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Make the most of your home investment

End of the month?

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Ask Our Broker The Beginning?
CLOSING TIME Experts weigh in
on the right time to
make your move
My Area is Great, but the
Local Market is a Bust. CTW Features
Was Buying a Bad Choice?
any buyers in the
process of purchasing a
home like to keep as
Q: I just bought a two-bedroom, two- close an eye on their calendar as
bath condo built in 1985. The area is they do their bank account.
great, but I’m now learning about the That’s because the time of the
month your transaction closes
local real estate bust. I’m not sure I made can have its financial advantages
a good investment. I bought the proper- and disadvantages – at least in
ty for $170,000 with no money down. It’s terms of your mortgage.
now available for rent for $850 a month First, it’s important to under-
but my monthly cost is $1,300. Did I make the right stand that interest on your
decision? mortgage begins accruing from
the date your home purchase
closes. Most mortgage loans,
A: You seem to have “buyer’s remorse,” a common condi- however, are due on the first
tion after purchasing real estate and one that typically is day of the month.At closing,
unwarranted. In your case, however, there may be good you prepay the principal, inter-
cause for concern. est, taxes and insurance
The slowing real estate between the date of closing and
market hardly is a secret.
“Buyer’s remorse” the last day of the month (the
vast majority of this prepay-
There should be nothing to a common condition ment almost always goes
learn and no surprises
because news coverage
after purchasing toward mortgage interest). If
you close on Jan. 30, for
regarding housing trends is real estate instance, you are responsible for
prepaying one day of PITI to
extensive.As an investor,
cover the remainder of January.
you have an obligation to read the local newspaper each In this example, March 1 would
day because area housing patterns can powerfully impact be the due date of your first
area property values. monthly mortgage payment.
You have a cash loss of $450 a month ($1,300 less $850), “If a buyer is feeling low on
but what is your loss after taxes? If you cannot afford a cash and is concerned with the
$450 cash loss each month how do you propose to keep amount of money that needs to
be provided at the time of clos-
the property? ing, I would suggest closing at
By any chance, have you financed with an “option the end of the month,” says
adjustable-rate mortgage” or interest-only financing? Are you Tyler Nevenner, a Realtor with
making only minimum payments? What will your monthly Kirkham and Friends Real
payment be for each of the next six years, assuming interest Estate, Salt Lake City.
costs do not rise? “This is particularly good for
a buyer who is putting no
You have made an investment with no money down, the money down and has very little
holy grail of late-night television barkers and seminar sell-
ers. But the point of real estate investing is not merely to See CLOSING TIME Page 2
acquire property, it’s to make money. How will you do that
with a yearly shortfall of $5,400?
You might be able to justify the yearly cash losses if you
can afford them and if property values are rising. In effect,
the annual loss is really just a deferred cost of acquisition.
Cutting Red Tape to Make Building Green Easier
However, you say the local market is a “bust,” an expression BY PAUL ROGERS finding a more mainstream audi- building products.To expand rolling out an ever-increasing ros-
that does not suggest a lot of appreciation, if any. CTW Features ence,” says Abby Mages, co- offerings and offer an even fuller ter of products.You name the
You need to determine if you have a sustainable invest- founder and one of the original in-stock inventory, the company remodeling need and most likely
ment. If not, it may be better to sell at a loss now then face a IN THE PAST, EVEN KERMIT the owners of Environmental this past summer merged with there is a green alternative to fit
frog would have a difficult time Building Supply, Portland, Ore., a Seattle-based Environmental the task.
bigger loss in the future. For specifics, sit down with several being “green” when it came to home-improvement retailer. Home Center. “We have always had a lot of
local real estate brokers who handle investment property. remodeling his pad or building an She should know: EBS’s sales To fill EBS, EHC and other strength in floor coverings and
Also, speak with a CPA, enrolled agent or a tax attorney to environmentally responsible growth – 20 to 30 percent annu- retailer shelves, building supply finishes. People tend to go for
home. No more. ally for the last five years – has manufacturers accelerated the green materials where they can
See ASK OUR BROKER, Page 2 “The green building material mirrored the booming popularity development of environmentally
market has a lot of strength and is and rising availability of green sound building materials and are See BUILDING GREEN Page 2

BUILDING GREEN Inc., Brattleboro,Vt.
Some of this year’s best new
to cork flooring and carpeting.
(“Significant innovation has been
bigger business, this problem has
worsened.” Ask Our Broker
It’s never been easier green products are formaldehyde-
free panels (particleboard, medi-
happening in the carpet industry,
where new green product lines
Wilson has addressed it by
compiling the directories Green

than right now um-density fiberboard, hardwood are being introduced all the time,” Building Products and
plywood) and water-conserving says Wilson.) But the flood of GreenSpec. Manufacturers do not review your tax and write-off situation.
CONTINUED FROM PAGE 1 fixtures and appliances, according green is not without its problems. pay to be listed in either, and nei- Consumer Notice:The federal government has issued an
to Wilson. There is no firm definition for ther carries advertising (visit
important mortgage information guide regarding “nontradi-
Formaldehyde was reclassified a green product. Organizations
see them versus in a wall that’s in 2004 as a “known human car- are working to outline what is “Independent, third-party certi- tional” mortgages – the government’s term for potentially
closed up,” Mages says. cinogen” by the International and isn’t green, but no single, sim- fication of environmental claims toxic loans, financing with tiny payments up front and then
One of EBS’s most popular Agency for Research on Cancer, ple classification system exists. is very important,” he says. huge payments after “start” periods end.The credit-resource
newer products is a natural earth and California is expected to No hard rules. In general, a green What sometimes slips through pamphlet “Interest-Only Mortgage Payments and Payment-
plaster called American Clay from adopt stringent regulations that product is one that – to one the cracks in finding and using Option ARMs – Are They For You?” contains important ques-
American Clay Enterprises, will, within a few years, eliminate degree or another – conserves green materials is their perform-
tions, examples and forms that borrowers should review
Albuquerque, N.M.The product, panel products made with urea- energy and/or water, contributes ance.A toilet that uses less water
made using a low-energy, low- formaldehyde binders, says to a healthy home environment for a year then breaks down and before considering these increasingly-popular loan formats.
waste process, can be colored Wilson. Portland, Ore.-based (by improving air quality, for requires a replacement may not The guide can be found online at
with natural pigments, so no Columbia Forest Products Inc., example), protects natural be so environmentally friendly sumer/charmbrochure.pdf.
painting is necessary.And clay North America’s largest producer resources and is affordable (based after all.
naturally controls climate by of hardwood plywood, is leading on life-cycle costs). One green product that has Q: What does a real estate broker do?
absorbing and releasing moisture alternative development with a But it’s not an exact science. In boomed in recent years has been
as the environment changes, says soy-based binder. wood, for example, debate contin- bamboo floors. But more than
Mages. On the water-conservation ues over which agency is the best one source has expressed disap- A: A real estate broker traditionally is described as some-
Much green building material front,Wilson points to the new to certify sustainably harvested pointment in the performance of one who, for a fee, helps another buy, sell or manage real
activity revolves around products generation of horizontal-axis lumber – although both Mages bamboo.A lot depends on the estate. In effect, a broker is an “agent” of a “principal” or
that purport to create a healthier (front-loading) clothes washers and Wilson believe the Forest manufacturer, but bamboo in gen- “client.”As an agent, a broker has obligations to clients such
indoor environment, particularly and dual-flush toilets (both avail- Stewardship Council runs one of eral does not distress “gracefully,” as care, obedience, accountability and loyalty.
low- and zero-VOC paints, adhe- able from multiple manufactur- the most robust programs to pro- says Mages.
In some jurisdictions, however, brokers may not function
sives and caulks but also products ers), low-water-use (about 1 gal- mote responsible forest manage- People not only want to be
that replace PVC or vinyl, and lon per flush) pressure-assist toi- ment. more environmentally responsi- within the traditional definition. For instance, you may find a
products without phthalate plasti- lets using flush mechanisms from (Visit ble, she says,“they want perform- “transactional” broker, someone who brings buyers and sell-
cizers, brominated flame retar- Sloan Valve Co., Franklin Park, Ill., and specify FSC-certification ance; they want something that ers together. Or, you may encounter a “disclosed dual agent,”
dants and fluoropolymers. and Chicago-based Delta Faucet using the “certified product” ages well.” someone who represents both buyer and seller with their
“These are compounds that Co.’s new 1.6-gallon-per-minute search tool to find a supplier.) With the abundance of green advance approval.
most people had never heard of a showerhead with H2Okinetic But … “So-called ‘greenwash- products now on the market, it is
A real estate salesperson or associate broker works under
few years ago, but that are raising technology, which provides a ing’ happens more and more fre- now easier than ever to find both.
serious concerns in scientific cir- drenching, large-droplet shower quently, as manufacturers exag- the authority of a broker. Only a broker may enter into con-
cles,” says Alex Wilson, author of while saving water. gerate environmental claims © CTW Features tracts with the public or collect a real estate commission.
“Your Green Home” (New The list of green products goes about their products to appeal to The commission paid to the broker is then divided with
Society, 2006), executive editor of on and on, from structural insulat- the growing demand for green salespeople or associate brokers on a negotiated basis.
Environmental Building News ed panels (foam sandwiched building products,” says Wilson. Real estate licenses are awarded by state and provincial
and founder of BuildingGreen between layers of particle board) “As green building has become
governments upon the completion of certain educational
requirements.The term “Realtor” defines a real estate licens-
ee who is a member of the National Association of Realtors.
15th through the 31st of that Nevenner. close of an escrow,” Mintz says. It’s important to know whom a real estate professional
CLOSING TIME month. In the long run, it doesn’t really “There are many things that can represents. Most jurisdictions now require brokers to pro-
“Granted, they would not have make a difference when you cause the close to be a few days vide detailed disclosure forms to both prospective clients
How much do you a payment due for another 30 close, says Mintz.“But some peo- late or even a little longer.There
and customers.These forms are important because they
days, but they would be required ple like to save their initial out-of- are title searches, inspections,
want to put up front? to have more cash at closing than pocket expenses to pay for costs escrow officers’ schedules, plus explain whether or not the broker represents your inter-
if they closed at the end of the associated with moving or unfore- the lender that has to approve ests.
CONTINUED FROM PAGE 1 month,” Leon says. seen expenses that may come up and fund the loan.These people Brokers can represent sellers as listing brokers, purchasers
On the other hand, closing at associated with their new real are all human and have to work as buyer brokers and both as disclosed or “designated” dual
savings,” says Staci Mintz, a Realtor the start of the month can have estate purchase.” together.” agents.The terms of listing agreements and buyer brokerage
with Pinnacle Estate Properties, a its plusses, too, says Mintz. If you In the current housing market “The timing of a closing is all
contracts are entirely negotiable.There are no fees or com-
real estate brokerage firm located closed on March 2, for example, that favors buyers, concerns about cash outlay,” adds Leon.
in Encino, Calif.“Their out-of- your first payment would not be about the time of the month to “There is no cost differential mission rates set by law or regulation.
pocket, up-front expenses are less- due until May 1: 60 days later.You close are less worrisome, consid- dependent on the day of closing – Given the complexity of real estate transactions, and given
ened.” would be responsible, however, ering that buyers typically have it’s all about how much money the money involved, both buyers and sellers should use
By closing at or near the end of for prepaying 29 days of PITI at more leverage today to ask sellers you need to bring to closing. experienced, competent real estate professionals when buy-
the month,“many buyers feel as closing. to pick up the tab on some or all Interest is charged for every day ing or selling property.
though they are receiving a free What’s more,“if a buyer closes of their closing costs and PITI pre- that the loan is outstanding, so at
month of housing,” says Patricia near the first of the month, even paids. the end of the day, buyers and
Leon, CEO of RELO Direct, a full- though they will be charged PITI Ultimately, the scheduling of sellers have ultimately paid the © CTW Features
service relocation company head- for the entire month – making your closing may be out of your same amount of money for their
quartered in Chicago. However, if their costs at closing a little bit hands anyway, so it’s best not to housing.”
the buyer closed in the middle of more expensive – it allows them fret about it, says Mintz. Need real estate advice? Peter G. Miller, author of “The
the month, they would be to get into their home sooner and “Even when you want to, it can © CTW Features Common-Sense Mortgage,” would love to hear from you. Send your
required to pay the PITI from the start the decorating process,” says be hard to accurately time the questions to