Janice Petteway

Half built homes are intriguing to potential homeowners who think "Discount" when they see them. Often, these homes can be bought and completed for less than their intended sales price. Whether the homes are still owned by the builder or owned by a lender who foreclosed on the builder, a potential owner who brings in a contractor to finish them might have a new, unlived in home for a great price. According to David Carlyse of the National Academy of Building Engineers, there are definitely some things to evaluate before deciding to buy a partially built hom

The first thing is to make sure that the part of the home that was completed is good quality. Some builders who are now bankrupt were in trouble long before they abandoned the homes and cut corners on many things like foundations and support beams that are crucial to the long term well being of the home. If the builder found a way around city inspections, inferior workmanship and materials might go unnoticed.

Another consideration is the point in construction where the home was abandoned. How long was it abandoned? What type of weather conditions did it endure? The impact of all these factors will depend on the area of the country - but in humid Florida, watch out!

Stage 1 - Roughed In - Two months shelf life

A rouged in home has a graded site, a foundation, wood framing, and maybe even plywood subfloors installed. Because these things are exposed to the elements, two month is about as long as the "home" can endure these conditions without damage. Foundations can crack and settle after heavy rains. The impact on the home later is uneven floors, wall cracks, and doors that don't line up. Framing studs are subject to rot with long exposure, but manufactured wood products such as plywood absorbs water and swells, gets weak, and warps and can even develop mold. Roof felting can break down. Nails can rust and corrode.

Stage 2 - Dried In - Four months shelf life

A dried-in home has the roof finished and sealed, wall cavities filled with insulation, outside covered in "house wrap," major systems in place, floors and walls defined, windows and doors may be in place. A house in this state is susceptible to moisture. After a few months, the house wrap and other synthetic material can start to deteriorate. When moisture seeps into walls and insulation, mold and rot can take up residence.

Stage - Finishing - Six months to years shelf life

A home in the finishing stage has exterior siding, as well as windows and doors installed. Inside, the wall board, cabinets, and appliances are in place. If the heating and air conditioning units are run regularly, the home can be unoccupied for six months or more. After that, there is risk of mold and moisture ruining wallboard and floors and even unrun heating and cooling systems. Unfinished unoccupied homes are prey to squatter, vandals, and thieves.

Needless to say, before buying a home that did not have a normal building cycle, a potential buyer needs take precautions before agreeing to buy. Talking to the neighbors is a great start, as they will indicate if the home construction was halted for a while. The next stop should be the city building department, which should have dated records of when permits were pulled and of any inspections done while building was in progress. A visual inspection for water stains visible from the basement or attic crawl space can indicate exposure to the elements early in the building cycle. What a novice can't detect should show up in a thorough home inspection, even supplemented by a further inspection by a building forensics specialist.

The inspections may add a couple thousand to the price of the home, but this "due diligence" is well worth it to determine whether an unfinished home is a bargain or a disaster-in-waiting.

Your realtor can also offer good information on this subject and lead you to new construction that is a good value without the risks associated with completing a home with an erratic building history. Janice Petteway of Exit Real Estate Results can show you new and pre-owned homes, including foreclosure and bank owned bargains in Central Florida.

If you live in Florida or other areas with high foreclosure rates, you may have wondered why homes continued to be built in many areas. Keeping in mind that there's always some market for new homes regardless of economics, more homes appeared than buyers with money. For many builders, who had already secured financing and who just finished the job as far as the financing covered, it became a waiting game to determine what to do with there properties.

With half-finished construction on their hands, builders had to make a choice of what to do with the property. Some waited it out to complete the project. Some finished the project and hoped for buyers and now are trying to sell new homes that actually are a couple years old, though they have not been lived in. Some went bankrupt or had the property foreclosed on. The banks that own the assets were then forced to make a decision on what to do with the partially completed homes.

One Texas bank that found itself owning 16 homes in Victorsville, California decided to demolish them. Home values in the Southern Califiornia area had dropped 60% since 2006 when they were started. The homes, some nearly completed, had been vandalized and stripped of any thing of value. Squatters and drug traffickers took up residence. After comparing the million dollars it would take to complete the homes and then sell them at a loss, the bank decided to demolish them for around $100,000.

When information about this decision hit the Wall Street Journal a couple weeks ago, reader reaction was strong. The many opponents suggested that the bank should have sold the properties at cost or donated them to needy families in return for sweat equity or to non-profit groups. The reality is that had the bank completed them, they would have assumed liability for them and been on the hook for years as they would be considered the "dealer." Most banks, already thrust into the real estate business via REO homes, are not looking for long term obligations for more property - especially since homes left unfinished may have many hidden problems.

In Florida, there are many partially finished homes, often from bankrupt builders. These homes can be good values for buyers willing to hire a contactor to oversee completion and find a bank that will finance them. There are certain things to watch with this type of home which we will consider next time in this blog.

For a good selection of new and pre-owned homes, including Florida foreclosures and bank-owned, Janice Petteway and the Exit Real Estate Results Team knows Central Florida real estate. Check out her website today.

You live in a home you love but the payment is pretty high. Fortunately, you have your job and if you pull out all the stops, you can still make the payment. At a time when many others are getting relief in the form of refinancing or loan modification, you start to think how much easier your life would be if only your payment was a few hundred dollars less. You find your way to the Making Home Affordable site, and find you don't qualify for a loan modification because you are current on your mortgage. So you think that maybe if you skipped a house payment or two, you too could end up with a lower payment that would make your life much easier.

This approach is like do-it yourself loan modification. Should you deliberately skip your mortgage payment so you can get help? The short answer: Don't try this at home!

In terms of your credit score, deliberately missing a payment is a terrible idea. Missed payments affect your credit score, especially if you already have a pattern of delinquency on other accounts. Your score reflects how recently you have missed a payment, how long overdue it is, and how frequently you have been delinquent. When your credit score is lowered, this can have a snowball effect on your finances. When you want to refinance you home, buy a car, or open a new charge, you might be turned down or offered a loan at a higher rate. Though this practice may be illegal within the next year, your credit card company could increase your rate or make your terms more restrictive even if you have not been late on the payment to them.

In terms of the impact on your cash flow, the idea is not sound either. You may have more money to pay other things in the months you are delinquent, but your obligation to pay the mortgage payments never goes away. When you're late, you rack up additional fees and penalties that you will owe in addition to the amount of the missed payments. Catching up with the combination of payments, fees, and penalties put you in a financial straightjacket for months to come.

Until recently, delinquency was a criterion to qualify for loan modification. Some lenders still hold to this principle, but most have played Follow-the-Leader with federal standards set down in the Making Home Affordable program. The loan modification part of that program is open to people at risk of delinquency as well as to borrowers who are behind by one or more payments. To qualify, a homeowner would have to prove hardship such job loss or other cause of income reduction. If the mortgage reset to an unaffordable level, a homeowner could make a case that they were at risk of default.

Loan refinance, the other part of the program, is only available to those who are current and who have not been more than 30 days late within the last year. Delinquency - whether intentional or out of necessity - makes a person ineligible for the program.

When you are able to pay, the best advice is to resist the temptation to skip the payment in hopes of getting help. If you are in a circumstance where you can't make the payment because you lost all or part of your income, you may have no choice but to skip a payment. Help in the form of payment relief may be available now to you now in either case.

Regardless of your particular circumstance, there is plenty of housing counseling available to offer direction about how to make it in this tough economy. (See Hope is in the Air, Even in Foreclosure.) There are plenty of scammers who promise debt relief and mortgage reduction these days who can make your problem worse instead of better. Seek help from Florida HUD-approved counselors right here in Orlando or call (888) 995-HOPE (www.995hope.org). Even if you have gone to the government site and don't think you qualify, check with these reputable counselors or your lender directly to try to work out something.

If you are interested in selling your home on short sale or in buying bank owned properties in central Florida, Exit Real Estate Results has the experience and patience to work through the process with you.

One stumbling block in recent housing stabilization efforts was that the programs only addressed first mortgages. Yet, at least half of seriously delinquent homeowners have second mortgages or home equity lines of credit. A newly passed bill addresses this concern.

When the first Obama plan was announced, investors protested that their loans were jeopardized. As things stand, second mortgages are repaid second if the borrower becomes insolvent. Often the same banks service the same loans which created a conflict of interest. As a practical matter, if the first mortgage was modified and the second wasn't, the homeowner could still have too much debt to stay current on one or both or them.

On April 28, the administration proposed a revised plan that suggested that both mortgages will be modified for participants in the federal programs. The government will pay part of the cost of reducing the interest rate on the second mortgage for five years or will help those who hold second mortgages pay down the debt. This would mean an upfront payment of $500 and $250 a year for three years to mortgage servicing companies. Borrowers who remained current on the modified loan would receive $250 a year for up to five years to help pay down their first mortgage.

The plan encourages people to refinance through the Hope for Homeowners program, a well-intentioned program intended to help 400,000 that has only helped 51 people to date. As originally drafted, the program offered few incentives for lenders to participate. In fact, the regulations were so complex, the fees were so high, and the amount of loss the bank has to absorb so great that banks ran from the program. Borrowers were disqualified or put off by some of the requirements: primary residence loans only, no previous mortgage defaults, higher insurance rates on the loan.

The refurbished plan, pumped up with $2 billion in Wall Street bailout funds, would settle homeowners in an FHA-backed 30 year loan and address many concerns of homeowners, lenders, investors, and communities. Many of the 12 banks who cover more than 75% of the first mortgages in this country are supportive of the new plan. The bill passed the Senate on May 7. Now it remains to be seen if the lenders and borrower jump on board.

Looking to buy or sell a home in Central Florida? Janice Petteway and Exit Real Estate Results can show you the perfect location.

As a dog lover it's hard to imagine, yet a number growing of pets are left behind when a family is forced to leave their home due to foreclosure. Property inspectors and real estate brokers often enter abandoned homes to find starving, emaciated animals amidst the trash and destruction left by angry homeowners.

Some owners can't afford to continue to feed and care for the pet and walk away, with or without remorse. At the last minute they may try to find a home for the pet at a shelter, but shelters in many areas where foreclosures are high are full. When there is room, the owners can't deal with the fact that their pet has a 50% chance of being euthanized and decide to take their chances that "things will work out." They often find that their new housing, whether it's a rental or a relative's home, won't accept the pet. They then may dump the pet off by the side of the road or leave it in the old home to find nourishment from carpet and wallpaper. The pet, hungry, frustrated, and confined, contributes to the destruction of the home.

Pets are not property that should be left behind like a set of old encyclopedias or a worn out mattress, yet that's what is happening. They are part of a growing class of victims of the economic crisis. When the economy is bad, there is usually a drop in pet adoptions as many families who still have their homes realize they cannot afford to feed and maintain a pet. Many well intended people who would step in and rescue some of these abandoned animals are unable to do so.

There are a few things that you as a concerned citizen can do to minimize the impact of foreclosure on pets, even if you cannot take in another animal yourself.

• If you see that a home is in foreclosure in your neighborhood, ask the occupants how they are doing and ask them if they have made plans for their pets. You could offer to put a sign up to adopt the pet in the grocery store or help make arrangements with the local animal shelter.
• After owners have moved out, check to see if animals are left tied in the back yard or if you hear signs of them in the house. If you think that is the case, call the neighborhood specialist at the local real estate agent firm or the police to inspect the home for abandoned pets.
• If you find a dehydrated pet, offer a small bowl of water under supervision. Before offering food, you might want to check with a vet.

If you are a homeowner faced with the unfortunate prospect of leaving your home, don't forget to make the call that will ensure a humane future for your beloved pet.

If you need help with a short sale or foreclosure in Central Florida, call Janice Petteway at Exit Real Estate Results.