J.J. Ballard's Blog

Think again if you’re considering buying a home without having it inspected. This particularly applies to first-time buyers who have little, if any, experience with home defects and repairs. Even professionals can make mistakes when buying homes without having them thoroughly inspected.

In one example, an experienced contractor bought a home to fix up and resell. The contractor looked over the property carefully before he bought it, but he did not have it inspected by an impartial home inspector.

After the contractor took possession of the property, he discovered that the furnace was shot and required replacement. The cost of a new furnace was not included in his renovation budget.

Homebuying is an emotional experience no matter how hard you try to keep it strictly business. You have high hopes that nothing will go wrong and the transaction will close. The appeal of a home could cloud your objectivity about the real purchase price when you consider the work that needs to be done to repair defects and deferred maintenance.

Home and magnifying glass image via Shutterstock.com.

Think again if you’re considering buying a home without having it inspected. This particularly applies to first-time buyers who have little, if any, experience with home defects and repairs. Even professionals can make mistakes when buying homes without having them thoroughly inspected.

In one example, an experienced contractor bought a home to fix up and resell. The contractor looked over the property carefully before he bought it, but he did not have it inspected by an impartial home inspector.

After the contractor took possession of the property, he discovered that the furnace was shot and required replacement. The cost of a new furnace was not included in his renovation budget.

Homebuying is an emotional experience no matter how hard you try to keep it strictly business. You have high hopes that nothing will go wrong and the transaction will close. The appeal of a home could cloud your objectivity about the real purchase price when you consider the work that needs to be done to repair defects and deferred maintenance.

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In some areas, the home-sale market has picked up. One example is California’s Silicon Valley, where job growth is strong. There is far more demand than there are homes for sale, which tends to drive prices up.

In some cases, buyers will waive contingencies in order to outbid the competition. Buying without including an inspection contingency in the purchase contract can be an expensive strategy if you later find defects that are expensive to repair.

The risk is minimized if the sellers provide the buyers with copies of recent presale home inspections done by reputable local home inspectors before they write an offer. However, most home inspection reports recommend further inspections. Diligent sellers take the extra step and have further inspections done, like a roof or furnace inspection. Many do not.

HOUSE HUNTING TIP: A second opinion from a highly regarded home inspector can’t hurt. The reason to have inspections at all is to find out as much as possible about the property’s condition before you go through with the sale. Don’t skip an inspection to save money.

Sometimes, buyers who are satisfied with the report they received from the seller’s home inspector will hire that inspector to do a walk-through inspection based on the seller’s report. This means a second home inspector isn’t involved. But at least the buyers have an opportunity to spend time at the property with the seller’s inspector, ask questions, and find out more about what works and what doesn’t.

Inspection contingencies protect the buyers and, depending on how the clause is written, can allow the buyers to withdraw from the contract without losing their deposit. This is why sellers are often drawn to an offer that doesn’t have an inspection contingency. However, accepting such an offer can create problems.

Inspection contingencies also protect sellers from future legal entanglements with the buyers over items that weren’t discovered before closing. It’s much easier to resolve inspection defect issues before, than after, closing.

Inspection contingencies can create an opportunity for buyers to ask sellers to fix defects, lower the price, or credit money at closing to cover the cost of repair work.

When buyers ask sellers to make concessions after they bought the house “as is” with respect to certain disclosed defects, it can be a deal-breaker. However, reasonable sellers will often attempt to negotiate an acceptable solution regarding newly discovered defects rather than put the house back on the market.

If you’re buying in a competitive market and find you’re losing out because you won’t waive an inspection contingency and others are willing to take the risk, consider having inspections done before making an offer.

THE CLOSING: Make sure to ask permission from the seller through the listing agent.

By Dian Hymer, Monday, January 2, 2012.

Inman News®

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

The Spanish Colonial Revival officially started in 1915 when the style was showcased at the Panama-California Exposition in San Diego.

However, the architectural style was also made popular by the immensely successful 1884 historical novel “Ramona,” featuring a romanticized and picturesque vision of Mexican Colonial life in Southern California.

The novel was republished 300 times and made into four films by 1936. This led droves of tourists to visit locations in the novel and then mail tens of thousands of postcards across the country featuring the iconic Spanish-style architecture. A coordinated public relations campaign promoted this sunny, robust American way of life. Both the Southern Pacific and Santa Fe railways adopted the style for rail-corridor buildings to provide a consistent Southwest theme for eastern travelers.

The two most influential architects of Spanish Colonial Revival were Bertram Goodhue and George Washington Smith. In the 1920s and 1930s, their architectural plans were made widely available in books produced by contractors and builders. The revival quickly spread to other regions, including Arizona, New Mexico, Texas and Florida.

Spanish Colonial Revival draws inspiration largely from Moorish, Renaissance, Byzantine and New World Mission-style architecture. Characteristics include low-pitched, multi-level red-tiled roofs; rectangle or L-shaped floor plans; balconies and porches; courtyards and patios; arched entryways and windows; stucco walls; ornamental iron work; unpainted, heavy wooden doors often carved in detail; ceramic flooring; exposed wooden beams; and colorful interior tiles.

Many of the features associated with Spanish architecture borrow directly from older traditions. Arcades — a series of arches supported by columns — originated in Rome. Arched entryways were brought to Spain by conquering Moors in the 9th century.

from Prospect Morgage Knowledge Builder

With 2012 nearly upon us, many of us will be spending this week reviewing the events of 2011 and setting resolutions, goals or visions for what we’d like to accomplish next year.

It will come as no surprise that the most common New Year’s resolutions fall into the categories of getting organized and getting fit — physically and financially.

Financial fitness includes getting your real estate business in order. But you can’t set up your real estate plans for the year in a vacuum. They must be done in context of what’s going on in the market. Here are four predictions about what that market context will look like in the coming year:

1. Even more foreclosures

While I’d like to claim crystal-ball credit for this one, it doesn’t take heightened powers of prediction to foresee an uptick in the rate of home repossessions in 2012. Last fall’s robo-signing debacle and the ongoing legal fallout from it created a massive backlog in the foreclosure pipeline, meaning that banks are taking many months, even years, to actually foreclose on mortgages in default.

Earlier this year, the New York Times reported that the additional hurdles New York state courts are requiring banks to leap in the wake of the robo-signing revelations, like additional settlement meetings with the homeowner to see if a modification can be brokered, have created a backlog of foreclosures that it would take 62 years to clear, at the current rate of foreclosure.

It’s pretty clear that in 2012 and beyond, the banks will work through those backlogs. The inevitable result will be an increase in foreclosures.

2. REOs and short sales will become the new normal

If you even know anyone who has house-hunted in the past couple of years, you’ve likely heard tales of the high-drama high jinks — super-long escrows, first-time buyers being bested by investors’ cash offers, banks resistant to negotiating for repairs — that take place in the course of a distressed property sale.

In the coming year, distressed home sales will continue to represent an increasing share of homes on the market. So, buyers will shift from considering whether to buy a short sale to understanding that they must be educated and prepared to do a deal with a seller, a bank (to buy an REO) or a hybrid of the two (to buy a short sale) to access the full selection of homes on the market.

This, in turn, will empower buyers to make smart decisions about what to offer and what to expect on any listing they like, as well as to set smart priorities and make realistic comparisons between listings based on their own personal priorities around timing, certainty and seller flexibility.

3.  So-called ‘smart cities‘ will do well 

This year, a number of housing markets saw double- or even triple-dips in home values. In others, pricing stayed relatively flat. However, in areas where technology powers the economy, home values prospered along with the industry. Silicon Valley real estate, for instance, saw fierce competition among buyers as the young employees of companies that went public like used their newly stocked bank accounts to buy their first homes.

I recently talked with Jed Kolko, chief economist for real estate search site Trulia, and his 2012 forecast was that so-called “smart cities” will continue to have hot real estate markets next year. But Kolko defined smart cities much more broadly than the California tech hubs. Other tech centers like Austin, Texas, and the Massachusetts suburbs of Cambridge, Newton and Framingham all made Kolko’s list, as did Rochester, N.Y. (a town known for its highly educated, highly skilled work force).

4. Consumers will get ‘hopeless’

I mean hopeless in the best of all possible ways. For years, buyers and sellers have been waiting for that singular event to occur that would cause a quick market recovery. But 2012 will mark the fifth or sixth year of the real estate recession, depending on who you talk to. I predict that those consumers who have not already done so will drop unrealistic hopes for a fast return to the heady real estate fortunes of the subprime era.  Instead, people will make their real estate plans based on:

• today’s low home prices, rather than the fantasy of what could happen if the market miraculously came back;
• assumptions of very low, or no, appreciation in home values for years to come; and
• very conservative estimates of their own finances and how they will grow.

As a result, buyers won’t break their necks to hurry and buy before prices uptick; rather, they’ll save and plan to buy when it makes the most sense for their finances. Homeowners will do the same; they will either refi, remodel and be content where they are for the long haul, or decide their homes no longer fit their lifestyles and their finances, divest of them and move on. But the good news is, people will make these decisions based on what is or is not sustainable for their lives and their finances, and not based on inflated hopes about what the market will or will not do.

By Tara-Nicholle Nelson, Tuesday, December 27, 2011.

Inman News®

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

Mortgage rates surveyed by Freddie Mac bounced back from historic lows this week, but aren’t expected to soar in the New Year.

Rates on 30-year fixed-rate mortgages averaged 3.95 percent with an average 0.7 point for the week ending Dec. 29. That’s up from 3.91 percent last week — an all-time low in records dating to 1971 — but still well below the 2011 high of 5.05 percent seen in February.

The 30-year fixed-rate loan has averaged at or below 4 percent for the past nine consecutive weeks, Freddie Mac noted in releasing the results of its Primary Mortgage Market Survey.

Rates for 15-year fixed-rate mortgages averaged 3.24 percent with an average 0.8 point. That’s up from 3.21 percent last week, an all-time low in records dating to 1991, but down from the 2011 high of 4.29 percent registered in February.

For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.88 percent with an average 0.6 point. That’s up from 2.85 percent last week, an all-time low in records dating to 2005, but down more than 1 percentage point from the 2011 high of 3.92 percent seen in February.

Rates on 1-year Treasury-indexed ARM loans averaged 2.78 percent with an average 0.6 point. That’s up from 2.77 percent last week, an all-time low in records dating to 1984, but  down from a 2011 high of 3.4 percent in February.

Freddie Mac’s rate survey is based on loans offered to borrowers with good credit scores who will be making down payments of at least 20 percent. Borrowers with damaged credit or making smaller down payments can expect to pay higher rates.

Mortgage rates are largely determined by demand for mortgage-backed securities (MBS), bonds that fund the vast majority of home loans.

The Federal Reserve helped push mortgage rates down in 2009 and 2010 by buying $1.25 trillion in MBS. Since then, the European debt crisis has helped keep mortgage rates down, as investors seek the relative safety of government-backed mortgage bonds, whose payments are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

In a Dec. 20 forecast, economists at Fannie Mae project that rates for fixed-rate mortgages will average 4.0 percent in 2012 and 4.3 percent in 2013, down from 4.5 percent this year and 5 percent in 2009.

The Mortgage Bankers Association predicts rates on 30-year fixed-rate loans will average 4.2 percent in 2012 before rising to 4.7 percent in 2013. The National Association of Realtors projects rates on 30-year fixed-rate loans will hold steady at 4.5 percent in 2012.

By Inman News, Thursday, December 29, 2011.

Inman News®

For the second year in a row, the Federal Housing Administration is extending a temporary waiver of its “anti-flipping” rule, meaning homebuyers relying on FHA-insured financing will continue to be able to buy homes that have changed hands in the last 90 days.

The waiver is a boon for investors seeking to rehab and flip properties, because it expands the pool of eligible borrowers to include those relying on FHA-backed loans, popular with first-time homebuyers and others who lack the cash to make large down payments.

In extending the waiver through 2012, FHA said all transactions must continue to be arms-length. In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender can document the justification for the increase in value, FHA said.

FHA instituted the anti-flipping rule in 2003 to protect its mutual mortgage insurance program from losses on homes that were merely flipped, rather than rehabbed. Homes repossessed by Fannie Mae, Freddie Mac, and state- and federally chartered financial institutions were exempt from the rule.

In February 2010, the Obama administration waived the waiting period for resales — including homes purchased and rehabbed by private investors — in the hopes of stabilizing home prices and revitalizing communities hit by foreclosures.

It often takes less than 90 days to acquire, rehabilitate and sell properties, the Department of Housing and Urban Development said at the time. Some sellers of rehabbed properties had been reluctant to enter into contracts with FHA buyers because of the cost of holding a property for 90 days, HUD said.

In extending the waiver through 2011, FHA said it insured 21,000 90-day property flip loans worth more than $3.6 billion in 2010 that would otherwise not have qualified for financing.

That number has since grown to nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.

By Inman News, Wednesday, December 28, 2011.

Inman News®

- About 45 percent of Americans make New Year’s resolutions

Factory orders rose 1.8% in November to a seasonally adjusted $459.2 billion, following a revised 0.2% decrease in October. Excluding the volatile transportation sector, orders rose 0.3% in November.

Retail sales rose 1.2% for the week ending December 31, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 5.3%.

The Institute for Supply Management reported that the monthly composite index of manufacturing activity rose to 53.9 in December after a reading of 52.7 in November. A reading above 50 signals expansion. It was the 29th straight month of expansion.

Total construction spending rose 1.2% to $807.1 billion in November, following a 0.2% decrease in October. Economists had anticipated an increase of 0.5% in November. Compared to a year ago, construction spending rose 0.5%.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending December 30 fell 3.7%. Refinancing applications decreased 1.9%. Purchase volume fell 9.7%.

The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity rose to 52.6 in December from 52 in November. A reading above 50 signals expansion. It was the 25th straight month of expansion in the services sector.

Initial claims for unemployment benefits fell by 15,000 to 372,000 for the week ending December 31. Continuing claims for the week ending December 24 fell by 22,000 to 3.595 million. The monthly unemployment rate fell to 8.5% in December from a revised 8.7% in November and 9% in October.

from Prospect Mortgage Economic Update

Q: What is the down payment?

A: The down payment is the property value less the loan amount. It is not the same as the borrower’s cash outlay if some of that outlay is used for settlement costs. On a newly constructed home, the land value can be part or all of the down payment.

Q: If the appraised value of a home exceeds the sale price, can the difference be applied to the down payment?

A: No, the property value upon which down payment requirements are based is the lower of sale price and appraised value. An appraisal higher than the price is disregarded.

House and calculator image via Shutterstock.com.

Q: What is the down payment?

A: The down payment is the property value less the loan amount. It is not the same as the borrower’s cash outlay if some of that outlay is used for settlement costs. On a newly constructed home, the land value can be part or all of the down payment.

Q: If the appraised value of a home exceeds the sale price, can the difference be applied to the down payment?

A: No, the property value upon which down payment requirements are based is the lower of sale price and appraised value. An appraisal higher than the price is disregarded.

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But there is an important exception, called a gift of equity, where the home seller is someone near and dear, usually a family member, who is willing to sell below market value. In such cases, the lender will probably require two appraisals, and the seller must follow Internal Revenue Service rules to avoid gift taxes, but those are minor nuisances.

Q: Can a home seller contribute to the buyer’s down payment?

A: No, because of a presumption that such contributions will be associated with a higher sales price. However, subject to limits, home sellers are allowed to pay purchasers’ settlement costs. This reduces the cash drain on purchasers, allowing more of it to be used as down payment.

Q: Can the lender contribute to the buyer’s down payment in exchange for a higher interest rate?

A: No, but lender rebates or “negative points” can be used to pay settlement costs as a possible alternative to seller contributions.

Q: Can cash gifts be used as a down payment?

A: Only if the gift comes from a relative or live-in partner who can document its source. Gifts from parties to the transaction such as home sellers or builders are not acceptable as down payment funds because of the presumption that the gift affects other parts of the transaction, especially the sale price.

The lender must also be convinced that the gift is not a disguised loan with a repayment obligation that might reduce the borrower’s ability to repay the mortgage.

Borrowers who receive undocumented cash gifts can include them as part of their own funds if they can show that the funds have been in their account for at least 60 days. They should have two monthly statements issued after the funds are deposited in the account.

House and calculator image via Shutterstock.com.

Q: What is the down payment?

A: The down payment is the property value less the loan amount. It is not the same as the borrower’s cash outlay if some of that outlay is used for settlement costs. On a newly constructed home, the land value can be part or all of the down payment.

Q: If the appraised value of a home exceeds the sale price, can the difference be applied to the down payment?

A: No, the property value upon which down payment requirements are based is the lower of sale price and appraised value. An appraisal higher than the price is disregarded.

Article continues below

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But there is an important exception, called a gift of equity, where the home seller is someone near and dear, usually a family member, who is willing to sell below market value. In such cases, the lender will probably require two appraisals, and the seller must follow Internal Revenue Service rules to avoid gift taxes, but those are minor nuisances.

Q: Can a home seller contribute to the buyer’s down payment?

A: No, because of a presumption that such contributions will be associated with a higher sales price. However, subject to limits, home sellers are allowed to pay purchasers’ settlement costs. This reduces the cash drain on purchasers, allowing more of it to be used as down payment.

Q: Can the lender contribute to the buyer’s down payment in exchange for a higher interest rate?

A: No, but lender rebates or “negative points” can be used to pay settlement costs as a possible alternative to seller contributions.

Q: Can cash gifts be used as a down payment?

A: Only if the gift comes from a relative or live-in partner who can document its source. Gifts from parties to the transaction such as home sellers or builders are not acceptable as down payment funds because of the presumption that the gift affects other parts of the transaction, especially the sale price.

The lender must also be convinced that the gift is not a disguised loan with a repayment obligation that might reduce the borrower’s ability to repay the mortgage.

Borrowers who receive undocumented cash gifts can include them as part of their own funds if they can show that the funds have been in their account for at least 60 days. They should have two monthly statements issued after the funds are deposited in the account.

Q: Are there any substitutes for a down payment?

A: In principle, any collateral acceptable to the lender could serve as a substitute for a down payment. The only such substitute found in the U.S. is securities, which must be posted as collateral with an investment bank that also makes mortgage loans. Borrowers who do this are betting that the return on the securities will exceed the mortgage rate.

Mortgage insurance and second mortgages can also be viewed as substitutes for down payment. They do not provide the first mortgage lender with additional collateral, but they shift a major part of the risk of the low-down-payment loan to a third party who is paid by the borrower for assuming it. The payment is either a mortgage insurance premium or a relatively high interest rate on a second mortgage.

Q: Is it wise to withdraw funds from a 401(k) to make a down payment?

A: Withdrawing funds is very unwise, as you would be hit with taxes and penalties, but borrowing against your account might make sense, provided your employer allows it. The cost of borrowing against your 401(k) is not the loan rate, which you pay to yourself, but the return the money would have earned if left in the account.

The risk is that if you lose your job, or change employers, you must pay back the loan in full within a short period, often 60 days. Otherwise, the loan is treated as a withdrawal and subjected to taxes and penalties. Loans from a 401(k) cannot be rolled over into a 401(k) account at a new employer.

Q: What are the costs and benefits of making a larger down payment than is required?

A. The cost is measured by the rate of return you could earn on the money if you invest it rather than use it for a larger down payment. The benefit is measured by the mortgage interest rate, as that rate determines the interest savings on the amount you don’t borrow.

If you increase your down payment by $10,000 on a 4 percent mortgage, you earn 4 percent on the $10,000 you didn’t borrow.

A possible additional benefit arises when the larger down payment reduces the cost of the loan by lowering either the mortgage interest rate or the mortgage insurance premium.

My calculator 12a shows the total rate of return on investment in a larger down payment taking account of any such cost reductions.

By Jack Guttentag, Monday, December 19, 2011.

Inman News®

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

While reading this article about the aggressive — and ostensibly legal — tax reduction strategies of Ronald S. Lauder (son of Estée), I was struck by this quote from University of Colorado law professor Victor Fleischer: “There’s real truth to the idea that the tax code for the 1 percent is different from the tax code for the 99 percent.”

The connotation? The super-rich have not only cash, but also elite access to loopholes and other advantages to which the 99 percent might aspire, but will never attain.

While the Occupy movement is on a mission to illuminate and shatter power imbalances between the 99 percent and the 1 percent, there’s another angle to take on the issue: Let’s call it the “If you can’t beat ‘em, learn from ‘em” school of thought.

Along those lines, here are four real estate lessons all of us can take from the 1 percent:

1. Take advantage of government programs/assistance. When the big banks — whose execs certainly belong to the 1 percent — began to experience the fallout of the subprime mortgage meltdown, they threw up their hands, pleaded their case, enrolled governmental advocates and got the bailouts we now know as the $700 billion Troubled Assets Relief Program, or TARP.

Yet many an individual American, whose personal finances have too much at stake to fail — at least as far as their household and local communities are concerned — struggle silently to make their monthly mortgage payment.

More than 20 million American households are upside down on their mortgages. The Obama administration’s foreclosure avoidance program, Home Affordable Refinance Program (HARP), was designed to help 5 million homeowners refinance into lower interest rates and payments.

At last count, earlier this fall, HARP had actually helped only 62,500 seriously underwater homeowners, and fewer than 900,000 homeowners total — a number so low Congressional Republicans sought to wind the program down. The Obama administration revised the program in hopes of helping more homeowners. (In 2009, the administration projected 4 million HARP refinances by fall 2011.)

The Main Street bailout is here and, whether you think it’s sufficient or not, it seems indisputable that it is vastly underutilized.

In an effort to get more help to the homeowners who need it, the Obama administration loosened up qualifying criteria; the revised guidelines just kicked in on Dec. 1, 2011. The 1 percent looks to the government when they are down on their luck; so should you.

2. Take full advantage of the tax code. Many members of the 99 percent have decried the complexity of the tax code and its loopholes that favor the rich. Lauder’s son, for example, has reportedly deferred or avoided tens of millions in federal taxes by donating art to his own foundations, deducting of property taxes on an extensive real estate portfolio, making massive charitable donations, and derivative stock transfers — deductions accessible only to those rich enough to own such assets in the first place!

Besides the better-known federal mortgage interest and property tax write-offs, there are numerous, less well-known deductions of which “99 percent-ers” should take full advantage.

Some areas allow renters to take a property tax credit. Similarly, homeowners who switch to solar or installing a tankless water heater can get the federal government to help pay via tax credits, some of which expire soon, others of which will be longer lived. It won’t line your pocket with millions, but every little bit helps.

3. Pay for professional advice when it counts. You’d be amazed at the number of buyers, sellers and homeowners I’ve heard reference real estate advice they received from their parents, their mechanic and the other moms at day care — and that doesn’t even begin to count the folks who try to distill insights just from a headline in the national nightly news or from a story they overheard at the hairdresser about the amazing deal they were able to negotiate (and, by the by, everyone exaggerates at the hairdresser!).

I assure you, Mr. Lauder pays a virtual army of attorneys and accountants a pretty penny for his tax advice. And the rest of us should make the appropriate investment in obtaining experienced, local, professional advice when it comes to making potentially life-changing real estate, mortgage and tax decisions.

4. Don’t let emotion cloud your decisions. Members of the 99 percent often stay emotionally committed to a home or a list price despite the fact that it is absolutely a losing battle, the data completely contradicts our commitment, or that the living situation no longer works for the people who live in the household.

The 1 percent, on the other hand, will divest of a home or slash even millions of dollars off the list price of their home in a New York minute, if it makes business sense.

Obviously, it’s a bit easier to be detached from an asset when it’s not the only asset you have. As well, sometimes the 1 percent is a little too hasty to detach from all sorts of relationships that most of us in the 99 percent hold dear — from homeownership to marriage and beyond.

But we 99 percent-ers might do well to take a page from the 1 percent playbook when it comes to holding onto assets that have become toxic. Sometimes, it makes sense to short-sell the house, divest of it via a deed-in-lieu of foreclosure, or simply slash the list price, in the service of the household’s greater, long-term financial good.

By Tara-Nicholle Nelson, Tuesday, December 20, 2011.

Inman News®

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

Q: Our house was built around 1940; the fireplace is original; and we installed forced-air gas heating about 10 years ago. We haven’t had the fireplace or furnace inspected. What do you guys recommend to get the fireplace and the furnace ready for winter?

A: Regular inspection and servicing of fireplaces and furnaces adds to comfort, makes them more economical, and most important, keeps them safe. Regular inspections can prevent a deadly house fire or the introduction of a silent killer: carbon monoxide.

Here’s our checklist to keep you cozy and safe during the winter months:

Wood-burning fireplaces

1. Inspection by a certified chimney sweep is a must. For heavy use, the chimney should be inspected and cleaned annually. Go up to five years if the fireplace is used only occasionally. The sweep should inspect for proper operation of the damper and for cracks in the flue liner, as well as sweeping the flue to remove creosote and other combustion byproducts.

2. Close the damper when the fireplace isn’t in use.

3. Install a chimney cap if you don’t already have one. You don’t want creatures building their nest in your flue.

4. When starting a fire, “prime” the flue by holding lighted newspaper at the back wall of the firebox to start the warm air rising.

5. Burn aged, dry hardwood if possible. Fir or pine burns hot and deposits creosote in the chimney. Don’t burn construction debris. It may contain toxic chemicals that will vaporize in the fire and could enter the living space.

6. Do not clean out the fireplace when the ashes are still hot. And dispose of the ashes in a place where wayward embers won’t start a fire.

Fireplace with gas starter

1. If the flame goes out, wait at least five minutes before attempting to relight the fireplace. This allows time to clear the fireplace of gas.

2. Be alert for unusual odors or odd-colored flames, which are often a sign that the fireplace is not operating properly. In such cases, contact your dealer or licensed technician for servicing. Contact the gas company if you smell gas when the unit is off.

Fireplace image via Shutterstock.

Q: Our house was built around 1940; the fireplace is original; and we installed forced-air gas heating about 10 years ago. We haven’t had the fireplace or furnace inspected. What do you guys recommend to get the fireplace and the furnace ready for winter?

A: Regular inspection and servicing of fireplaces and furnaces adds to comfort, makes them more economical, and most important, keeps them safe. Regular inspections can prevent a deadly house fire or the introduction of a silent killer: carbon monoxide.

Here’s our checklist to keep you cozy and safe during the winter months:

Wood-burning fireplaces

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1. Inspection by a certified chimney sweep is a must. For heavy use, the chimney should be inspected and cleaned annually. Go up to five years if the fireplace is used only occasionally. The sweep should inspect for proper operation of the damper and for cracks in the flue liner, as well as sweeping the flue to remove creosote and other combustion byproducts.

2. Close the damper when the fireplace isn’t in use.

3. Install a chimney cap if you don’t already have one. You don’t want creatures building their nest in your flue.

4. When starting a fire, “prime” the flue by holding lighted newspaper at the back wall of the firebox to start the warm air rising.

5. Burn aged, dry hardwood if possible. Fir or pine burns hot and deposits creosote in the chimney. Don’t burn construction debris. It may contain toxic chemicals that will vaporize in the fire and could enter the living space.

6. Do not clean out the fireplace when the ashes are still hot. And dispose of the ashes in a place where wayward embers won’t start a fire.

Fireplace with gas starter

1. If the flame goes out, wait at least five minutes before attempting to relight the fireplace. This allows time to clear the fireplace of gas.

2. Be alert for unusual odors or odd-colored flames, which are often a sign that the fireplace is not operating properly. In such cases, contact your dealer or licensed technician for servicing. Contact the gas company if you smell gas when the unit is off.

Gas furnace maintenance

1. An annual maintenance check of a gas furnace extends the life of the appliance and ferrets out any hidden problems. A qualified heating contractor should vacuum out the unit, inspect the blower motor, inspect the heat exchanger for cracks, check the electronics and perform a multipoint checklist to make sure the furnace is operating properly.

2. Clean or replace the furnace filter frequently during the heating season. This ensures that air returning from the inside of the house is unobstructed and clean when entering the combustion chamber.

3. Keep vents, space heaters and baseboards clear of furniture, rugs and drapes to allow free air movement.

4. Ensure there is free airflow around your furnace and make sure there are no storage items obstructing airflow.

5. Do not store or use combustible materials, such as chemicals, paint, rags, clothing, draperies, paper, cleaning products, gasoline, or flammable vapors and liquids in the vicinity of the furnace.

6. Carbon monoxide is a colorless, odorless and lethal gas that can occur any time there is incomplete combustion or poor venting. Any home that contains fuel-burning appliances, such as a fireplace or furnace, should have a carbon monoxide alarm installed according to the manufacturer’s instructions.

By Bill and Kevin Burnett, Wednesday, December 7, 2011.

Inman News™