How to Spot a Home-Contractor Scam

April 25, 2013 By 3 Comments

Most have integrity, but you have to rely on more than a handshake and your gut

By GEOFF WILLIAMS

April 24, 2013 RSS Feed Print

Couple standing in front of house while contractor points at something

This is the season when the lawn mowers begin roaring, the mulch is spread and homeowners, if they haven’t already, begin thinking about getting that roof fixed or finally putting up a privacy fence. But it isn’t just the sun that comes out. There are also the pests—the ticks, the mosquitoes and the con artists.

As plenty of homeowners are aware, there are ample anecdotes in the media of home-contractor scams. These often con the elderly into either giving up money for no work done, or having work done but at an exorbitant price that wasn’t agreed to. In the last few weeks alone, a 77-year-old man in the Philadelphia area paid for his roof to be repaired only to end up paying to have a useless, tar-like substance splattered across it; in Norfolk, Va., an 83-year-old woman gave a home contractor $4,300 and never saw him again; in San Diego, a con artist has been offering to fix driveways, collecting down payments as high as $2,500 and giving nothing in return.

The anecdotes go on and on. So what should you do if you want a project completed but don’t want to see your name in the local paper, where you’re quoted warning your neighbors not to fall for a scam?

Research your contractor. Everyone thinks they’re doing that, but it isn’t as straightforward as one might think to vet a home contractor.

“In many cases, we see a person posing as a licensed or reputable contractor, and all checks out until the first payment is made to begin the job, and then the subject disappears. We see fake business cards and websites being used, and criminals can assume the identity of a real contractor, register a company or use an alias. The goal is always the first payment,” says Tom Burnett, a spokesman for Wymoo International, a worldwide detective agency headquartered in Jacksonville, Fla. Burnett is also a former private eye.

Despite all the tricks a con artist can play, you can vet a contractor, says Burnett. Obviously, there’s the tried-and-true method of using a contractor that a friend or family member swears by, but if you don’t have that avenue, Burnett suggests:

• Contact the Better Business Bureau where the company or contractor operates and check for complaints.

• Ask for references and make sure you actually contact, say, two of them.

• Check to see if the company is registered with its state or your state’s division of corporations.

• You can ask for the contractor’s license number to verify with your state’s Department of Professional Regulation, or your contractor’s state license board or similar office.

• And, of course, search the Internet for whatever you can find on the company.

Be wary of paying upfront. This is tricky, too, because even honest home contractors ask for money upfront, for good reasons. “Let’s say you want your front door put in, and if the contractor makes the order, and you back out, they essentially own that front door,” says Amy Matthews, a home contractor who has hosted numerous DIY Network and HGTV series and is a spokesperson for Home Advisor, an online portal that matches, for free, homeowners with licensed home contractors (homeadvisor.com).

So it isn’t weird for a home contractor to ask for money upfront, but it shouldn’t be astronomical numbers, says Matthews. “It’s very common for home contractors to ask for a percentage, say, 30 percent at the start, 30 percent in the middle and the rest at the end, and you should never pay at the completion until you’ve really looked it over.”

She adds that every state is different, and that in California, home contractors aren’t allowed to ask for more than 10 percent of the job upfront. Meanwhile, some states have no regulations regarding home contracting projects.

It is also wise to pay a home contractor with a credit card instead of forking over a wad of cash or paying with a check. This will give you a record of the payment for the authorities and improve the odds of getting your money back if you are swindled, since credit card companies may refund your money in such situations.

If the proposal isn’t very detailed, that might be a red flag. A home contractor who plans on putting a fence around your yard or fixing your roof isn’t likely to offer up lengthy, detailed plans, but if you want to hire a contractor for a fairly elaborate project, such as a room addition, you’ll want to see some detailed blueprints.

“The less gray areas there are, the better off homeowners will be,” says Nicholas Iarocci, who owns a home contracting company, Source Development, Inc, which services the New York City area. He says detailed plans can “make the homeowner aware of possible additional expenses,” which can help you if the contractor is ethical and if the contractor isn’t. After all, some unethical contractors deliver when it comes to work, but they overcharge. Or they might not plan to destroy your finances but do because of the shoddy way they run their business.

“If an insured contractor brings a day laborer or an employee that’s not on the books, and they get injured, the property owner is directly affected,” says Iarocci. “I collect certificates of insurance from my subcontractors.”

Don’t let yourself be rushed into a project. Some perfectly honest home contractors will come to your house unsolicited, says Matthews. “They’re called storm chasers,” she says, “and there are some very credible contracting companies that look for homes that have been hit after a windstorm or heavy rain, but you still have to do that background check to make sure.”

So if the contractor can’t wait for you to think about their offer, or for you to summon your inner Hardy Boys or Nancy Drew and check them out, stay away. And you should always keep an eye out for that classic red flag waving in the warm, friendly breeze. Sadly, just as there is no free lunch, there is also rarely an extremely cheap lunch.

Says Matthews: “If someone offers to do a really quick job on your house for a really low price, and it sounds too sound to be true, it probably is.”

 

Courtesy of your Arcadia Real Estate Agent

Filed Under: Brettany Harrison, Brian Peralez, Design, Make Over Tagged With: , , , , , , , , , , ,

A U.S. housing recovery like never before?

April 18, 2013 By Leave a Comment

April 16, 2013

ALEX CARRICK

Chief Economist, CanaData

U.S. new home starts in February were 917,000 units, seasonally adjusted and annualized (SAAR), according to a joint press release from the Census Bureau and the Department of Housing and Urban Development.

The monthly level of housing starts has been above 900,000 units for three months in a row. Within that period, their monthly high was 982,000 units reached in December of last year.

On a month-to-month basis, February 2013’s level was almost even with January 2013 at +0.8%, but it was a much more impressive +28% when compared with February of last year.

Additionally, the latest building permits figure — which is a leading indicator, by a month or two, for starts — was quite encouraging. The number of residential permits issued in February was 946,000 units SAAR, an increase of 5% versus January and an uptick of 34% when compared with February 2012.

It’s possible the importance of housing’s recovery to the overall U.S. economy is being underestimated. Gross domestic product (GDP) projections for 2013 mostly lie between +2.0% and +2.5%, after a +2.2% performance in 2012.

An upward creep in taxes, higher medical costs for employers, plus jobs cuts and furloughs in the public sector are being blamed for keeping growth lower than it might otherwise be. Still, there are some forecasters who think +3.0% is attainable and the main reason will be better residential construction. The ripple effects (i.e., “multipliers” and “accelerators” in economic jargon) of a stronger homebuilding sector are enormous.

There are no guarantees, but this argument may have validity. Consider that the current recovery in housing starts will have a magnitude never seen before in the U.S. economy.

A look at historical data from the Census Bureau is revealing. Going back to 1959, when the statistical series begins, there has never been another period of decline nearly as steep as between January 2006 and April 2009. Within that interval, starts plunged 80% from a pre-recession peak of 2.273 million units SAAR to a bottom of only 478,000 units.

Only bungee jumpers had ever experienced that kind of descent before and lived to tell about it.

Economic events are often governed by a pendulum that swings back and forth to establish equilibrium. Sometimes, the duration of the movement in one direction or another can be a long time coming. A perfect example is the recovery in NASDAQ stock prices since the dot.com collapse. They still haven’t returned to their prior peak. But they are finally showing that such an eventuality isn’t totally out of the question.

U.S. home starts don’t have to make it all the way back to 2.3 million units to have a huge impact. Their average level of 940,000 units in the three most recent months is nearly double the volume to which they sank in the trough. Even if they only return to the lower end of a “normal” range of 1.5 million to 1.7 million units — which some forecasters are saying will happen by the end of next year — they will have more than tripled since their most recent low.

In the U.S., there have traditionally been two sub-sectors with exceptional influences on the overall economy — automotive demand and residential construction. Bringing the analysis up to date, those two might now be augmented by a third major player, the high-tech sector.

In Canada, where the economy is smaller and therefore more factors can assume larger roles in the overall results, the number of sub-sectors that can create an out-sized influence may be a little larger — auto production, energy exports, residential construction and start-ups or completions of mega projects in non-residential construction.

Economics 101 provides the following advice on how to move an economy out of a recession. Step number one, cut interest rates in order to stimulate the housing sector. It’s taken a long time south of the border, but the standard framework for recovery is finally taking hold.

And what a recovery it might be. Simply consider all the side effects of stronger housing starts. Remember in what follows, that improved activity levels reap a harvest of greater profits and more employment.

Suppliers of building products will realize a pick-up in sales. The Home Depots, Reno-Depots and Lowe’s of this world and their close cousins will benefit.

Further back in the supply chain are sawmills and cement manufacturers. Softwood lumber producers are already seeing prices for their output that have escalated dramatically.

The railroad and trucking industries move building products to wholesalers, retailers and other customers.

New homes have to be heated and cooled, bringing in the energy utilities.

Governments will receive more property taxes from new subdivisions.

Lawyers, real estate agents and mortgage brokers will smile more.

Let’s not forget the banking community. Sales of more new homes will mean greater mortgage business, contributing to better earnings. (In Canada, a decline in new home starts is expected to eat into banking sector profits this year.)

Stronger housing starts will also mean more retail sales by storekeepers who supply furniture, appliances, television sets, stereos, lighting fixtures, plumbing supplies, cabinetry, carpeting, drapes, blinds, dishes, silverware, paintings, paint and the list goes on and on.

The better housing sector alone will be a big boon to the U.S. economy. But it’s not just housing that’s picking up smartly south of the border.

Earlier, I mentioned some other pillars of the U.S. economy. Autos sales have improved nicely. Many high-tech firms are experiencing a renascence as evidenced by the surge in NASDAQ equity prices. There is an energy boom underway in a number of states. And an unprecedented amount of money has been made available by the Federal Reserve.

The politicians give the impression they’re still trying to gum up the works. But there is a great deal of underlying strength in the economy that will continue to march forward, with new home starts riding point.

Wouldn’t it be lovely — and a refreshing change — if whatever happens in Washington turns out to be irrelevant?

Courtesy of your Arcadia Real Estate Agent

Filed Under: Arcadia Real Estate Agent, Brettany Harrison, Brian Peralez, Housing Market Tagged With: , , , , , , , , , , , , , , ,

Real estate showing signs of new life

March 28, 2013 By 2 Comments

 

By Jane K Dove on March 28, 2013

Some green shoots appear to be pushing up to bring the first hints of new life to Lewisboro’s real estate market.

Sales for 2012 and the first quarter of 2013 are up and the median home price has stabilized instead of declining.The Ledger sat down last week with Houlihan Lawrence Associate Broker Mary Anne Condon, a longtime expert on our town, to review the numbers and discuss what they mean.

2012 recap and comparisons

“For all of 2012, we had 116 sales, compared to 97 in 2011,” she said. “This represents the highest level since the economic downturn began. One hundred-sixteen are the most homes sold since 2007, when 131 changed hands. However, the 116 sold in 2012 is well below the 2004 peak, when 189 homes were sold at the height of the real estate boom.”

Ms. Condon said the still modest though improving sales are a reflection of several factors, including tough mortgage approval standards, requirements for significant down payments, and the need for impeccable credit.

“Fortunately, today’s buyers are typically well-qualified and have the 20% down payment that is now typically required,” Ms. Condon said.

A “for sale” sign adorns the front yard of a home on Church Tavern Road in South Salem. Home sales in Lewisboro are up for 2012 and the first quarter of 2013, and the median home price has stabilized. (Photo Matt Spillane)

On the price side, 2011 saw the lowest median house price in 10 years — $560,000. “But 2012 saw an uptick to $610,000,” Ms. Condon said. “This is a positive sign, but still well below our 2007 all-time high median price of $825,000.”

“The 2012 median was impacted by the fact that a number of more expensive properties were sold in 2012. So everyone’s home price did not go up an automatic 8.9% in 2012. The typical house price is still close to flat year-to-year.”

Comparing median prices in adjacent towns, Bedford had a 2012 median price of $745,000 and Pound Ridge came in at $777,500.

“Again, these prices are still way below the peak of the local market in 2007,” Ms. Condon said.

Prices ranged widely in 2011, from a low of $185,000 for a short sale in South Salem to a high of $2.3 million for a 10-acre estate with pool and tennis court in Waccabuc. A waterfront home on Lake Truesdale commanded a sale price of $1,551,000.

“A significant amount of sales activity in 2012 was at the lower end,” Ms. Condon said.

She cited numbers that showed 40 of the 116 houses sold in 2012 coming in at under $500,000. By comparison, the “boom year” of 2007 had only 15 homes sold at under $500,000. “As prices go upward, sales drop off,” she said.

Property tax impact

When asked by The Ledger what impact Lewisboro’s high property taxes had on the marketability of its homes, Ms. Condon said taxes are always a factor in the purchase of a home.

“When a buyer is looking at a home, they consider the entire monthly cost, which includes both their mortgage and their property taxes,” she said. “Most homeowners write out a single check to their bank each month and look at the two numbers added together to determine how much they can afford to spend. Taxes do matter. Currently Lewisboro’s are higher than those on properties in adjacent school districts.”

Ms. Condon said many buyers still seek out homes in the Katonah-Lewisboro school district because of its good reputation.

“But if the taxes are too high, they may find the house they want is simply out of reach,” she said.

Lewisboro tax assessor Lise Robertson told The Ledger that current taxes on a $500,000 Lewisboro home average $14,000. On an $850,000 home they come in at $23,800.

Current quarter

Ms. Condon said she believed 2013 would prove to be a stronger real estate year than 2012 if new numbers hold up.

“For the first quarter of 2013, we have had 19 sales and another 22 are in contract, with a median list price of $511,000,” she said. “The first-quarter median sale price so far is $620,000, an insignificant change from 2012’s figure of $610,000.”

“As an optimist, I believe the rest of the year will continue to show improvement. The stock market is dong very well and jobs reports are better. Overall, people just seem to be feeling better about the economy, and on a national basis, house prices are going up and builders are getting back to building.”

Ms. Condon said she expected interest rates to remain at historically low levels, another boon to the market.

“But I would advise my sellers not to expect a quick rebound to the good old days,” she said. “Buyers are still very cautious and want a deal. They come into our office armed with information about the complete financial histories of the homes they want to see and are ready to drive a hard bargain.”

Ms. Condon said it could be a long time, if ever, for Lewisboro to see prices like those in the frenzied years of the real estate boom.

“That might be an anomaly we never see again, but I can say for sure that right now, things are definitely looking better and the market is slowly coming back to life.”

All figures used here are from the Westchester-Putnam Multiple Listing Service.

Courtesy of your Arcadia Real Estate Agent

Filed Under: Market Tagged With: , , , , , , , , , , ,

US housing starts rise

March 20, 2013 By Leave a Comment

By Christopher S. Rugaber THE ASSOCIATED PRESS

WASHINGTON —  U.S. builders started more homes in February and permits for future construction rose at the fastest pace in 4-1/2 years. The increases point to a housing recovery that is gaining strength.

The Commerce Department said Tuesday that builders broke ground on houses and apartments last month at a seasonally adjusted annual rate of 917,000. That’s up from 910,000 in January. And it’s the second-fastest pace since June 2008, behind December’s rate of 982,000.

Single-family home construction increased to an annual rate of 618,000, the most in 4-1/2 years. Apartment construction also ticked up, to 285,000.

The gains are likely to grow even faster in the coming months. Building permits, a sign of future construction, increased 4.6 percent to 946,000. That was also the most since June 2008, just a few months into the Great Recession.

And the figures for January and December were also revised higher. Overall housing starts have risen 28 percent higher over the past 12 months.

Separately, a private report showed the number of Americans with equity in their homes increased last year. That suggests one of the biggest drags from the housing crisis is easing and could clear the way for more people to put homes on the market.

“The road ahead for housing is still, so far, looking promising,” Jennifer Lee, an economist at BMO Capital Markets, said in a note to clients.

The pair of positive housing reports helped drive early gains on Wall Street. But stocks edged lower later in the day as investors awaited the outcome of a vote on an unpopular bailout plan in the European nation of Cyprus. The Dow Jones industrial average was down 35 points in afternoon trading.

Housing starts jumped in the Northeast and Midwest, while they fell in the South and West. Permits rose in the South, West and Midwest, falling only in the Northeast.

The U.S. housing market is recovering after stagnating for roughly five years. Steady job gains and near-record-low mortgage rates have encouraged more people to buy.

In addition, more people are seeking their own homes after doubling up with friends and relatives in the recession. That’s leading to greater demand for apartments and single-family homes to rent.

Still, the supply of available homes for sale remains low. That has helped push up home prices. They rose nearly 10 percent in January compared with 12 months earlier, according to CoreLogic, the biggest increase in nearly seven years.

Higher prices mean that more Americans have equity in their homes. Last year, about 1.7 million Americans went from owing more on their mortgages than their homes were worth to having some ownership stake, CoreLogic reported Tuesday. That benefits both home owners and the broader economy.

When homeowners have some equity stake, it makes it easier for them to sell or borrow against their homes. Still, 10.4 million households, or 21.5 percent of those with a mortgage, remain “under water,” or owe more on their home than it is worth.

The number of previously occupied homes for sale has fallen to its lowest level in 13 years. And the pace of foreclosures, while still rising in some states, has slowed sharply on a national basis. That means fewer low-priced foreclosed homes are being dumped on the market.

Those trends, and the likelihood of further price gains, have led builders to step up construction. Last year, builders broke ground on the most homes in four years.

Homebuilders have become much more confident over the past year.

Courtesy of your Arcadia Real Estate Agent

Filed Under: Brettany Harrison, Brian Peralez, Bussiness, Market, Mortgage Tagged With: , , , , , , , , , , , , , ,
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