirement age, who never missed a payment on anything in their lives,” says Jon Maddux, co-founder and CEO of the Carlsbad, Calif., firm. “They are trapped. They can’t sell or get a modification and they need to downsize or move for a job.”

Attitudes toward default have also shifted, Maddux says. “Back in 2008 people were very emotional, very scared, in disbelief or denial,” he says. “Now they are simply fed up. It’s a very calculated, black-and-white business decision. People feel very relieved.”

A more widespread understanding of the consequences of default may be a factor, says Brent White, a University of Arizona law professor and author of Underwater Home.

“The conventional wisdom is you are ruined and are not going to recover,” says White, who wrote a widely circulated discussion paper on the topic. But in so-called “non-recourse” states such as California, the bank can only foreclose on the property and resell it. If the price is less than the amount owed on the mortgage, the lender can’t sue the homeowner to recoup the shortfall, says White. Even in recourse states, the bank is unlikely to go after the homeowner following foreclosure, he argues.

“The vast majority of those who default end up doing a short sale and that discharges the deficiency,” he says. “If they are pursued, they can negotiate to pay less than the full amount. A savvy person who retains an attorney or other knowledgeable person to walk them through the process will likely get through default without having to pay a deficiency judgment. Most people will have a good credit score again within a couple years.”

But John Ulzheimer, president of consumer education for SmartCredit.com, disagrees, at least for consumers new to default. “If someone who has never missed a payment suddenly puts their home in foreclosure, their credit score is destroyed,” says Ulzheimer, who previously worked for a credit bureau.

“If you already have payment problems on the mortgage and defaulted on other accounts, [foreclosure] may not have a material downward impact, but it will lock in a lower score for a long time,” Ulzheimer says. People who stop paying the mortgage can minimize the credit score impact by using that free cash flow to pay down other debts, such as credit cards, he adds.

But just because the bank doesn’t pursue homeowners today doesn’t mean it won’t tomorrow, argues Ulzheimer. The statute of limitations to sue on contract debt in recourse states ranges from three to 15 years. “Some people think that’s the next shoe to fall,” he notes.

That possibility is just one reason other underwater homeowners are stubbornly hanging on. Liana Friend, 67, bought a two-story, 2,300-square-foot home with a pool in a master community in Corona, Calif., in July 2005 as an investment for $540,000. It’s now worth $295,000.

Friend owes $389,000 on 30-year mortgage at 6.75% that can’t be refinanced. The difference between her costs and the rent she can collect on the property is about $1,300 a month. Even Friend’s property manager has suggested she default on the investment.

But she refuses. “It’s a big time moral issue,” says Friend. “If you make a contract, you agree to the terms. It bothers me that people get up and walk away. I don’t want that on my credit report.”

Moreover, Friend made a $160,000 down payment using money inherited from her grandparents. Her grandmother was a self-taught investor from a farming community who married her first husband (of five) at age 14 and eventually made a fortune in stocks. “She would grab all the granddaughters in her pink Cadillac and take us shopping,” Friend recalls. “We were not allowed to take things in shopping bags — she insisted we had to have them in boxes. We all adored her.”

“I love and believe in real estate,” adds Friend, who purchased two other homes in the 1980s that are still worth far more than she paid. She bought the properties for income in retirement, and plans to bequeath them to her three daughters.

Friend should ask her lender how far the mortgage needs to be paid down in order to refinance, advises Keith Gumbinger, vice president at HSH Associates, a mortgage information publisher. He estimates she would need $160,000, possibly more, to do a cash-in refinance on the property. But even if she could refinance, it still wouldn’t fully close the shortfall between the rent and her costs, and it may take decades for the house to recover its value.

White says underwater homeowners should figure out if they are paying substantially more to own a house on a monthly basis than they would pay to rent a similar property. “Even if you are thousands of dollars underwater, if you are paying the same as you would to rent, you don’t gain that much financially by defaulting,” he says. (The survey by YouWalkAway.com found a quarter of respondents saved 50% or more on housing expenses when they rented after their default.)

In addition, someone who will need a good credit score to run a small business or borrow to meet a goal, such as a child’s college education, should avoid strategic default. “If you have a particular need for easy credit in the future, then it doesn’t make financial sense,” White notes.

As for Kessler, he is looking forward to biking, tennis and skiing in the Southwest next year. “I don’t feel guilty at all about walking away from the place,” he says. “The banks really did it to themselves. They made a ton of money with me over the years. I owned four or five houses. But I don’t think I’ll ever buy another house. I’ll probably just rent until they put me in a nursing home.”

SOURCE

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MLS#

2885131

Price $1,479,000

Beds 4

Baths3 Full / 0 Half

Year Built 1995

Fireplaces 1

Not to be missed. This home is as perfect as it gets.

Just steps to the beach! This meticulously maintained ocean block colonial with its open and airy floor plan makes the perfect beach home with its 4 large bedrooms that includes a master bedroom suite.

A bright and airy living room opens to a large dining room that flows into an updated kitchen with granite counters and center island. Relax by the fireplace in the family room off the kitchen or step outside onto a great deck shaded by a retractable awning. Enjoy your morning coffee on the upstairs balcony while taking in the views of both the ocean and bay!

Please call me at 201 259 – 4449 for more information.

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