Do-It-Yourself Home Security Check: 5 Essential Steps

Palos Verdes Gatehouse

Joseph D’Agnese has written the following article to assist you in your home security check:

Conduct a do-it-yourself home security check by walking around your house to assess what needs to be done to reduce the risk of a break-in.

1. Keep your home well-maintained on the outside

Burglars want an easy target. Stand on the street outside your house and ask yourself: Does my property look neglected, hidden, or uninhabited? A front door or walkway that’s obscured by shrubbery offers crooks the perfect cover they need while they break a door or window. To improve security, trim shrubs away from windows and widen front walks.

2. Install motion detector lights

All sides of your house should be well-lit with motion-activated lighting, not just the front. Simple motion-activated floodlights cost less than $50 each, and installing them is an easy DIY job if the wiring is already in place.

3. Store your valuables

Thieves want easy-to-grab electronics, cash, jewelry, and other valuables, though some are not above running down the street with your flat-screen TV. Most make a beeline for the master bedroom, because that’s where you’re likely to hide spare cash, jewelry, even guns. ??Tour each room and ask yourself: is there anything here that I can move to a safe deposit box? Installing a home safe ($150 to $500) that’s bolted to your basement slab is a good repository for items you don’t use on a daily basis.

4. Secure your data

While you probably won’t be putting your home computer in a safe anytime soon, take steps to back up the personal information stored on it. Password protect your login screen, and always shut off your computer when not in use (you’ll save energy, too!) Don’t overlook irreplaceable items whose value may hard to quantify, like digital photos.

5. Prepare ahead of time in case the worst happens

  • Check that you’re properly insured for theft. Note that high-ticket items in your home office, such as computers, professional camera equipment, or other business essentials, may require an additional rider or a separate policy.

Joseph D’Agnese is a journalist and book author who has written numerous articles on home improvement. He lives in North Carolina.

Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.”

Photo is Palos Verdes Gatehouse

Umbrella Insurance and Homeowner Liability

Do Palos Verdes homes owners need an umbrella policy?  Do you know what that is?  Below is an excellent article by Richard J. Koreto:

Umbrella insurance offers added homeowner liability protection that kicks in after homeowners insurance reaches its coverage limits.

Understand homeowner liability

Liability insurance covers you in the event you get hit with a lawsuit. Some of the liability risks faced by homeowners are more apparent than others. For example, a house guest takes a tumble after slipping on your hardwood floors, or a neighbor’s kid falls off a swing in your backyard. Insurance agents call swimming pools, jungle gyms, and trampolines “attractive nuisances” because they draw children unable to appreciate their dangers.

If someone gets hurt on your property–whether inside or outside, and whether you think it’s your fault or not–you can get sued. Travelers, an insurance provider, says you could even face a lawsuit if your dog bites someone. If your pet or a member of your residence causes accidental damage to the property of others, you’re liable too. Automobile accidents can also lead to lawsuits.

In addition, you can face lawsuits from personal injury, which includes a wide variety of problems, such as emotional distress or sickness or disease. You can be sued for malicious prosecution, humiliation, libel, slander, defamation of character, or invasion of privacy. Although many of these scenarios seem to have little to do with homeownership, the end result of an unfavorable lawsuit judgment can be the loss of your home.

Brian Mittman, an attorney in White Plains, N.Y., says the reality is that anyone can be sued for anything at any time, though it’s less likely that juries will side with a plaintiff where there’s no obvious fault on the homeowner’s part. Some states also have so-called homstead laws that can protect homes from creditors. Consult an attorney.

Start with your homeowner policy

Homeowners are more likely to see a lawsuit if there’s a foreseeable incident with knowledge of a defect. Consider a homeowner whose front steps have loose bricks. A lawyer could argue the homeowner should’ve known about the problem and fixed it. This is an example of what could be a low-payoff situation–a trip to the emergency room and a sprained ankle that heals quickly. Many lawyers would pass on the case.

On the other hand, a visitor’s tumble down rickety basement steps could lead to a long hospital stay and a permanent limp. The homeowner could be found liable and have to pay, even if the injured party has medical and disability insurance. An injured party’s own insurance situation doesn’t necessarily let the homeowner off the hook.

The good news is a limited amount of liability insurance is standard in most homeowner policies. Although terms can vary, $300,000 is typical. Check your policy. For about another $300 a year, you should be able to add $1 million of liability coverage to your homeowners insurance.

Umbrella insurance adds layer of protection

Many financial advisers prefer umbrella insurance over increasing the liability coverage of a homeowner policy because the umbrella insurance applies to your vehicles as well as your residence. Remember, umbrella insurance is an overarching policy that covers liability issues at home and in the car. This is critical since you could lose all of your assets including your home as a result of a major lawsuit stemming from an auto accident.

Umbrella insurance, in general, runs about $300 a year for $1 million of coverage. Premiums can vary greatly depending on a host of factors including your credit and claims history, where you live, and who’s covered. In most cases you can get a policy issued in a couple of hours. The process is faster, and you might receive a multi-policy discount, if you get umbrella insurance through your current insurer.

Keep in mind that umbrella policies by nature come with very high deductibles. They only pay off after a homeowner’s other liability coverage is exhausted. If you use the same insurer, it’s easier to coordinate claims and ensure your homeowners insurance dovetails with your umbrella’s deductible.

Umbrella coverage has its limits

Generally, anything business-related isn’t covered by umbrella insurance. Bob Gustafson, a certified financial planner in Marlborough, Mass., notes that people connected with a home-based business aren’t covered under typical homeowner or umbrella policies. However, many homeowner policies will allow the purchase of a rider for small businesses, which will increase your annual premium between $300 and $400.

Businesses you work with and de facto employees, such as domestic workers, also are unlikely to be covered. Riders are available for full-time domestic workers; occasional house cleaners and babysitters should be covered under a standard policy. Major outside contractors, such as roofers, for example, should have their own insurance. Ask for proof before you hire any contractor.

Richard J. Koreto has been editor of several professional financial magazines and is the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, N.Y.

Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

Will Homes Sales Rise This Year?

Palos Verdes homes owners certainly hope that is true.  Lawrence Yun, chief economist of the National Association of Realtors, thinks home sales will rise this year.  Here are his reasons:

  • More jobs
  • Rising stock market wealth
  • Rising apartment rents
  • Continuing high affordability conditions
  • Home values at historically justifiable levels
  • Investors looking to hedge against inflation
  • Foreigners buying U.S. homes on the cheap

This real estate outlook is for number of sales not sales prices.  Based on sales prices to date, I believe that prices for Palos Verdes real estate will continue to be fairly stable – plus or minus just a few points.  Click here to read entire article by Lawrence Yun.

Where Does The Appraiser Come From?

View from Rancho Palos Verdes, CA 90275

When a seller of Palos Verdes real estate and the buyer who submits an offer on a Palos Verdes home are waiting for the appraisal to come in, they generally presume that an appraisal expert from the area will be doing that appraisal.  That is not always true.  I have written several articles regarding the frustration resulting from the appraisal process (the most recent can be accessed by clicking here) created by the Dodd-Frank financial reform law last year.

In order to separate the potentially biased lender from the appraiser, a new layer was created – Appraisal Management Companies.  The LA Times printed a recent article by Kenneth R. Harney entitled, “Who’s getting appraisal fees?” which gets to the root of the issue.  The issue is that the appraisal management companies (some of which are owned by or affiliated with the lenders themselves) are  keeping as much as half the appraisal fee and offering the appraiser the other half.  According to Harney, “Most experienced independent appraisers refuse to work for $200 to $250 because they can’t pay their overhead at these rates.  Less-experienced appraisers, who sometimes have to travel long distances from their home markets, tend to be more willing to work for the lower amounts.”

This does not only affect buyers and sellers but current owners of Palos Verdes houses who are refinancing.  What can be done?  Some appraisal groups are lobbying to get this changed.  Harney has a great suggestion, “But in the meantime, consumers should demand transparency:  Of my $500 appraisal fee, who got what? And why?”

Palos Verdes Real Estate March 2011 Market Statistics

Palos Verdes Real Estate chart March 2011 showing active, pending and sold Palos Verdes homes for 90274 and 90275

March 2011 statistics for Palos Verdes real estate indicate a rise in average sales price for Palos Verdes homes – $1,728,000 compared to $1,361,000 in February.  Although this is exciting, it is not sustainable as last month a Palos Verdes house sold for $9,150,000 which was the highest price since 2007 (click here to read more about that sale).  9 additional sales were over $2,000,000.  43 Palos Verdes homes sold/closed escrow in March compared to 32 single family homes in February.  Pending sales in March were also up – 65 Palos Verdes houses compared to 43 homes pending in February.

There were 239 active Palos Verdes homes for sale in March, up from 209 in February.  Average days on market for Palos Verdes homes went down to 77 days in March from 95 days in February.  Months of Inventory (months it would take to sell existing inventory at the current rate of sale) was 5.6 months in March compared to 6.5 months in February.  6 months is considered a “normal” market. Entire charts can be accessed by clicking here or on the “Statistics” tab above.

Currently, there are 249 single family Palos Verdes homes for sale.  103 Palos Verdes houses are in escrow (50 homes have pending sales and 53 homes are accepting backup offers).  Additionally, 10 homes have sold/closed escrow in the first 9 days of April.

Chart courtesy of Trendgraphix, Inc.

Palos Verdes Cash Buyers

How many Palos Verdes homes sell for cash without any financing?  In 2010, 19.4% of Palos Verdes single family homesales were all cash transactions and in January of this year, 13.5% of single family home sales in Palos Verdes were all cash.

Lauren Beale in a recent Los Angeles Times article, “More home buyers offer cash deals” gave statistics for the all of California and then specific cities.  In the past, all cash buyers usually meant foreclosed property buyer but that is not currently true.  Two reasons were given – the challenge of getting a jumbo loan (over $729,250) and speculation by wealthy investors (who believe prices are near bottom).  In January, 30.9% of all single family and condo sales in California were all cash and in Los Angeles County the number was 24.6%.  All cash Palos Verdes condo/single family homessales were only 13.3% for the same period.  Cash sales for single family homes/condos in Southern California for 2010 were 27.8% and for Palos Verdes condo/single family homes it was 21%

I find it interesting to compare our statistics for Palos Verdes real estate with the rest of Southern California and the entire State of California.  In this case, statistics indicate that we are experiencing less all cash sales compared to the rest of the region for both single family homes and the combined category condo/single family homes.

Remodeling Cost vs Value 2011

Which home improvements and remodeling projects give the greatest return on investment?  For owners of Palos Verdes homes (and Los Angeles County) who choose upscale remodeling, the top three projects for 2010-2011 are Siding Replacement (fiber-cement) at 98.5%, window replacement (vinyl) at 91.7% and garage door replacement at 84.5% according to Remodeling Magazine’s “Remodeling 2010-11 Cost vs Value Report” (www.costvsvalue.com) .

Of the top 13 upscale remodeling projects with the best return on investment for Los Angeles County, 6 are under $20,000 and include both vinyl & wood window replacement, siding replacement (foam-backed vinyl & fiber-cement), garage door replacement and grand entrance.  A Master Suite Addition which is the most expensive at $165,174 only nets a 60.3% return.

Owners of Palos Verdes real estate remodel for different reasons, like the need for more space, to improve the functionality of specific rooms and to update them.  Kitchen and bathrooms are usually the most expensive remodel as plumbing and/or appliances need replacing.  There is no specific report for Palos Verdes homes but there is a Remodeling 2010-11 Cost vs Value Report (www.costvsvalue.com)  for Los Angeles County which is broken down into Midrange priced projects and Upscale priced projects (Reports can be accessed by clicking here).  When you click on the project name (i.e. Bathroom Remodel) you can then read the features of that price range to compare to your own.

Remodeling just for resale rarely nets you a dollar for dollar return.  Most remodels are done for the enjoyment of the homeowner (who still wants to maximize their return when they do sell).  My experience is that most buyers are looking for newer kitchens, bathrooms, master suites and nice yards.  Curb appeal is also important because it is the buyer’s first impression of the home.

Photo courtesy of Lowe’s

Red Flags For New Home Loans

My clients purchasing Palos Verdes real estate are told by their lender not to apply for additional credit or open new accounts when they purchase a Palos Verdes home  and have a loan (or even a refi) being processed.  I can’t tell you how many times the borower forgets.  They are planning to redecorate their new home, one client needed a new car as her car died, etc.  It can be any number of reasons.  However the new lender now runs a credit check just before the loan (and house) closes.  If there is additional outstanding loans or credit, that may negatively affect the borrower’s ratios and put a hold on the new loan.

Kenneth R. Harney has written an excellent article in the LA Times warning about this very issue.  “If inquiries pop up on your files during this time, lenders must check them out to determine whether any new debt might require a re-underwriting of the originally quoted terms.”  That is just what you want to avoid.  Harney goes on to explain that lenders are even looking back 120 days before you applied for the loan looking for credit inquiries to make sure that there are not any new loans that have not been picked up by the 3 major credit reporting services. 

Harney’s cautionary advice should be heeded, “Be aware that your credit files –  not just your FICO scores – are probably being checked, rechecked and evaluated for the third of a year preceding a mortgage application and two to three months prior to the closing.  The cleaner and simpler you keep the files, the easier your path to an on-time closing should be.”  To read his entire article, click here.

Adjustable vs Fixed Rate Mortgages

Interest rates have been at historic lows since last year and all my clients have opted for fixed rate mortgages for their Palos Verdes homes.  According to a recent Los Angeles Times article by Kenneth R. Harney, adjustable rate mortgages are becoming more popular.  “Adjustables accounted for just 3% of new home loans in early 2009 but are projected to be picked by nearly 1 out of 10 borrowers in 2011.”

I thought that was a surprising statistic so I called a local lender for his input.  He had not read the article but confirmed that last year he had done more adjustable rate mortgages and the trend was continuing this year.  When I asked why, he told me that certain buyers who are tight with their loan qualification ratios are opting for adjustable rates to get loan approval as the lower adjustable rates net lower monthly mortgage payments for the first five years.  However, the majority of his loans continue to be fixed rate.

To read the LA Times article, click here.

Mortgage Interest Deduction

  

Owners of Palos Verdes real estate take advantage of the mortgage interest deduction to help offset their higher mortgage payments which is a result of the higher home prices in Palos Verdes.  More than one client has been watching the federal governments discussions about the possibility of eliminating/reducing this deduction.

“Deduction’s deficit effect lowered – Homeowners are likely to write off less mortgage interest on taxes than anticipated” was the headline in a recent LA Times article by Kenneth R. Harney.  The article goes on to state that according to a new report by the non-partisan Joint Committee on Taxation, the mortgage interest deduction will not be decreasing revenue by as much as originally estimated:  “$88 billion less in revenue losses are now projected over the next three fiscal years – than the committee estimated early in 2010.”

There are several reasons for this reduction.  Interest rates are at record lows and many existing homeowners have refinanced their mortgages to take advantage of the lower rates.  Home prices are down resulting in lower purchase prices and smaller mortgages.  There is also some repayment of the first-time home buyer credit programs.  Let’s hope that this new report will make the mortgage interest deduction “less vulnerable to attack”.  Click here to read the entire LA Times article.