Frequently Asked Questions About Home Warranties

Article Provided by,
Bill Hurlbett, Sr. Account Representative
American Home Shield

What is a home warranty?
A home warranty is a service contract that covers the repair or replacement of many of the most frequently occurring breakdowns of home systems and appliances.

Why do your clients need a home warranty?
For sellers, it can help their home sell faster. Home warranties offer added value to listings by increasing buyer confidence, helping the home stand-out from the rest. For buyers, home warranties help protect their new investment and help them avoid high repair and replacement costs on covered items.
What is a Trade Service Call Fee?
A Trade Service Call Fee is a small expense to the customer which is due each time a contractor comes to the home to diagnose a problem. The amount of your Trade Service Call Fee can be found on the back of the application. Additionally, the service fee amount may vary depending upon the number of trade service technicians requested for service.
Is everything in my home covered by the AHS Home Warranty?
No. While not everything is covered, we do offer coverage for many of the most frequently occurring breakdowns of home system components and appliances. Please review sample contract for specific covered items, terms and conditions, limitations and exclusions.
What if I have an appliance that just can’t be fixed?
If AHS determines your covered system component or appliance can’t be repaired by a service contractor, it will be replaced.
What out-of-pocket expenses will I have?
For each service request, you will pay a Trade Service Call Fee to each contractor of a different trade (plumber, electrician, etc.) who visits your home to diagnose a problem or perform service. There may be additional costs associated with the repair or replacement of covered items. Details will be included in your contract.
I'm selling my home. Why would I want a Home Warranty?
A Home Warranty helps give buyers additional confidence in the real estate transaction—they’ll know that Warranty Company stands behind the covered systems or appliances in the house. An added benefit is that it can also protect your home while it’s on the market which can help you avoid investing more money into a home you’re trying to sell.
My home systems and appliances are old. Does that matter?
No. The age of a home or its system components and appliances are not important. The covered items must be in good working condition and properly maintained at the time coverage is purchased.
Can a Home Warranty help resolve issues found on a Home Inspection?
Yes, many times a home warranty can help with issues found in a home inspection. If a covered system or appliance is found to be malfunctioning due to normal wear and tear a covered item may have coverage subject to terms and conditions of contract.
Is it important to ask for a home warranty when purchase a home?
Yes, especially in today’s economy. Many homes are in foreclosure or bank owned. A Home Warranty would be an excellent tool to provide budget protection for new home buyers.

How to make $30,000 in a Down Market!

When the real estate market slowed, many people turned to the stock market thinking it was a safer place to be. That is not proving true. In the Portland area, housing values have dropped 10% - 15% over the past couple of years. Lately, some 401K’s have lost 5% in one day!
So, the perfect storm has been brewing for months. For two years the real estate market has contracted. Home values have become much more affordable. Now, the credit industry is loosening, courtesy in part to our $700 billion rescue plan. It is the perfect setup to unleash pent-up demand.
History shows that most of the world's largest fortunes have been created when everyone else was filled with fear. In fact, the two greatest fortunes in American history were created during times almost exactly like these. It was just after the stock market panic of 1873.I t started with a housing bubble, similar in cause and effect to the current one. The turning point was the failure of Philadelphia blue-chip bank Jay Cooke, similar to our Bear Stearns sale for $2 a share. Once the bank fell, the credit market locked up and nobody was lending money. Companies failed by the thousands. The economy was horrible, yet some businesses flourished.Companies that positioned themselves strategically and exploited the opportunities reaped huge rewards. John D. Rockefeller, who founded Standard Oil (the parent of nearly all the major U.S. oil companies), was able to buy out his competition at fire-sale prices. Andrew Carnegie, who built U.S. Steel and became history's second-richest man behind Rockefeller, did the same thing. These men converted their companies into empires. The years following the Panic of 1873 became the Gilded Age of Industry. I love the way Warren Buffet puts it. He says, "Be fearful when other people are greedy...and greedy when others are fearful." Like he says, now is your time to BE GREEDY!
Which bring me to how to make your $30,000. Do you know that it is very wise to buy up to a more expensive home in a down market? Yes, you may loose 15% on the $200,000 house you are selling ($30,000), but you may well pick up the same 15% on the $400,000 house you are buying ($60,000). (I can write your offer today!)
You see, it really is a good market. Values may be set back a couple of years, but it is still better than it was in the late 90’s and early 2000. If you don't plan to flip a house, but live in it for 5 years or so, this is the time to do it. It is a time of opportunity!

Installment Sales and the 1031 Exchange

Submitted by,
David Moore
Equity Advantage, Incorporated
Today’s economic environment may require the use of a contract sale. A common misunderstanding of installment sales is their impact on a tax-deferred exchange. Since a note typically represents equity in a property and a 1031 Exchange requires all equity to be carried forward to be completely tax deferred, it is necessary to use the note in the exchange for complete tax deferral.
In order for a note to be used in an exchange, you, the Exchangor, must not have had actual or constructive receipt of the note. The note must be the Facilitator’s at settlement just as any cash must be.
The following are options available to you:

1. As the Exchangor, you can direct Equity Advantage to sell the note to a third party such as a bank, pension fund manager or a private investor. The proceeds from the sale of the note are then deposited with Equity Advantage. You will need to deposit additional cash to offset the amount that was discounted on the note for total tax deferral. If the additional cash is not deposited, you will have tax exposure on the difference between the note’s value and the discounted sale price of the note if any.
2. You, the Exchangor, use the note along with the cash to acquire the replacement property. The Seller of the replacement property now owns the note.
3. You, the Exchangor, purchase the note from Equity Advantage. The note has now been converted to cash and the exchange can be completed.
4. If the note is short term and matures inside the 180-day exchange period, it is possible to complete the exchange after the note is paid off.
5. Finally, if you are not concerned with deferring all of your taxes, you may choose a partial exchange, using only the cash proceeds in the exchange. The note will be considered “boot” and payments will receive installment sale treatment (Section 453). Depreciation recapture is due in the year the sale occurred.
Equity Advantage often receives requests to structure an exchange for a potential client that is about to receive a balloon payoff of a note they have been in receipt of. Unfortunately the taxpayor has had receipt of the note and therefore a future balloon payment will be fully taxable.
Understanding the motivation behind the sale and the use of the note often dictates the option chosen. A careful review of the options available and their tax consequences is critical, the taxpayor’s tax and legal counsel will be able to make the right decision given time and information.
David Moore
Equity Advantage, Incorporated
One Centerpointe Drive, Suite 300
Lake Oswego, Oregon 97035 Phone (503) 598-1031
(800) 735-1031 Fax (503) 619-0226 http://www.1031exchange.com
Tax Advice Notice: The above written material is general information and not tax advice. Please consult with your CPA and/or attorney for tax advice. Per IRS Circular 230 Disclosure, IRS regulations requires us to notify you that this communication was not intended or written to be used, by you as the taxpayer, for the purpose of avoiding penalties that the IRS might impose on you.

First Time Home Buyer Tax Credit

What is it?

It’s a $7,500 tax credit for qualified first time home buyers purchasing homes between
April 9, 2008 and July 1, 2009. If the home purchase price is less than $75,000, the
tax credit will equal 10% of the purchase price. The tax credit is refundable, so the
buyer will receive the full credit even if it exceeds his or her tax liability. For many
people, this will mean getting a sizeable check from the government. Buyers can
even elect to have their qualified 2009 purchase count as a 2008 purchase so they
can claim it on their 2008 tax return.

The credit must, however, be repaid. It is structured as a zero-interest 15-year loan,
where the payments are added to your federal tax liability on an annual basis and your
first payment is due 2 years after the credit is claimed. For example, if you claim the
tax credit on your 2008 tax return, your first payment of $500 will not be due until your
2010 tax return is filed. If you sell your home prior to complete repayment of the
credit, the remaining credit amount will be due from the profit on the home sale; if your
profit is insufficient, the remainder of the credit payback will be forgiven.

You are eligible if:
• you (and your spouse, if applicable) have not owned a principal residence
within the last 3 years;
• your modified adjusted gross income (MAGI) does not exceed $75,000 if
you file as an individual taxpayer or $150,000 if you file a joint return (partial
credits are available for MAGIs up to $95,000 and $170,000, respectively);
• you are a U.S. citizen or you are not a nonresident alien; and
• you purchase a home as a primary residence and the closing occurs on or
after April 9, 2008 and prior to July 1, 2009.

Exceptions:

*If you stop using your home as your primary residence (i.e. converted to a rental or vacation home), all remaining installments become due on the return when that happens.
*If you sell your home, all remaining installments become due on the return for the year of the sale. The repayment is limited to the gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain, or a loss, the repayment may be reduced or maybe even eliminated.
*If you transfer your home to your spouse, as a result of a divorce settlement or otherwise, that person is responsible for making all subsequent payments.
*If you die, all remaining installments are not due. If you filed a joint tax return and then you die, your surviving spouse would be required to repay his/her one-half of the remaining payment.

Jennifer Cunnington
Senior Loan Consultant
(503) 699-6439 Office
(503) 358-1687 Cell
www.equityhome.com/jenniferc

For tax advice, please consult your tax advisor.

Oregon Property Tax - How it Works!

What it does:
Property tax in Oregon helps support fire protection, police, education and other services provided by such local taxing districts as cities and counties.
Amount you pay:
This is based on two things, both of which have limits based on the Oregon constitution.
- the assessed value of your property
- the amount your district is authorized to raise
Assessment:
This is based on the lower market value. The tax assessor determines the real market value (RMV) and calculates the maximum assessed value (MAV). Your taxed amount reflects the lesser of these two which is the assessed value.
Real Market Value (RMV):
In general, RMV is the price a willing buyer would pay and a willing seller would sell on January 1, the assessment date used. The initial RMV is comprised of a physical inspection and a comparison of market data for similar properties. In following years since this determination, it is usually based on trends of like properties in the area.
Maximum Assessed Value (MAV):
MAV is the taxable value limit that has been established for each property. This was set in 1997-98 tax year. Then it was the real market value minus 10%. These can increase for two reasons only:

Amaximum 3% increase annually OR A specific property events.
1. Three Percent Increase: Subsequent to 1997- 89, MAV will increase 3% unless the RMV of the property is less than MAV for two years in a row. Should that happen, MAV will not increase in the second year. There are certain property events that can cause the MAV to increase more than 3%:
2. Property Events:

a. New property or new improvements to a property
b. A property is modified in any
c. If a bond measure is passed in your area
Property Tax Statements:
The tax year is July 1 through June 30. October is usually when both your value notice and your property tax bill arrive. This bill may include other taxes depending on services provided to your area. These other charges, taxes, assessments or fees may not be based on property value.
Payments:
- At least 1/3 must be paid before November 15th to avoid an interest charge
- Additional 1/3 payments must be made by February 15th & May 15th
- If you pay in full by November 15th, you receive a 3% discount
- If you pay 2/3 of the full amount by November 15th you receive a 2% discount on the amount paid
You will be charged interest for payments made after its due date (1.33% per month or 16% annually)
- Or, your taxes can be paid along with your mortgage payment
For more information, please check out the following links:
Washington County
Clackamas County
Multnomah County
Yamhill County
Oregon Property Tax Information

Yes, You CAN Buy a Home in Today’s Market!

By: Jennifer Cunnington, Loan Consultant

If you’re like me, the stories about our economy in the news can be confusing. Is it the right time to buy, or should we wait until the bottom drops out? Is financing readily available? Well, the answer is…..YES! The reason? OPPORTUNITY. As a mortgage broker, I am asked these questions every day. Many buyers are “on the fence” and feel that the market will continue to decline, however, since interest rates have fluctuated, waiting may nullify any small additional savings in price and will postpone the realization of a the benefits of buying your home!

Just last week a client of mine contacted me before their loan was about to fund and asked if our lender was able to close due to recent news reports of many banks going out of business. Truth be told, there is still a plethora of financing options available today from stable institutions. Mortgages written today are more solid than ever, safe for buyers and lenders and interest rates for conforming mortgages are still at very reasonable, historically low levels. While it’s true that many of the looser and more extravagant options are on their way out, buyers are still able to obtain a variety of loans. The key is to employ a mortgage broker who is experienced, deals with stable lenders and will take the time to analyze your personal goals to find a mortgage that will meet your needs.

Please contact me to find out what I can do for you in today’s changing market! I look forward to helping you with professional service and results.

Jennifer Cunnington
Loan Consultant
Equity Home Mortgage, LLC
503-699-6439
jennifercunnington@equityhome.com
www.equityhome.com/jenniferc

Wondering where to live?

Money goes further some places in the United States than it does in others.Housing, in particular, has remained most affordable in the South and the Midwest. That’s because of less stringent building, an abundance of land and growing populations in the South, says Daniel McCue, a research analyst at Harvard’s Joint Center for Housing Studies.To determine the cities that offer the best quality of life for the least amount of money, Forbes magazine calculated the ratios between a city’s median home price and its median household income. It also factored in projected job growth. And it compared median income to Moody’s Economy.com’s cost of living index.Here are the 10 cities that it found to offer the best value, and the cities that it believes offers the worst value.Cities Where Residents Get the Most for Their Money
Austin, Texas
San Antonio, Texas
Indianapolis, Ind.
Houston, Texas
Charlotte, N.C.
Columbus, Ohio
Dallas
Minneapolis/St. Paul
Denver
Portland, Ore.Cities Where Residents Get the Least for Their Money
Los Angeles
Providence, R.I.
New Orleans
Philadelphia
Cleveland
New York
Milwaukee, Wisc.
St. Louis, Mo.
Washington, D.C.
Sacramento, Calif.
Source: Forbes, Abha Bhattarai (10/10/2008)

The high road or the low road?

I don't know about you, but I am really tired of listening to the news. All the negativity promotes fear and becomes a self-fulfilling prophecy if we let it. It is time to counteract all this, think positively and search out the facts from the experts in the local industries.

With so much happening, everyone has a myriad of common questions: Will the 'Rescue Plan' work? How will it affect me? Can I still sell my house? Will someone buy my house? Can anyone get a loan these days? These questions and more will be addressed on this Blog over the coming weeks.

In the meantime, it is wise to keep a positive outlook. The average person has between 12,000 and 50,000 thoughts a day with up to 80% constantly repeated and most of them negative. There are 1440 minutes in a day, which means there are 525600 minutes in a year, so let's not waste them.

There are various strategies to help manage your outlook:

• Turn off the news. Repeated negative comments will destroy a positive attitude. Realize that much of the news is generalized. What is happening in Florida or California is not necessarily the case here in Oregon. Ask an expert his or her opinion.
• Be careful who you associate with. Surround yourself with positive people. Nothing will bring you down faster than someone who only sees the negative side of something. RUN!
• Simplify your life. If you are stressed and worried about what is happening, stop doing so much. Cut back. Clean up your surroundings. It helps to clarify your thinking.
• Find a support group. This can be, but doesn't have to be a formal group. Just make sure you have like minded, supportive people to talk to. Don't isolate yourself!
  

Now that we have laid the ground work to a healthy outlook, we are ready to tackle the real news. Next article will address the health of the Portland Real Estate market.... which is healthier than you might think!

Introduction!

This Blog was originally started a couple of years ago. There are some articles still posted that you might find interesting, so check them out as they still apply today.

The purpose in re-starting this is to have an avenue to answer questions and to give current updates concerning the Portland Metro Real Estate market. As you are well aware, things are changing too quickly for a newsletter to be timely.

This Blog will be updated once a week, so look for new information at the beginning of every week. At this point, the Blog will be informational. You are invited to submit questions to give me ideas of what you are interested in. It is my hope that you will find this as educational as it is interesting.

Many topics will be covered. There will be a variety of contributors including some of the following groups: Mortgage Lenders, Bankers, 1031 Exchange Experts, Escrow Officers and so forth. I do not claim to have all the answers, but will seek information from the best in the local industry.

Check out this Blog Monday, October 13th for a look at Portland Oregon Real Estate in light of the current economic crisis. In the meantime, turn off the news!