Archive for January, 2010

A Touch of Reality

By Luci Pestana

Last week, showings and inspections took a back seat to an even more deserving cause. The women of UDR put in some elbow grease as part of an ongoing project to support Reality Ministries, a community-based youth ministry organization in Downtown Durham.

The Reality Center is a large, 2-story building on the corner of Gregson and Lamond. Each of the spaces inside is meant to serve students in some specific capacity, and it’s an ambitious work in progress!  The center, providing a sense of community and fellowship to adolescents and teens from differing backgrounds and levels of ability, already provides a wide array of enrichment programs.  Staff and volunteers aim to mentor participants, offering after school programs as well as weekly events for those with special needs.  On weekday afternoons, middle and high-school students drop in to play basketball, join their friends in the game room, grab a snack and get to work in the study lounge, or even receive free tutoring and homework help. Classes are offered in art, photography, cooking, and SAT preparation, and students are encouraged to set career goals as they learn.  The center also holds events on DPS half-days, so students can grab a healthy meal and take advantage of their free time in a constructive environment.

Upstairs and down the hall, there’s a small room overlooking a quaint courtyard.  It’s through this space that UDR is fortunate to take part in Reality Ministries’ mission. We’ve chosen to sponsor the room, and made plans to create a library for students.  It is our hope that, once finished, the room will provide a calm, comfortable, and cozy space for students to read and reflect.

So far, so good!  The room badly needed a fresh coat of paint on the walls and moldings, and the new wash of color made all the difference.  The team, who took shifts prepping and painting the room, agreed that it was a process both rewarding and therapeutic!  We’re lucky to be surrounded by very generous people, and have had a number of bookshelves donated.  They’ll be painted and put to good use, housing a myriad of books piled high in the middle of the room.  Of course when all that’s in place, we’ll feel compelled to accessorize with a few final touches.  Stay tuned for the big “reveal” when the library is complete!

All of us at UDR are honored to be participating in this inspired and effective program for the youth of Durham.  Thank you very much to Jeff McSwain and Steve Larson for making us feel so at home, and for giving us this great opportunity.

If you’d like more information on the Reality Center, or you’re interested in volunteering with Reality Ministries, please visit… and tell them UDR sent you!


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by Susan Herst

I want to move, but I owe more on my home than I can get for it in today’s market.  What are my options?

Usually when a home is sold, the proceeds from the sale are sufficient to cover the pay off of the mortgage(s) and seller closing costs.  But, due to softening home values, no down payment purchases,  and high loan to value equity lines, increasing numbers of homeowners are finding that the current value of their home is less than they owe.  This is known as being “upside down” or “under water”.  If there is no pressing need to move,  most owners just stay in their home until the market improves.  But not everyone has the luxury of time.   Following are the options available to those homeowners with the pros and cons:

Rent out the home.  Pros: preserves the owner’s credit record and provides income to at least partially cover the monthly payments. Cons: owner must either manage the property or pay a management firm.  May affect the owner’s ability to purchase a new home because all or part of the existing mortgage payment will still be counted in the debt ratios. Usually there is still a negative cash flow from the house since the mortgage payment, property taxes, insurance and maintenance costs will normally be higher than the incoming rent when the mortgage is higher than the market value.

Bring cash to closing to cover the difference. This is usually the best option.  It can make sense to borrow from your retirement account or family in order to make it work.  Pros: preserves the owner’s credit record.  Ends the owner’s responsibility to pay the mortgage and maintain the property.  May provide a tax loss which will reduce the seller’s taxes for that year.  Makes it easier to qualify for a new house since there is no remaining payment on the old house. Con: cash outlay

Short sale.  A short sale is when the seller’s mortgage company agrees to release their lien for less than is actually owed on the loan.  Pro: allows the seller to sell the house without bring cash to closing. Cons: creates a very serious derogatory on the credit report which will prevent the purchase of a new home for 4-5 years and potentially make it difficult to obtain other types of credit such as car loans, credit cards, etc.  Usually takes 3-6 months to get agreement from the mortgage company.  The mortgage company will generally not agree if they believe the owner does have the ability to continue making the mortgage payments or to bring money to closing.

Should you, a friend, or a family member find yourself in the situation where you owe more on your home than it is worth, let us help you navigate your choices.  Offering our confidential, real estate expertise in this complex environment is our business.  Thank you Lucy Haislip of Benchmark Mortgage for your insights.

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Oil in the Soil

I discuss the issue of oil in the soil with most of my clients. It can
be a very expensive problem and is arguably under-addressed in real
estate transactions. While I am not a oil or soil expert I’d like to
share a few basic facts about the oil in your soil.

Many homes in NC have used oil as the heat source. Oil is stored in
tanks either above ground (AST) or below (UST). These tanks are not
regulated and a tank alone is not a cause of concern. The issue is
with a leaking tank. I have been told by oil tank experts that ASTs leak as much as 30% of the time and USTs can leak about 70%
of the time. Once a tank has leaked it is regulated by the state.
Knowledge of a leak must be reported to the state within 24 hours with
a penalty of up to $10,000 per day. A leak is found through soil

Any spill must then be cleaned up, which can often be an expensive
endeavor. I’ve seen it cost anywhere from $3000-$30,000. If you live
in a home where a leaky tank is found, you may have some options. If
the tank was not used after 1984 then the last user is responsible for
the tank, although it can be difficult to find a former owner. Another option
is the Commercial and Noncommercial Leaking Petroleum UST Trust Fund
which may cover up to 100% of a UST leak.

If you are purchasing a home that may have a tank (or may have had a
tank in the past), it’s wise to do your best to find a tank and do any
necessary soil testing. Often I will visually inspect for a tank or
signs of a tank. If a house is heated by gas I call the gas company to
see when gas was hooked up to the home (often if there is a gap
between when the house was built and when gas was hooked up oil was
used in the interim). If we cannot eliminate the possibility of a leak
I advise clients to have a professional search the property for signs
of a tank. If a tank is found I order soil inspections so that a leak can be address prior to closing. If we cannot find any evidence a client can purchase the
home with some assurance that they won’t be encountering an issue with
oil in the soil in the future.

It can be a complicated issue but it is certainly worth addressing to
avoid costly oil remediation when selling one’s home.

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Durham Townhome Market

by Mariana Byrd

Since the start of my real estate career seven years ago, I have focused on helping clients sell their townhomes.

From my experience, and in general, the townhome market tends to be more cyclical than the single family home market.  A large majority of townhomes are bought by first-time home buyers in the spring/early summer.  In our market, graduate students, medical residents, etc make up a large portion of townhome buyers because of price range and ease of having minimal to no exterior maintenance and landscaping to maintain.  Therefore, one of the best times for selling a townhome is in the spring/early summer when schools are being decided upon and transitions are made.

Between 2002-2007, as in most areas, we began to see an increase in new home developments.  In 2001, the major townhome developments in SW Durham were Woodcroft, Woodlake, and Darby Glen.  Between 2002 and 2007, we saw the following new townhome neighborhoods be developed in SW Durham: Auburn Square, Park at Auburn, Chancellor’s Ridge, Cambridge at Wyndcross, Thaxton Place and Elm Grove in Hope Valley Farms, Lochside, and Southpoint Terrace.  These new developments added 842 new townhomes in the 27713 zip code alone.  They were quickly bought up by buyers.

Before the mortgage meltdown in the fall of 2008, many buyers were able to finance loans close to, or at, 100% of the sale price.  Therefore, many needed little, if any, down payment to buy their home.  This was great for most students/residents since it allowed them to buy a home thereby contributing to a thriving townhome market.

Fast forward to 2009, due to the overall economic recession, tighter lending practices, and low consumer confidence (first half of 2009), the number of townhomes that sold in Durham County was 17% less than in 2008 (per the Triangle Multiple Listing Service).  SW Durham, specifically zip code 27713, experienced a 28% decrease in closed transactions in 2009 compared with 2008.  The “worst” economic, and thus fearful time (i.e., low consumer confidence), occurred during what should have been peak selling season for townhomes in our area.  Therefore, a large contributor to the drop in townhome sales was due to their cyclical nature.

I am hopeful that this year will be different for several reasons:

  1. The first time home buyer tax credit will be in effect during the peak selling season for townhomes.  Allowing first time home buyers, as well as those sellers that are buying another home, to possibly take advantage of up to $8,000 in tax credits (see previous blog by Jessica Sadler for more info).
  2. The economy as a whole is in better shape now than this time last year.
  3. Our area has fared better than most with regard to the local real estate market (see Courtney James’ previous blog).  This will only increase consumer confidence and allows buyers to feel more comfortable investing their money in real estate.

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