Avoid Scams

Most of us think we won’t be duped by a scammer, but these people are good at what they do and desperation sometimes causes us to bypass our common sense. With the rental market in Ukiah as tight as it is, people are frantic to find a place to live, which can cause them to take risks they usually wouldn’t consider.

While I’m reluctant to write an article about this—because it will educate scammers as well as potential victims—this is so common now that anyone of a criminal nature already knows about it.

Here’s how the scam works. Let’s say you need to find a place to rent. The last four rentals you called about were rented yesterday, and then you see an ad on Craigslist and it sounds perfect. You call the number and a sweet-sounding lady answers the phone. She explains that the house was listed for sale, but the listing expired. She gives you the address but insists that you NOT talk to the real estate company. She says she’s not happy with her agent and does not plan to re-list.

She apologizes that she can’t meet with you because she’s on the East Coast with a dying relative, but suggests that you go by the property and peer in the windows. If you like it, send a check for the security deposit and first month’s rent.

On move-in day, she says she’ll have a friend meet you at the residence with the keys. You give notice at your current residence and prepare to move. You pack up everything you own and call your five best friends with pick-ups to bring your belongings to your new home, only to discover the house is already occupied by the people who bought it and closed escrow two days ago.

Bottom line: your $3500 is gone and everything you own is in the back of friends’ pick-ups. I would like to tell you what to do in this situation to recoup your money. Unfortunately, I can’t because there is no way to know where to find the scammers who took your money and ran.

The best advice I can give you is to be skeptical. If someone is not available to meet you at a property and provide you with access to the interior, that should raise a red flag. Even then, things can go wrong. The current tenant can pose as the homeowner and run the scam. When your Spidey sense (think Spiderman) starts tingling, pay attention. If someone asks for cash rather than a check, be skeptical. If the rent seems too low, be skeptical. If you’re told to peer in the windows instead of getting a tour, be skeptical.

If you want to know who owns the property, ask your Realtor—he or she can check county records and find out. Talk to the neighbors to see what they know.

Realty World Property Management manages about 800 residential units. Right now, as soon as a rental unit is vacated, it is leased to a new tenant almost instantly. This is partly because we keep properties in excellent condition, but the truth is, landlords who do not keep their properties in great condition are also able to rent their properties quickly.

The moral of the story is: if a rental situation seems too good to be true, it probably is.

As a side note on the scam issue, if you’re wiring money when buying a house, be sure you’re sending it to the right account. Realtors’ and escrow company emails have been hacked and the hackers are sending false wire instructions for clients to wire money to. Be aware, get independent verification of wire instructions before you send money. To the best of my knowledge this has not happened in Ukiah…yet.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

Selling in Winter

Many people believe spring is the best time to sell a house, so they take their property off the market during winter. It is precisely this behavior that could make your property a hot commodity during the coldest months.

As I compare housing statistics from April 2015 to statistics in October 2015, I see some interesting trends. January through April, the average time on the market for residential properties in inland Mendocino County was 113 days. Through October, the average time on the market was 91 days. Homes are selling faster now than they were in spring. During the first four months of the year, 75 homes sold. Through October, 217 homes sold; that’s an average of 19 homes per month for the first four months compared to 24 homes per month through October, or put another way: a 26 percent increase in the number of homes selling per month. This market is heating up and, therefore, this suggests it is not a good time to take your property off the market.

I knew a real estate agent years ago who consistently sold more houses in the month of December than during any other month. Why? Because, he explained, everyone else stops working. As the holidays approach, sellers do not want to be bothered with the hassles of having their property on the market, and Realtors—who also have families and personal lives—tend to slow down, too. When fewer homes are on the market, the laws of supply and demand are in your favor: fewer available homes means less competition for your property. If you’re motivated to sell, do not let the holidays scare you away.

This is not only a good time to sell compared to last spring. It is encouraging to look at housing statistics from a year ago. Last October, the median home price in inland Mendocino County (excluding Hopland) was $308,000. This October, the median price was $345,000. That’s a 12 percent increase. If you’re a buyer, I’d say, get into the market while the getting’s good—before prices rise even more, not to mention interest rates.

Bear in mind, “median” is not the same as “average.” Median means there are as many properties with a higher price as there are with a lower price. If you have ten houses evenly spread between $300,000 and $400,000, your median is $350,000. If eleven more houses are put on the market and they are all priced at $290,000, the median price is $290,000.

Average means you add the total of all the prices and divide by the number of properties. Averages can be more dramatically influenced by outlier properties (super expensive or super cheap).

Market forces can certainly influence the median housing price. If there’s a run on higher priced or lower priced homes, the median price can change, but the individual price for many houses will remain consistent. Let’s say COSTCO is finally allowed to open its doors in Ukiah, and they pay salaries between $30,000 and $40,000/year, so a dual-income family makes $70,000. This means the family can afford a $400,000 home at today’s interest rates, so the increased demand for homes in that price range may drive up prices for houses between $350,000 and $450,000. If you are selling a mobile home or a million dollar ranch property, dozens of new COSTCO employees looking to buy a home will not affect the value of your property much.

Regardless of price, the financial factor that always affects the housing market is interest rates. According to Ginny Richards at Sterns Lending, rates are down about three-eighths of a percent compared to last year. I think rates will remain stable until the presidential election is over next year, but my crystal ball doesn’t always work, so don’t count on it.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

 

 

 

 

Career Opportunities in Real Estate in 2015

Finding a way to support yourself financially in Ukiah can be tough, especially without a college degree, but if you have the right personality and work ethic, a career in real estate might be just what you’re looking for. Jobs range from sales agent to property manager to loan officer, and more. They all require a real estate license, but little additional schooling.

To be a successful Realtor, you must be interested in meeting and working with people. It also helps to be a self-starter, because being a Realtor isn’t like having a regular office job where people notice (or care) if you show up during regular business hours. You must be disciplined enough to prioritize and schedule all your own activities.

As a Realtor, you’ll work on behalf of your clients to find homes, invest money, sell homes, borrow money, and lots of details in between. Since a Realtor works on commission, your financial success depends on your ability to solve problems and help clients meet their goals, so it’s best if your work is accurate, thorough, and timely.

Realtors can specialize in several areas: residential, commercial, industrial, ranches/land, agricultural properties, or new development. Each area has laws and practices associated with them, from zoning to water rights. As a practical matter, you may want to consider whether you’re the outdoor type. If you’re selling ranches, for example, some properties may not be easy to access. Plan on owning a four-wheel drive vehicle and a pair of hiking boots. If you want to sell agricultural property in Mendocino County, understanding soil and terrain, and how they affect different types of grape varietals, comes in handy. If you want to work with a developer to subdivide land and build spec houses to sell, you better be good at details and willing to work with bureaucracy at all levels, completing forms, coordinating inspections and reports, and more.

In real estate sales, you can work very little and make $5,000 a year or you can work a whole bunch and make $250,000 a year. Depending on the market, your income is largely up to you. Remember, as an agent you are self-employed, and therefore 100 percent responsible for your financial success.

If working on commission or being available during non-traditional business hours doesn’t fit your lifestyle, property management might work for you. Many of the same traits as a sales agent are important (e.g., working with people, solving problems), but property management has more security and regular hours. You may not earn as much, but for some, the security you gain is a worthwhile trade.

A property manager takes care of real estate for a property owner, including all the details of renting the home or space to qualified tenants and coordinating care of the properties if something breaks or needs maintenance. A property management position comes with a salary and often includes benefits like health insurance, paid time off and a retirement plan. Be aware, property managers are expected to be in the office, so there’s less flexibility than for a Realtor.

If you are detail oriented and like solving problems, but prefer to work with numbers and a computer, being a loan officer could work for you. Some loan officers work for banks or loan brokerages to lend money; others are self-employed. Either way, some of your salary may be based on a commission. If you are a go-getter, then you’re likely to earn a higher income.

Realty World is currently hiring secretarial help, and other real estate companies may be as well. Starting as a receptionist can provide you with an insider’s view of the industry to see if you may want to pursue a career in real estate.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

 

 

 

 

 

 

Let’s Do It Again: Safe Mendocino Contest Builds on Success of Safe Ukiah Contest

In June, I was talking with Ukiah Police Chief, Chris Dewey. We were reminiscing over the success of the Safe Ukiah contest, and we started talking about whether a Safe Mendocino County contest could produce even more good ideas on ways to keep our local communities safe.

The next thing you know, we’re having lunch with Sheriff Tom Allman and Ukiah Daily Journal Editor KC Meadows, and we’re brainstorming about all the reasons a county-wide contest would be a great idea. This is our home. We care about quality of life issues, and we want to work together to improve things.

While I’ll admit that as crime goes down, housing prices typically go up and that’s good for business, but that’s not my primary reason for sponsoring these contests. I grew up in Ukiah. I’ve raised five children in Ukiah, and I would like them to consider returning to Ukiah to raise their children someday. Unfortunately, the way things are going, that’s not likely.

People who live in Mendocino County have a history of taking care of each other. The more remote your community, the more you depend on yourself and your neighbors to make things happen. I understand times have changed, and I’m not looking to return to the 1950’s, but I believe we can band together and draw a line in the sand and say, “No more,” especially when people who aren’t from here—and have no intention of ever contributing to our community—start asking for money when I’m at the ATM or shopping downtown.

Chief Dewey’s response to the Safe Ukiah contest was to implement Business Watch; it’s like a Neighborhood Watch program for businesses. It uses technology to help business owners connect, and it helps keep UPD informed of possible problems in real time so they can be more effective. I would love to hear what people have to say about keeping other communities safe.

To that end, Realty World Selzer Realty invites Mendocino County residents to submit ideas on how to make their communities safer. Whether you’re on the north coast or south coast, up in Laytonville, Covelo, or Leggett, or in Willits or Ukiah, you can win $500 if your idea is the best one in your area. We’re dividing the county into its supervisorial districts, so Realty World is offering five prizes—$500 each for the best submission in each district.

Even though I’ve been focusing on law enforcement solutions, there are lots of ways to make Mendocino County safer. Get creative. Safety can mean better roads, helping students stay busy and productive after school instead of getting into trouble, organizing volunteers to provide transportation for those who should no longer drive but need a way to get around. How are people unsafe now? How can we fix it? Sometimes simple solutions are the best. Other times technology can bridge gaps that used to seem unrealistic.

If you are serious about this, you’ll have to consider budget and resource issues. Last year, I was really impressed with the time and research people put into their submissions. It was great because it made the solutions viable. We have to consider not only what to do, but how to make it happen here in Mendocino County.

If you’re a teacher and you want to make this a class project, I think that would be great. You grade the grammar, and the judges will review the ideas.

If you’d like to help but don’t feel like entering the contest, consider joining or donating to the Mendocino Public Safety Foundation, a group that supports public safety and helps fund local projects. If this interests you, give me a call.

You can pick up an application and the rules of the contest at the Realty World office in Ukiah or request them via email at safemendo@gmail.com.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

 

Foreclosures – A Last Resort for All Parties: Part I

Last week I talked about servicing a real estate loan yourself. That was a prelude to the next couple articles, which are in response to a reader’s question about foreclosures and what other options may exist when a borrower stops paying his loan.

If a borrower misses a mortgage payment, there could be a perfectly innocent reason. Before you do anything dramatic, call the borrower to see what happened: did he forget to make a payment? Did the check get lost in the mail? These things do occasionally happen. If the borrower says the check is in the mail, go ahead believe him the first time, but file this information away for future reference.

Once in a while, a borrower will call to admit a payment will be late or that a personal emergency has prevented him from making a payment this month. While this is rare, again, I’d take him at his word the first time. (If you’re a borrower reading this, take note: lenders are generally much more forgiving when you call them rather than forcing them to track you down about a missing payment.)

As the lender, once you’ve concluded the borrower is no longer making payments on the loan, it’s time to begin foreclosure proceedings. They aren’t fun and they aren’t cheap, but they are sometimes necessary.

Two types of foreclosures exist: judicial and non-judicial, and both result in the public auction sale of the property in question. If you can go with the non-judicial option, it’s cheaper and faster, but depending on your circumstances, it isn’t always better.

A judicial foreclosure requires an attorney and a court order, and it’s the only way to go if flaws exist in the loan documents or the property’s legal documents. Also, if there is no equity in the property but your borrower has assets, and the note involved in the foreclosure wasn’t a “purchase money note” (the note used to purchase the property), then a judicial foreclosure opens the door for a deficiency judgment.

A deficiency judgment helps you get your money back. Here’s how: if the foreclosed property is sold for less than the total amount owed, the court can order the borrower to pay the difference between the foreclosure sale price and the amount owed. If you choose a judicial foreclosure in hopes of recouping your money, be sure the borrower has some assets with which to pay you. If you’re relatively sure he does, once you’ve completed the judicial foreclosure, you can call the borrower into court for an examination of debtor, where you can ask the borrower about his holdings. If he lies under oath, he’s perjuring himself, and courts really frown on that.

Do not go down this path without consulting an attorney and someone who can give you good advice about the true value of your property, because while a non-judicial foreclosure usually takes four to six months, a judicial foreclosure is likely to last at least a year—maybe two. And the judicial option is significantly more expensive.

In addition, the borrower in the judicial foreclosure retains the right of redemption. That means that for the whole time the foreclosure is in effect, the borrower can pay you what he owes you to bring the loan current (paying any outstanding loan payments, late fees, advances plus interest, and fees or costs associated with the foreclosure). In most situations, that’s not a problem, because the property is worth less than is owed and you’d be happy to get all your money back. But here’s the downside: even though the borrower will never pay you what he owes, he still has the option, so you cannot sell the property until the redemption period expires.

More next week!

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

 

How Do You Own Your Property? Holding Title – Part I

 

To own real estate you must hold title, and the way you hold title affects how the ownership of a property can be transferred; how the property can be financed, improved or used as collateral, and it has tax implications. Methods of holding title include limited liability companies (LLCs) and limited liability partnerships (LLPs), partnerships, S-corporations and C-corporations, tenants in common, joint tenancy, community property, community property with the right of survivorship, sole ownership, a married person as sole and separate property and trusts.

Before I go any further, I must start with a massive disclaimer: I am not an attorney or an accountant. People’s decisions on how to hold title impacts their income tax, capital gains tax, property tax, inheritance tax and legal positions and more. This column will not provide instructions on how to hold title, but rather arm you with questions to take to your accountant and attorney. Every situation comes with its own complications that MUST be addressed by those professionals.

LLCs and LLPs are typically used when unrelated parties acquire title to income-producing property but there are advantages to related parties taking title this was as well. The parties probably have an existing business or personal relationship, and they know (and trust) each other. The advantages of LLCs and LLPs include a buffer from legal liability, and someone with whom to share responsibility. The disadvantages include the setup and administrative costs, and while the federal government treats LLCs and LLPs as non-existent for income tax purposes, the State of California does not. Therefore, you owe state income tax on income produced by the property.

S-corps and C-corps are similar to LLCs and LLPs in that they provide protection from liability, for everything from slips and falls that occur on the property to the discovery of a toxic waste dump located under the main building. S-corps and C-corps are more burdensome and expensive to administer, but useful if an existing corporation chooses to purchase a property where it will operate a business. C-corps are unlikely for small investors because of the high cost of compliance with regulations and because they are not exempt from state or federal income taxes. S-corps and C-corps generally only hold title if they already exist. You wouldn’t create these types of corporations simply to hold title to real estate. There are extensive down sides to these forms of ownership and you MUST talk to your attorney before you go this route.

Whether we’re talking about LLCs, LLPs, S-corps, or C-corps—even if the company or partnership already exists—the smart choice is often to own a property as an individual and lease it back to the company. This avoids unnecessary tax burdens and paperwork, as well as retaining depreciation for your personal income tax return at a better rate than the corporate return would allow. While these corporate structures can shield property owners from some liability, if owners don’t follow the corporate rules to the letter, a claimant can pierce the corporate veil and come after the owners’ personal assets.

I once had a tenant with a corporation who co-mingled personal and corporate funds. He allowed his corporation to go bankrupt, but was a personally wealthy individual. Because he didn’t follow the rules, I was able to pierce the corporate veil and collect $45,000 in “uncollectable” rent. So a word to the wise, if you want to take advantage of the liability protection, know the rules and follow them.

Next week, I’ll detail a few more ways to hold title. Remember, I am not an attorney or accountant. Do not think that by reading this column you now have all the information you need to make what usually amounts to complex and legally binding decisions with significant tax implications.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

Getting Homeowner’s Insurance in Rural California is Getting Tougher in 2015

Recently, rural properties in California have had a harder time qualifying for homeowner’s insurance. After the big fires in 2014 (and the not-so-big Black Bart Fire locally), many insurance companies have declined new requests for coverage and even opted not to renew existing policies.

Why? Because the Department of Insurance disallowed a rate increase for insurance companies hit by claims resulting from those fires. So the insurance companies responded by reducing risk—choosing not to offer insurance in areas deemed more likely to suffer a loss. Consequently, if your current home is in a rural setting with a moderate fire risk and your homeowner’s insurance renewal is coming up, you should check well in advance of the deadline to make sure a nasty surprise isn’t headed your way. If you are buying a home, check on insurance as soon as you decide on a property. You’ll gain two useful pieces of information: 1. Whether you can get insurance and 2. Whether you’ll have to sell your firstborn to pay for it.

By the way, if flood insurance is required and you didn’t get a flood certificate when you bought the property, now might be a good time to verify that you are, in fact, in a flood zone and therefore need flood insurance. You might just be leaving money on the table and not know it.

Whether you’re a homeowner or renter, I strongly recommend investing in homeowner’s insurance. Why? Because it can help prevent a natural disaster or other crisis from also becoming a personal financial crisis. A standard policy typically covers loss from fire damage, which is what most people think of when they think of homeowner’s insurance. It also covers things like having a computer stolen out of your car or the hospital bills for the Girl Scout slipping on your driveway when selling cookies or the UPS guy getting bitten by your dog. It will often cover acts of vandalism and even worker’s compensation for a landscaper who is injured on the job at your house. The only difference between a homeowner’s policy and a renter’s policy (both are called a homeowner policy) is that the structure is included in the coverage if you own your home.

A home’s insurance value is based on the cost to rebuild the house, not the market value. If you under insure the property, the insurance company will only pay a portion of your loss even though the loss is less than the stated amount of insurance. (Otherwise we would all insure our property for less than full value because the odds of a total loss are very small.) You can pay less for insurance if you have less coverage or a higher deductible, but you’re taking a risk.

Be sure you understand what’s covered under your policy. Flood and earthquake insurance are separate and cost more. If your home is in a flood plain (even a 100-year flood plain that hasn’t flooded in anyone’s memory), the law will require your lender to require flood insurance.

Earthquake insurance is often very costly, and honestly, hard for me to recommend. Typically, there is a 15 percent deductible. This means if your house is worth $300,000, you’ll pay for the first $45,000 worth of damage. That will cover a lot of damage. If the earth opens up and swallows everything you own, then you’ll wish you had earthquake insurance. Otherwise, you’ll be paying expensive premiums and still be on the hook for tens of thousands of dollars if an earthquake hits.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

 

Gems Can Hide In Plain Site: Buying a Home in Winter

Once winter weather hits in California, the housing market slows: homeowners don’t want to spend time outside sprucing up their property in cold, wet conditions and this weather usually means the holidays are approaching—when most people would rather spend time with family than focus on selling their home. It’s much more fun to think about Thanksgiving dinner than painting your bathroom.

You’ll also see fewer buyers out looking for new homes this time of year. The idea of dragging small kids around to view houses for sale when it’s 45 degrees and raining isn’t too appealing. And if you do happen to find a house, the idea of tracking mud onto your new carpet as you move boxes out of your brother-in-law’s pick up in the rain is enough to cause any rational person to put off this whole adventure for a few months. Even if you’re brave enough to go house hunting and find a house to purchase, many people still prefer to wait until after the holidays, because there is something very special about waking up Christmas morning in a familiar home.

Now that I’ve completely talked you out of buying or selling a house in winter, I’ll tell you this: if you are willing to forge ahead with this home-buying adventure, you may just find a gem that others miss. For some, winter is the perfect time to buy. Typically, there’s more inventory available, so you have a better selection to choose from. And the laws of economics are in your favor: more homes for sale and fewer people buying usually results in a better value. For example, six months ago, there were only 68 houses listed for sale. In mid-October, there were 94 houses listed for sale. That’s a 38 percent increase.

This year, in particular, is shaping up to be a great year to buy because the interest rates are so incredibly low.

In addition to the economic benefits of buying in winter, you get to see your prospective home in non-optimal conditions. Shopping in spring shows you a house in all its glory—beautiful landscaping and warm, dry interiors. Winter shopping often gives you a worst-case scenario, so you don’t get any nasty surprises down the line: drafts are more evident and you can see condensation on the inside of windows. And while home inspectors and pest and fungus inspectors have a slightly harder time doing their job, the inspections are often much more productive.

No matter when you buy, it’s a good idea to hire a realtor. Is this comment self-serving? Yes. Is it true? Also, yes. Realtors can help you look for small issues that may indicate bigger problems. They can help you assess fair market value, whether you’re buying or selling a property. They can also negotiate on your behalf. In addition, they can arrange and attend appropriate inspections, make sure you get all the appropriate reports and disclosures, help you arrange for financing, make sure you have adequate insurance, and help you traverse the sometimes complicated escrow and closing process.

Remember, it is in a realtor’s best interest to help you meet your goal because theyonly get paid if you get what you want – if you complete a buying or selling transaction. It’s interesting to note that people in the real estate industry hire realtors for their own transactions; I’m talking about brokers and lenders with the knowledge to do the work themselves. They know the value of a good realtor. It’s kind of like when you find out your doctor goes to a specialist when he needs one. Don’t you want to do the same?

If you have questions about real estate or property management, feel free to contact me at rselzer@selzerrealty.com or visit our website at www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

Is Flood Insurance Worth It? How About Earthquake Insurance?

If you buy a home in a federally designated flood zone with a federally insured loan (and most loans fall into this category), you are required to purchase flood insurance. Sometimes, property that falls within a designated zone on a map isn’t all that likely to flood, yet the insurance is still required—with one exception: you have a Letter of Map Amendment Determination from a surveyor or civil engineer who says your property isn’t any more likely to flood than homes outside the flood zone.

Flood insurance is very expensive ($1,000 to $3,000 a year). If you live on top of the one hill in a flood zone, and you don’t want to pay for flood insurance because you really don’t need it, it’ll cost between $500 – $2,000 for a survey to prove it. Locally, surveyor Ron Franz and civil engineer George Rau are both excellent.

Here’s the thing: if you drive around Ukiah in the winter, you won’t see much flooding and with today’s mortgage rates, $3,000 per year equates to about $50,000 more in mortgage. So, if the home you’re interested in buying requires flood insurance, you may be better off to pay a little more for a home outside the flood zone than to pay for the “less expensive” home in a flood zone. Of course, if the house in the flood zone is an exceptional value, go for it.

Jumping onto my soapbox for a moment, I have to say that I believe flood insurance rates are outrageous. At $3,000 a year, flood insurance is way higher than insurance for similar potential disasters. My take is that the Federal Emergency Management Agency has to pay for Katrina and other devastating hurricanes somehow, and charging appropriate insurance rates for the folks affected by those disasters isn’t politically palatable. And they make the rules on who must buy it.

Since I’m on a roll with insurance here, I think we should talk about earthquake insurance, too. California is known for earthquakes and Northern California has the San Andreas Fault running through it. Locally, we also have the Mayacama Fault and a few others. This leads one to seriously consider purchasing earthquake insurance. Unlike flood insurance, it isn’t required, but sometimes it is advisable.

According to local insurance agent Mark Davis, typical premiums for earthquake insurance usually run about the same as rates for homeowners insurance, about $500/year for a $300,000 home. If you own a one-story home built in the last fifty years that is bolted to the foundation (as most are), and you’re not located on the edge of a cliff, you’re probably fine without earthquake insurance. However, if you have a two-story, unreinforced masonry home built in the 1800s, you may want to consider it—and for this level of risk, you’ll likely pay quite a bit more than the amount quoted above. Some homes do not qualify for earthquake insurance: if you have a post and pier home (not bolted to the foundation), most insurance companies won’t sell you insurance at any price.

Even with earthquake insurance, you may end up paying for earthquake damage. Most policies have a 15 percent deductible; that’s $45,000 worth of damage before your policy kicks in on that $300,000 home. And as I’ve said before, be sure to read your policy. Some policies have exclusions and it’s a bummer to learn about them right after the earthquake hits.

So, is earthquake insurance a good idea? Without a crystal ball, there’s no telling whether you’ll use it. So it boils down to this: if it makes you sleep better at night and you can afford it, it’s worth it. Of course, I really value a good night’s sleep.

If you have questions about real estate or property management, feel free to contact me at rselzer@selzerrealty.com or visit our website at www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

Preparing for Winter Weather in Ukiah 2014

You’ve heard the saying, “An ounce of prevention is worth a pound of cure.” Well, it’s true with home maintenance, too. After writing about earthquakes and disaster preparedness recently, I received a note from a reader who told me about a “motion-activated” gas shut off valve.

I called local plumber John Chan to get the details. He explained how the valve works: a small metal ball is suspended via a magnet, powered by a small electrical charge. If an earthquake hits, a sensor is triggered, electricity to the magnet is cut, and the ball falls to prevent gas from escaping. While there is a downside, (having to re-light pilot lights) it is minimal compared to your house blowing up or your family breathing gas until they don’t breathe anymore.

(I don’t know how sensitive the sensor is, but any time your gas service stops, you’ll have to relight your pilot lights. If John Chan is your plumber, he’ll re-light pilot lights at no charge.)

If electricity goes out—unrelated to an earthquake—but your gas service is fine, you may want to consider a battery back up to keep certain gas appliances going—yes, some gas appliances depend on a smidge of electricity to run. For example, I have a gas water heater, and I really don’t like to lose hot water when the electricity goes out (which I would because of the electric thermostat), so I have a battery back up that comes on automatically to prevent the pilot light from going out.

Other preventive tips you may find helpful this time of year include checking whether you have propane in the tank and whether your central heat will fire up after its long summer off. It’s a real bummer to be uncomfortably cold and find your heater is out of commission. You can check the propane levels yourself, but if you don’t know how to assure your heater is in good working order, you can call a local heating and air company. Mark Devereux of Devco Heating and Air Conditioning said his company charges about $100 for the service. I just refilled my tank and it cost $1.81/gallon. I get a little discount because I bought my own tank, but if you’re paying more than $2.00/gallon, consider finding a new propane company.

As a side note, if you use a wood burning or gas stove for your heat, I recommend buying a little fan that goes on top and sends the heat out into the house. The fan converts heat from the stove to electricity to power itself. Pure genius. The fans are available at Mendo Mill, ER Energy, and Friedman’s, and range in price from about $100 – $250.

By this time in the year, hopefully you’ve already cleaned out your gutters and made sure you have insulation on any exposed pipes. If not, now’s the time. After the first rains of the season, it’s also a great idea to look for evidence of water leaks or intrusions (check window sills, sheet rock—especially in hard-to-see places like closets, and damp spots in your attic). And, while you’re at it, fall is a great time to check your smoke and carbon monoxide detectors and make sure your homeowner’s insurance is up-to-date. Check weather stripping around doors and windows, and have your chimney cleaned before the first fire of the season.

A little maintenance can go a long way.

And a little plug for the Safe Ukiah contest, in case you haven’t heard. Realty World Selzer Realty is offering $750 to the person who submits the best plan to make Ukiah safer. Curious? Call my office for details at (707)462-4000.

If you have questions about real estate or property management, feel free to contact me at rselzer@selzerrealty.com or visit our website at www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.