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RENTERS BEWARE

Here is the latest scam I have to warn you about – homes for rent at “too good to be true” prices. The most common location for these scams are on Craigslist, but they can happen anywhere.

 

Here is how it works. You are looking for a home to rent, and come across one that looks great, and the price is even better. When you contact them, they tell you the owner has to leave the country unexpectedly, or got a sudden job transfer. They are willing to rent it for less than market rent just to get it over with. They will send you multiple interior photos, but make excuses why they can’t show it to you in person. When you express interest in renting the property, they will send you an application and an official-looking rental agreement. Once you give them your deposit and first month’s rent, they will send you a house key.

 

Here is the problem: They may not even own the property, so when you show up, your key doesn’t work. The real owner may meet you at the door and ask what you are doing on his front porch. When you try to reach the “owner” or “agent” you dealt with, they are long gone and so is your money.

 

These scam artists are “scraping” info and pictures of legitimate homes for rent from the Internet, then substituting their contact info to pretend to be either the owner or the owner’s agent. Some of them even target vacant bank-owned homes. They have the locks changed to make the scam look even more real by opening the home up for you in person.

 

You’ll want to verify three things – 1. The property. Drive by and see if there is a different for lease or for sale sign in front. 2. Is the owner real? Check the public records for who really owns the property. 3. Is the agent real? Go to www.bre.ca.gov to verify their license. But even these 3 items won’t 100% protect you if the scammer is sophisticated enough.

CLEANING TIPS—PART II

Last week I gave you some general cleaning tips prior to putting your house on the market. A little time spent cleaning can lead to big bucks for you. This week I’ll cover some of the “problem areas.”

 

Windows can be difficult, but are worth doing correctly. There are new microfiber cloths that make the job much easier, with less streaking (search Amazon.com for “microfiber glass cleaning cloth”). The key is not cleaning your windows when they are in the direct sun. For the outside, use Windex Outdoor. This attaches to your hose, and works even through screens. If your water isn’t too hard, it will even dry without streaking. Test one window first to see if you will need to squeegee. Make sure to do the window tracts, as well.

 

Before you attack blinds and drapes, dust and/or vacuum the valance and frame first. Shut the blinds and wipe with a duster or microfiber mitt. There is also a mini-blind vac attachment you can find online. If your blinds and drapes are too dirty, hire a professional.

 

If your bathroom grout is stained, ordinary cleaners may not be enough. There is a popular product called “Black Diamond Ultimate Grout Cleaner” you can find on Amazon.com plus some special grout cleaning brushes. If this doesn’t work, there are companies that can come in and re-do just your grout for much less than replacing all your tile. There are also some great new products out there you can spray on your shower after each use to keep it clean, but you usually have to start with a clean shower. If your caulking is too badly stained, there is a great little tool now you can buy at most hardware stores called “Caulk-Rite” that makes caulk removal and installation easy.

CLEANING TIPS

To maximize the value of your home, it needs to be “super-clean,” especially now that we are competing with all the new homes again. I have some tips I’ve learned over the years that might help. Let’s start in the kitchen:

Sink– Fill the sink with very hot water; add one cup of regular bleach, and soak for an hour. Drain and rinse. Scrub with baking soda which acts as a natural cleaning agent and odor neutralizer. Rinse. Shine with glass cleaner then dry thoroughly. If you have any chips in the sink, there are sink touch-up paint kits you can find online (but you may still have to disclose this to your buyer as a “defect”).

Garbage disposal–White vinegar is an all-natural deodorizer. To get rid of odors, make vinegar ice cubes and feed them down the garbage disposal. Simply run cold water through the drain after grinding. You can then use lemon afterwards, which will leave your disposal smelling lemony-fresh.

Microwave–Fill a coffee mug with water and a few slices of lemon; put it in the middle of the microwave’s tray. Cook on high for about 3 minutes; then leave the mug inside for another few minutes. The steam will soften food spills, and the lemon will get rid of odors. Wipe down the walls with warm, soapy water to remove excess residue and food.

Stainless-steel appliances–A streak-free stainless appliance is the gold standard of a clean kitchen. Be sure to wipe with the grain, which usually runs vertically on refrigerators, and horizontally on smaller appliances. Wash surfaces with hot, soapy water. Dry with a towel. Apply a layer of stainless-steel polish, like Sheila Shine, or 3M also makes a great stainless steel cleaner/polish combo product. Buff the polish into the surface with a towel, going along the grain.

A SIMPLE WAY TO TEST YOUR GFCIS

“What the heck is a GFCI?” GFCI stands for ground fault circuit interrupter. This is the type of electrical outlet that you should have wherever a water source is close to your outlet. For example, in your kitchen, bathrooms, laundry, etc. They are designed to prevent electrocution in the event that you were to drop your running hair dryer into a sink full of water (for example). The GFCI will detect the interruption in the flow and shut off the current.

 

However, some GFCIs (even in new homes) are defective, and it’s a common problem. Seems like we see defective GFCIs come up in many home inspections reports, and this is a potentially dangerous situation. There is an inexpensive device you can buy at a hardware store to test them, but here is an even easier way.

 

You can locate the GFCI by two small buttons on the face of the outlet. One is labeled “test” and the other is labeled “reset.” Press the “reset” button to make sure that the unit is ready. Then plug a nightlight, or any other portable appliance, into the outlet and turn it on. Push the “test” button and the nightlight should turn off. Press the “reset” button again and the nightlight should come back on. If the nightlight doesn’t go out, then the GFCI isn’t working properly. You should have a licensed electrician come out and check all of your GFCI’s.

 

Not every outlet that is GFCI protected will have the two buttons on them. There will be one with buttons on it that will often protect several other outlets close by. On a new home there will be a little white sticker on the protected outlets, but it often falls off with use.

NEW TWIST ON STUDENT HOUSING

For those of you faced with children heading off to college soon, here is an idea you’ll want to consider. Instead of paying rent for 4 (or more) years, consider buying a small home. Your child (children?) can live in the home, and also be in charge of renting out the rest of the bedrooms.

 

There are several advantages to this strategy. The rent you collect on the other bedrooms may cover part or all of the mortgage payment and other costs. This could mean your child’s housing costs would be less than a straight rental for them. Hopefully, the property will appreciate in value over time. However, even if the value never changes, you will still benefit from having the mortgage paid down each month which is kind of like a forced saving plan. There can be some nice tax benefits, too. For example, you may be able to deduct several trips per year to go check on your rental. How convenient for you since your child lives there! [I’m assuming that you’ll WANT to see your kids again…]  If you have other children and they attend the same college, that gives you even more time to accumulate the financial benefits of this plan.

 

The second advantage to this plan is that if you put your children in charge of the rental, it will provide an invaluable “real world” education to them about responsibility, fiscal management, budgeting, paying bills, etc.

 

You don’t even need to wait to employ this strategy. If you are certain about where your kids are headed, buy the home now and have a property manager rent it out for you. And once they graduate, you can even consider keeping it as a rental property if you wish if it makes sense to keep it.

NEW DROUGHT LAW

California is still suffering from a major drought and people are really starting to take it seriously. Last summer I saw a few brown lawns, but most people weren’t quite ready to let theirs die. Now it seems like there are more brown lawns than green ones! Last year my advice to homeowners putting their homes on the market was to go ahead and keep their lawns green because it would help their home sell. I said I’d change my advice as soon as the majority of lawns in their neighborhood were brown, and I think we’ve reached that point!

 

The problem is that some homeowner’s associations and cities have rules that require residents to keep their lawns up. So homeowners were stuck between complying with water-reduction mandates from city and county governments versus complying with rules about upkeep on their property. Some homeowners were even getting fined by their homeowner’s association or getting abatement notices from other government entities about their brown lawn.

 

Thankfully a new law was just signed by the Governor to settle this issue. AB1 says that local governments cannot fine a homeowner for a brown lawn during a statewide water emergency like we are under now. Last year a law went into effect prohibiting HOAs from fining homeowners, so this new law covers the rest of the bases regarding other government agencies.

 

Let’s all pray for rain next year! They say a big El Nino season is possible. Let’s hope they are right!

SO HOW IS THE MARKET NOW?

The market in East County is still hot, although if inventory continues to rise, we may see appreciation slow later this year.

 

Here are all the good things going on right now for our real estate market: Inventory (number of homes for sale) is still very low and buyers are plentiful. Many people who lost a home due to foreclosure or short sale 2-5 years ago can now qualify to buy again. Interest rates are still incredibly low. The economy appears to a muddling through into a tepid recovery, but a recovery nonetheless. Maybe wages aren’t as high as they could be, but at least the massive layoffs we saw during the “Great Recession” have slowed. The Silicon Valley continues to go gangbusters, and real estate prices there are above the peak prices of a few years ago. That’s driving homebuyers out our way again in droves as they seek affordable housing. Highway 4 is getting better and about to get a whole lot better when the current expansion is completed. Bart is coming to Antioch soon and e-Bart is coming to Brentwood (sometime in my lifetime).

 

Here are the things we need to monitor that may slow things down: Inventory, while low, is starting to rise again, and I’m hearing a lot of agents talk about the new listings they are going to put on the market soon. Many of the investors that bought homes at “the bottom” are looking to cash in their profits. Plus all the homeowners that really wanted to move the past 5-8 years but were “trapped” with no equity can now sell, so look for more homes on the market over the next few months. Affordability is also becoming a problem for many buyers because prices have risen so quickly the last few years.

NEW SHORT SALE RULES

Short sales have gone from being the bulk of our market to being somewhat rare. However, there are still some homeowners out there that may be considering a short sale. Not all short sales are the same. Each lender will have their own guidelines and rules. If your lender participates in the government HAFA program, there are some new rules that are very interesting.

 

When HAFA first started they would pay $6,000 to the 2nd lender. Then they upped it to $8,500. Under their new rules they will pay up to $12,000 to a 2nd lender. This should help many short sales that are “stuck” because the 2nd lender wants more than the first lender would give them.

 

The next issue is in regards to the homeowner getting money at close of escrow as an incentive and/or for relocation expenses. At first almost no lenders would allow short sale homeowners to receive any funds at closing. But then some homeowners figured out that they may be better off to just sit in the home and live rent-free for months and months and maybe even have the lender pay them “cash for keys” after foreclosure. HAFA came out with a $3,000 relocation incentive to the homeowner for a while to solve this problem. Under their new rules they’ve increased that to where the occupant (whether the homeowner or tenant) could be eligible for up to $10,000 in relocation expenses. I just got a short sale approved where the homeowner is getting $10,000 for relocation and $5,000 as a further incentive to do the short sale. (Please note that I’m not advocating whether this is a “good” or “bad” use of our tax dollars or whether this is the “right” thing to do for some borrowers. Just passing on the info so you are aware.)

HOMEOWNERS DOING REPAIRS?

A few weeks ago I warned you to make sure you hire licensed contractors to do work on your home. If it’s less than $500, you can consider using someone who isn’t licensed, but there are some risks. But what about when the homeowner wants to do work on their own home? Do they need to be licensed?

 

I contacted the Contractor’s State License Board (www.cslb.ca.gov) about this issue and they said there are some exemptions for homeowners doing work on their own home. They have two main categories – owner-builder and improvement. Owner-builder means the owner of the property is building a home from scratch, and they don’t plan to sell the property. The second category is someone just altering, repairing, improving or remodeling an existing structure.

 

If you want to build a house from scratch, and live in it, it is possible to do that without a contractor’s license yourself, although there are restrictions for which subcontractors you hire, how they are paid, etc. But if you just want to improve or repair your existing home, you can do that without a license as long as: “The work is performed prior to sale; the homeowner resides in the residence for the 12 months prior to completion of the work; and, the homeowner has not taken advantage of this exemption on more than two structures during any three-year period.”

 

I asked them what they meant by, “Prior to sale.” I asked if that means before you close escrow on the sale, or prior to the for sale sign going up? They explained that what they mean is that you don’t intend to sell the property for at least one year after doing the work. If you are prepping the home for sale, or you are in contract to sell, you should hire a licensed contractor.

HANDYMAN LICENSE?

Very often in a real estate transaction the owner of the property will have work done on the property either to get it ready for sale, or based on the buyer’s request for repairs. A question arises if the person they hire to do the work needs a contractor’s license.

 

The California Business and Professions Code says it’s a misdemeanor for anyone to act as a contractor without having a license, unless, “…the aggregate contract price which for labor, materials, and all other items is less than five hundred dollars ($500)…” So if the price is less than $500, the work can be done by an unlicensed person, what we often call a “handyman.”

 

Some people try to get around this by splitting the job up in pieces to get each piece under $500 by description, or by billing. However, the Code is wise to this ruse and prohibits it. Even if the particular job is less than $500, it is not exempt if it’s part of a larger job, whether done by the same or a different person.

 

The homeowner takes on a lot of risks by hiring an unlicensed contractor, no matter the cost of the job. If the handyman gets hurt, damages a neighbor’s property, or hires other workers, those could all blow up in a negative way for the homeowner. They could be liable for Workman’s Compensation, be found to be the “employer” of the hired workers, etc.

 

There is also a danger to the unlicensed handyman in that the homeowner may be able to refuse to pay them for the work done, even if the work was done perfectly.

 

Bottom line – it’s probably wise to use a licensed contractor for all repairs, even if it’s just a small job.

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