Home sellers increasingly are ordering pre-sale home inspections to make reports available for buyers to review before they make an offer. By doing so, they hope to avoid renegotiations that can occur if the buyer’s inspections reveal defects that weren’t disclosed to them before they made an offer.

Knowledge is power. However, many buyers wonder if it’s wise to rely on reports that were ordered by the sellers. The answer depends on the reliability of the inspectors, how recently the inspections were done and the completeness of the reports.

Some inspectors take a more critical look at a property when they inspect for a buyer than they do when they inspect for a seller. However, if the inspector is reputable, it shouldn’t make a difference who hired him

HOUSE HUNTING TIP: Ask your real estate agent for a candid opinion of an inspector’s reliability. If some of your agent’s past clients used the inspector, ask for permission to call them for a recommendation. Call the inspector and ask for references. And check with friends who bought recently to see if they know the inspector, and if they would use him again.

Beware of inspectors who are unknown to the local real estate community. Out-of-area inspectors may not be aware of local problems, such as slide areas, that could have a future impact on the property.

Home inspections often recommend further inspections by other professionals, such as roofers, plumbers, electricians, drainage contractors or engineers. Few sellers complete all recommended further inspections before they market their homes.

It’s hard to tell from a written report whether a further inspection recommendation is in response to something questionable that the inspector discovered, or whether it’s simply an attempt by the inspector to limit his liability.

Before you rely on a report, have a conversation with the inspector to find out if there are issues of serious concern that need further investigation. Inspectors will often be candid in a verbal conversation, but will attempt to minimize their liability with disclaimers in the written report.

Also be aware that many home inspection reports include a statement that the report can’t be relied on by other parties. This could mean the buyers if the report was ordered by the sellers. If you’re concerned about this issue, talk directly to the inspector or consult with a knowledgeable real estate attorney to determine the extent of the inspector’s liability to you for overlooked defects.

It’s usually advisable to include an inspection contingency in your purchase offer, even if the sellers have provided pre-sale inspection reports. But in competitive markets, where overbidding is the norm, many buyers choose to rely on the sellers reports and forego an inspection contingency.

This may not be risky if the sellers have provided current and complete reports from reputable inspectors and the buyers have a wealth of home owning experience. Experienced homeowners have an advantage because they can often assess how much it will cost to repair defects even if the sellers don’t provide estimates.

Buyers who don’t fall in to this category should include an inspection contingency in their offer. There’s a strategy that could improve your chances even if you end up competing with buyers who choose to waive their right to an inspection contingency. You can include an inspection contingency in your purchase offer, but also include a provision that you will pay up to a certain amount to correct defects that are uncovered that were previously unknown.

THE CLOSING: This way the seller knows that you are a sincere buyer who won’t back out due to minor defects that might be uncovered during your inspections.

Dian Hymer is author of “House Hunting

The median price of an existing home in California in June increased 16 percent and sales increased 3.6 percent compared to the same period a year ago, the California Association of Realtors reported today.

“Fixed mortgage interest rates have fallen compared with a year ago, and remain below 6 percent,” said Jim Hamilton, association president. “This continues to propel both sales and the median price of a home as consumers gauge current market conditions against future interest rate increases.”

Closed escrow sales of existing, single-family detached homes in California totaled 656,310 in June at a seasonally adjusted annualized rate, according to information collected from more than 90 local Realtor associations statewide. Statewide home resale activity increased 3.6 percent from the 633,660 sales pace recorded in June 2004, the association reported.

The statewide sales figure represents what the total number of homes sold during 2005 would be if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during June 2005 was $542,720, a 16 percent increase over the revised $468,050 median for June 2004, the association reported. The June 2005 median price increased 3.8 percent compared with May’s revised $522,900 median price.

“Inventory levels in recent months were nearly double that of a year ago,” said Leslie Appleton-Young, association vice president and chief economist. “This has contributed to the increased pace of home sales in the presence of continued strong demand for housing in California.”

Highlights of the association’s resale housing figures for June 2005:

The association’s Unsold Inventory Index for existing, single-family detached homes in June 2005 was 2.7 months, compared with 1.7 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

Thirty-year fixed mortgage interest rates averaged 5.58 percent during June 2005, compared with 6.29 percent in June 2004, according to Freddie Mac. Adjustable mortgage interest rates averaged 4.24 percent in June 2005 compared with 4.1 percent in June 2004.

The median number of days it took to sell a single-family home was 27 days in June 2005, compared with 23 days (revised) for the same period a year ago.

In a separate report covering more localized statistics generated by association and DataQuick Information Systems, 97.5 percent – or 396 of 406 cities and communities – showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates.

Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices may be exaggerated due to compositional changes in housing demand, the association noted. The DataQuick tables listing median home prices in California cities and counties are accessible at http://www.car.org/index.php?id=MzUyMjM.

Statewide, the 10 cities and communities with the highest median home prices in California during June 2005 were: Manhattan Beach, $1,570,000; Malibu, $1,550,000; Laguna Beach, $1,537,500; Los Altos, $1,424,000; La Canada Flintridge, $1,395,000; Palos Verdes Estates, $1,360,000; Saratoga, $1,350,000; Newport Beach, $1,300,000; Coronado, $1,275,000; and Hermosa Beach, $1,249,500.

Statewide, the 10 cities and communities with the greatest median home price increases in June 2005 compared with the same period a year ago were: Twentynine Palms, 81.2 percent; Sanger, 72.5 percent; Reedley, 66.1 percent; La Canada Flintridge, 61.3 percent; Desert Hot Springs, 57.6 percent; Barstow, 53.8 percent; Selma, 53.3 percent; Visalia, 49.4 percent; Norco, 48.5 percent; and Benicia, 48.3 percent.

Regionally, the Santa Cruz County area had the greatest increase in median home price, up 32.3 percent from June 2004 to June 2005. The High Desert had the second highest gain in median home prices from June 2004 to June 2005 (29 percent), followed by the Northern Wine Country (28 percent), San Luis Obispo area (27.8 percent), and Northern California (27.3 percent).

The appreciation of median home prices was slowest in the following regions: San Diego (5.8 percent), Orange County area (6.8 percent), Ventura area (9.7 percent), San Francisco Bay Area (12 percent) and Palm Springs-Lower Desert region (13.5 percent).

Home sales from June 2004 to 2005 jumped highest in the following regions: San Luis Obispo (23.5 percent), Santa Barbara County (22.7 percent), High Desert (20.9 percent), North Santa Barbara County (20.7 percent), and Los Angeles (12.9 percent).

Meanwhile, home sales dropped the most from June 2004 to June 2005 in the following regions: Santa Cruz County area (19.8 percent), Santa Clara area (14 percent), San Francisco Bay Area (11.1 percent), Northern California (10.1 percent) and Monterey area (9 percent).

Learn what these 10 key terms mean before you buy that dream house, and you may be able to save a lot on interest costs, fees and other charges, or get much more home for your money.

Adjustable-rate mortgage (ARM)
In this type of loan, the rate changes anywhere from once in six months to once in five years to reflect interest rate changes. To sell an ARM, a lender will offer a lower initial rate than on a fixed loan.
Four Tips for Mortgage Shopping

Closing
Also known as settlement, act of sale or closing escrow. This is when buyers sit down, maybe with a lawyer, and sign a bewildering mound of papers. At the end, the deal is done and the home is yours. Some states require both buyers and sellers to attend closings.

Contract
The document that lays out terms of the deal: price, mortgage amount, when the deal closes, what stays or goes (such as that freezer in the garage), even the agent’s commission.

Conventional mortgage
The most common home loan, this type of mortgage is not insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs.

Fixed-rate mortgage
In this type of mortgage, payments stay the same during the term of the loan. Fixed-rate loans are often made for 15 years or 30 years. You can cut the interest rate by taking a shorter-term loan, but the monthly payment will be higher.

Inspection
Every home buyer should demand this independent, third-party examination of the property prior to the sale. If the inspector finds a problem, such as a bad furnace or roof, the buyer can demand repairs or a lower price as a condition of the sale. Cost to buyer: $200 to $350 for most homes. Buyers should attend inspections.

Loan-to-value ratio (LTV)
What you’re borrowing compared to the price. The smaller your down payment is, the higher the ratio and the riskier the mortgage. When you apply for a loan, a lender will study the ratio closely.

PITI
The owner’s typical monthly payment, which includes principal, interest, (property) taxes and (mortgage) insurance. Most lenders collect a portion of annual tax and insurance bills each month, then pay them when they’re due.

Point
A point is 1 percent of the loan amount. For example, two points on a $100,000 loan would be $2,000. You can pay points to get your lender to give you a lower interest rate. Or, you can refuse to pay points and keep the interest rate offered. Often the increase in payment is quite small, so weigh the pluses and minuses carefully before you decide. Points are also called loan discount fees.

Private mortgage insurance (PMI)
If your down payment is less than 20 percent of the property’s cost, most lenders will require you to obtain private mortgage insurance, which protects your lender if you default on the loan. Cost: $45 to $75 a month. Be sure you can cancel the private mortgage insurance policy when you’ve paid your loan to less than 80 percent of your home’s value.

You’ll be better prepared to work with an agent if you know what to expect and what your agent will expect from you.

Split Commission
Real estate commissions average 6 percent of a home’s purchase price (that’s $6,000 on a $100,000 house). A seller almost always pays the commission, which is split between the two real estate agencies involved in the purchase.

Agents, Brokers, & Realtors
Real estate agents are state-licensed to represent buyers or sellers. So are real estate brokers, who supervise agents and typically manage or own the office. Realtors are agents or brokers who are voluntary members of the National Association of Realtors (NAR), an industry trade organization.

Offer and Deposit
You’re usually not required by law to make any kind of deposit when you submit a contract to buy a house, except in court-supervised sales. Most agents will expect you to include a deposit with your offer, though, to prove you are a serious buyer.

Getting to ‘Yes’
When you sell your home through an agent, the agent will be the conduit for all purchase offers and negotiations with prospective buyers. A good agent will have excellent negotiation skills and a track record of satisfied sellers.

Paper Trail
If you’re a prospective seller, always get a written sales or marketing plan from any listing agent you are considering. Such plans should include schedules for listing, advertising, and otherwise marketing your property to buyers. Good agents will include backup plans in case your home doesn’t sell right away.

Fixtures
Most purchase contracts contain a paragraph about fixtures, or what comes with the house. Fixtures typically include wall-to-wall carpeting, major appliances, plumbing fixtures, built-in bookcases, track lighting, tile and anything else that has been “fixed” to the property. If you’re a buyer, a good agent will make certain you’ve covered all the bases in your offer. If you’re a seller, a good agent will make sure the contract only includes items that are indeed fixtures.

Discrimination Prohibited
Federal law prohibits an agent from discriminating against buyers or sellers in any way, including refusal to show, sell, or rent a house to someone on the basis of race, color, religion, sex, national origin, handicap or family status.

Classified Ads
Agents use a shorthand all their own when they write real estate ads. For example, an ad describing a house as “split lvl, 2b, 2ba, frpl, q.pos” means a split-level home with two bedrooms, two baths, fireplace and quick possession. Watch out for euphemisms, too. For example, “low upkeep” may mean a house with no yard. Use a checklist to keep track of what you want.

WASHINGTON - Sales of new homes rose unexpectedly in April, climbing 0.2 percent to a fresh record, a government report showed Wednesday.

The Commerce Department said new single-family home sales rose to a seasonally adjusted annual rate of 1.316 million units, a record, from a downwardly revised rate of 1.313 million in March.

Wall Street analysts had expected April sales to decline 0.1 percent to a 1.350 million rate, from the previously reported 1.431 million pace. Deep revisions cut the March sales rise to 4.5 percent from the previously announced 12.2 percent jump.

The national median sales price for a new home rebounded to $230,800 in April from $217,500 in March. The average price was unchanged at $283,500.

“The data confirm that the housing market is still very hot and that housing is still an important, strong sector of the economy,” said Gary Thayer, chief economist for A.G. Edwards & Sons in St. Louis.

Inevitably the stepped-up pace revived talk of a housing bubble, especially after Tuesday’s report of an increase in sales of existing homes.

Jack Guynn, president of the Federal Reserve Bank of Atlanta, warned that speculators who are gambling that housing prices will soar indefinitely are bound to get hurt.

“There are some local markets, especially in coastal Florida, where I’ve heard stories for more than a year about behavior that’s got to be characterized as nothing other than speculation,” Guynn said in response to questions after addressing a home builder’s group in Atlanta.

“It makes me very uncomfortable,” he said. “Some buyers, some builders, some lenders are going to get burned, could very likely get burned, in some of those local markets.”

Guynn’s remarks seemed closely coordinated with a caution that Fed Chairman Alan Greenspan offered last week to Americans who speculate in real estate.

On Friday, Greenspan said he saw signs of “froth” in housing markets though he did not characterize it as a worrying national issue. “We don’t perceive that there is a national bubble but it’s hard not to see … that there are a lot of local bubbles,” Greenspan told a group in New York.

Although the new-home sales rate edged up to a record, the downward revision for March eased some concerns.

The surge in March in new-home sales seemed at odds with more moderate strength in other indicators, and the new March numbers make more sense,” said Michael Englund, chief economist at Action Economics.

In another positive sign for the housing market, mortgage applications rose last week, boosted in part by an increase in refinancing activity as long-term rates fell slightly.

“Even though the Federal Reserve is in a tightening cycle, longer-term mortgage rates are holding steady at near historic lows,” said Bob Walters, chief economist at online lender Quicken Loans, according to National Mortgage News.

“That’s creating tremendous opportunities for people purchasing a new home or refinancing their existing mortgage,” he said. “Low rates are fueling the housing market and should keep the number of purchases and refinancings at very healthy levels.”

Thayer said the Fed faces a policy dilemma if it wants to prevent the housing market, where prices are rising so fast that interest rates are having little impact.

“Even though the Fed has raised short-term rates eight times over the last year it hasn’t been enough enough to dampen the housing market yet,” Thayer said.

While the Fed has raised short-term interest rates, longer-term rates that affect 15- and 30-year mortgages have barely budged in the past year, surprising some Fed officials including Guynn.

“I’ve certainly been among those that’s been surprised that the usual pattern of longer-term rates at least partially following short term rates up has not shown itself this time,” Guynn said.

One possible explanation is that financial markets believe inflation will remain low so they may be adding in a smaller “inflation premium” to longer-term loans, Guynn said, adding, “If that’s the case, it’s a very happy development.”

New-home sales surged 37.2 percent in the Northeast last month, reversing a 4.9 percent fall in March, and the West recorded a 2.8 percent sales pickup. The South and Midwest both saw sales cool in April, falling 5.3 percent and 0.5 percent respectively

Want to paint your front door pink, periwinkle or purple? Let wild mushrooms grow in the back yard? Like to sunbath in the nude?

If so, I’d steer clear of buying property where you automatically become a member of a homeowners association.

On the other hand, if you like rules, regulations and restrictions that keep things tight and tidy, the only concerns you need have are:

The homeowners association has cash reserves
Its rules and board are reasonable
The board has term limits

A Growing Trend
According to the non-profit National Center for Policy Action, approximately one in six people in America, or about 50 million residents, live in a community regulated by a homeowners association. These range from co-op apartment buildings in big cities to subdivisions in small suburbs.

So when you buy a home in a new subdivision, a planned unit development (PUD), a common interest development (CID) or a co-op, it’s very likely your deed will in include something called covenants, conditions and restrictions (CC&Rs) that regulate property use. As part of the deal, you automatically become a member of the association—there’s no saying “no.”

Some associations enforce each and every rule in strict military style; others are less regimented. Their purpose is to protect the community, to maintain the common property and to enhance the value of the houses or apartments in the association.

De Facto Governments
The typical homeowner’s association:
Collects association dues. These help maintain the common property, including landscaping, playgrounds, pools, security patrols.
Imposes special assessments. These are used to finance major improvements and repairs.
Enforces rules. These include house paint colors, parking policies and the like (see list below).
Fines residents who break the rules.
Forecloses. In rare cases, the board can foreclose on homeowners who cannot afford dues, assessments, fines.

Before you Sign on the Dotted Line
It’s not uncommon for homeowners to sign away their rights without realizing they’ve done so. And after you sign, it’s too late to do anything about it. So, before going to contract, find out if the property you’re considering comes with a CC&R. If it does, read the document carefully to see if the regulations are compatible with how you like to live. And ask to see the association’s financial records. If these documents are complex, your lawyer should review them with you.

Talk to any residents you know. Ask to meet with a board member. Find out what problems there may be.

The most common CC&R governs the colors you can paint your house. But they can have much broader control over other aspects of your day-to-day life. Among the things associations often regulate are:
Basketball hoops
Blinds and drapes facing the street
Boats—number and where parked
Cars—number and where parked
Clotheslines
Fences
Flag flying
Garage sales
Garbage cans
Home businesses
Lawns, landscaping, trees, hedges
Lawnmowing schedules
Mailboxes
Motorcycles, motorbikes, motor scooters
Noise
Open garage doors
Outdoor lights
Open garage doors
Pets
Pools
RVs
Roof shingles
Sheds
Signs on lawns or in windows
Swingsets
TV antennas
Trailers
Tree houses
Wind chimes

Making Changes
If, after you move in, you’re unhappy and want to get a variance, even a small variance such as getting a kitten or putting up a retractable clothesline, you’ll be required to submit an application and pay a nonrefundable administrative fee. You may be asked to attend a formal hearing. You may or may not win your case.

And, if you wish to go a step further and make a structural change, such as building a fence, adding a deck or enlarging the kitchen, you’ll not only have to get permission from the association but you’ll also be required to comply with the area’s zoning rules.

If you decide the heck with it, and fly the flag from a 12-foot flagpole even though it’s against the rules, your association can fine you. In rare cases, if you don’t pay the fine, the association has the right to collect the money by selling your house—not very likely to happen but such drastic steps could be part of the bylaws.

Fees and Assessments
Homeowners associations also have mandatory monthly fees, used to take care of any common property, such as lawns, swimming pools, jogging paths, golf courses, tennis courts, or lakeside docks. Fees are typically hiked as expenses rise.

Most associations can also impose hefty special assessments (without getting a majority membership vote) for major things such as a new roof, updated electric system, or structural shoring up of a building.

If you’re on a tight budget, these payments can be onerous. So, before moving in, find out how much and how often the board can raise fees and levy assessments.

Bottom Line: Look Before You Leap
If you move into a community run by a homeowners association, you are required to abide by its rules, like them or not. If you don’t want to live by the legally-binding covenants, then buy somewhere else. On the other hand, if the association has reasonable bylaws, an emergency reserve and intelligent board members, you will benefit from the protection it offers residents and their property.

For More Information
Read: Questions & Answers About Community Associations by Jan Hickenbottom. Available at most public libraries or from the publisher, the Community Associations Institute Research Foundation in Alexandria, VA.

Nancy Dunnan

You can always tell when it’s summer at my house. Not because of the homegrown flower arrangements in vases, or the gourmet dinners whipped up on the grill. Summer arrives at my home with no such magazine-cover prettiness. You can tell it’s summer at my house when you see the columns of tiny ants marching across my kitchen counters.

When temperatures rise, pests perk up. “Insects are temperature-dependent. When weather gets cold, their metabolism slows and when the weather warms, their metabolism increases in activity so we see more activity in the warm months,” says Greg Bauman, Technical Director of the Professional Pest Management Association.

When your place becomes a summer home for insect pests, the results can range from a mild nuisance to the complete destruction of your home. Watch out for these bad bugs of summer.

Termites
Termites can wreak havoc on your home—these insects eat wood. “They destroy more homes than fires or floods each year, with annual damage in the $2.5 billion range,” says Bauman. And here’s the rub: They’re hard to find, even when they’re digesting your subflooring. How to identify them: The bugs themselves generally have an off-white body, and a thicker “waist” than an ant. Their antennae are straight, not bent, and flying termites have four wings that are all the same length. Termites swarm once or twice a year during warm weather to mate, and you may see them then. But you generally do not see the ones that are tunneling through your home.

So how do you find these home wreckers? Walk your home’s perimeter once a month, and look for small mud tunnels on the foundation. Termites build these for covert, humid access to your wood. Also look for broken-off wings and sandy, wood-colored termite droppings.

Preventative measures include making sure the wood part of your house has no contact with the ground. This means keep walls free of dirt piles, don’t let trellises or plants bridge from the ground to the siding, and don’t stack firewood against the house. Even thick wood mulch can provide cover for termites, so make sure your bark chips aren’t piled up around your wooden porch rails. Also keep moisture away from the foundation and repair leaks around structural wood. You see rotted wood where the downspout leaked onto the siding; a termite sees a free buffet.

Ants
That whole ant/picnic thing isn’t just a marketing creation: Ants, like other bugs, get active when the temperature rises. And the more than 20 different types of ants that may invade your home in the summer may do anything from march through your food with their dirty little feet to destroy the wood.

Bauman says ants are the most difficult pests to control. As much as I am obsessed with the little guys colonizing my countertops, carpenter ants are the ones you should be on the lookout for. According to Bauman, carpenter ants are generally larger than other ants and have one node between the abdomen and the thorax (the point between the rear and middle segments of the body—get out your magnifying glass). Carpenter ants also have circles of hair on the tips of their rears. And Bauman cautions, “Carpenter ants are not all black…some are reddish, brownish, or even a combination.”

Carpenter ants occasionally will swarm inside a house. If this happens, it’s a sure bet that there is a nest within the structure. A more likely scenario is that a homeowner will encounter the 1/4- to 1/2-inch-long ants crawling about inside the home at night. These ants don’t eat wood; they just hollow it out to create galleries, or nests. Look for shredded bits of coarse sawdust under slits in wood, or if you think something is infested, tap on it with a screwdriver. It may sound hollow, or you might even hear the sound of disturbed ants rustling inside. Carpenter ants also like moist wood for access, so repair those leaks. As with termites, keep wood, earth and debris away from siding. Also, make sure tree branches have no contact with your house: Carpenter ants are capable of invading from on high.

Smaller ants, sometimes called sugar ants, don’t tunnel through your wood. However, it is embarrassing to be wiping them off the table when you have dinner guests. These ants like to eat sweets and grease (don’t we all) and the trick to keeping them at bay is to keep your kitchen spotless. Keep food sealed in containers, wipe counters frequently, and empty the garbage religiously. “Ants love to infest cat and dog food dishes, even water dishes,” says Bauman. Clean like mad, and cut off the ants’ food supply.

Roaches
There’s good news and bad news about roaches. The good news is they used to be the most common and difficult-to-control pest, according to Cindy Mannes, Director of Public Affairs for the National Pest Management Association. Thanks to better sanitation practices by homeowners, they’ve moved to the number-three spot. The bad news: Roaches are active at night, so if you see roaches in your kitchen during the daylight hours, you may have a really bad infestation.

Roaches don’t do structural damage to homes, but they do spread germs. “Cockroach allergens have also been linked to triggering children’s asthma,” says Mannes.

Cockroach prevention includes sealing all holes and cracks that provide access to your home from the outside. Make sure to do this in the basement as well as the crawlspace. Keeping food sources scarce will help, though it’s a tough task because this bug dines on everything from garbage to wallpaper paste.

Bees/hornets/wasps
These stinging insects range from docile pollinators to nasty beasts that can put you in the hospital if the circumstances are right. Believe it or not, there are bees that can tunnel into your home as well.

Carpenter bees look like big bumblebees, but their abdomens are bare and black. They nest in spring and prefer bare, unfinished wood. The male, who doesn’t have a stinger, will hover near the spot where the female is drilling her nest. If there’s a big black bee guarding an area of your home, get closer and look for a finger-diameter hole with sawdust beneath it. Don’t poke your finger in there, though—females do sting.

Since these bees prefer unfinished wood, the best prevention is a coat of paint. Also, be careful to not let these critters into garages or sheds where they could have access to bare-wood rafter beams, shelves and so forth.

Of course, these bugs of summer are just a drop in the pest bucket. Migrating swallows can invade via a chimney. Ladybugs can completely cover a sunny south wall when the weather warms. But every critter on this list, with the exception of the cockroach, can do significant structural damage to your home. So pay attention to prevention, look for the signs, and don’t be afraid to call a professional if it looks like you’ve got uninvited summer guests.