Do You Recall
Given the amount of paperwork that plagues our daily lives, filling our a product registration from for a toaster or a toy seems like a waste of time...but it might be time well spent.

Registering products lets manufacturers know how to reach you if there is a product safety issue that requires your attention. Depending on the product, a manufacturer might not have the responsibility of ability to contact effected owners, but manufacturers of smaller household items probably don't have any idea owns their products. The onus is on consumers to check for recalls and stop using un-safe products. "Basically, it's caveat emptor, let the buyer beware," says Tod Marks, senior editor for Consumer Reports. "If you want to protect yourself, you have to do your homework. Product recalls are going on all the time; it's nothing new. The problem is that people don't hear about them because most media outlets fail to report on a recall unless it grabs public attention."

If you're thinking this probably doesn't effect you, you might want to think again. The list of manufacturers and the products they've recalled for this year for safety reason includes : Acer computer batteries, Asko dishwashers, Thermador ovens and cooktops, Beautyrest electric blankets, Black & Decker trimmers/edgers, Casio keyboards, Circuit City flat-panel TV mounting brackets, GE dishwashers and gas ranges, Honeywell valves (used in fireplaces and stoves), Jenn-Air dishwashers, Maytag dishwashers and washing machines, Milwaukee power tool batteries, Nokia cell phone batteries, QVC toasters and convection ovens, Rheem/Rudd Richmond tankless water heaters, Sears Craftsman circular saws, Kenmore dishwashers, Sunbeam microwave ovens, Toro electric blowers, Trane air filtration systems, Weber gas grills...and that's just the recalls for 2007.

The recent RC2 Corporation recall of .15 million Thomas & Friends trains and rail components covered with lead paint leads us to China. The number of Chinese products being recalled by the CPSC has doubled in the last five years, driving last year's recall to 467, an annual record. China is now responsible for about 60 percent of all product recalls, compared with 36 percent in 2000.

So how do you find out about product recalls that don't make the evening news? The U.S. Consumer Product Safety Commission (CPSC), located on the web at http://www.www.cpsc.gov/, is the government agency that issues recalls on household products. Not only can you search the site by date or product, you can also sign up for e-mail alerts in specific categories such as infant and children's products, sports and recreation products, etc. Another site, recalls gov, lists current recalls by category: consumer products, foods, medicines and cosmetics, motor vehicles and car seats, environmental products, meat and poultry products, and boats and boating safety. As with most informational resources, the trick is to use them.

If you determine that you have a product that's been recalled for possible safety issues, stop using it. "When we announce a recall, it's for a good reason," says Patti Davis, spokeswoman for the CPSC. "Visit the manufacturer's website or call their 800 number for more information."

Understanding Easements
An easement is a non possessory right to use land in the possession of another. Imagine that your neighbor has to use your driveway to access her otherwise unreachable property, and you are agreeable to this. An arrangement is formalized by conveying an easement to your neighbor, allowing her a legal right to enter and use your driveway to reach her property. The easement does not grant her any ownership interest in your land.

Expressed or Implied?
By documenting the easement, you've created an expressed easement. The utility company's right to maintain electrical lines that cross your property is an implied easement, based on the prior use; the lines were in place when the land was purchased.

Grantor and Grantee?
The heart of an easement is a grant of use. The party that grants the right of use is the grantor, while the party accepting the right is the grantee. In this case, you would be the grantor, and your neighbor would be the grantee.

Dominant or Servient?
Easements have a benefit side and a burden side. The property that benefits from the easement is the dominant estate. The property that is burdened by the easement is the servient estate. In our example, your neighbor benefits.

Appurtenant or In Gross?
An appurtenant easement is viewed as attached to a property, and unaffected by a change in ownership. An in gross easement follow the grantee. Because anyone who purchases your neighbor's property will need to use your driveway, the easement is attached to the property.

Affirmative or Negative?
The easement allowing your neighbor to use your driveway is affirmative because it grants a right of use. By contrast, a negative easement operates as a land-use control, possibly prohibiting agricultural use or construction that would block a view or restrict access.

Prescriptive Easements
A prescriptive easement arises if someone uses part of your property without your permission. The most common prescriptive easement arises when a fence is erected on the wrong wide of a property line. The legal test to acquire a prescriptive easement of another owner is that the use must be (a) open, not secret, (b) notorious, clearly observable, (c) continuous, without interruption for the number of years required by state law. The minimum hostile use varies from 5 years in California to 30 years in Texas.

Buyer Beware
To avoid unexpected surprises, property buyers should always obtain a copy of the owner's title insurance policy at the time of property purchase. If any issues arise, the title insurer is liable for the diminished value of the property or the Cost of removal. Even so, not all easements are properly documented or recorded. Any time an easement on the title report raises concern or is confusing, you may want to consult a real estate attorney to review the language. One example of a "red flag" easement would be a shared driveway agreement with no maintenance provision. Depending on the nature of the concerns, you may then need to hire an appraiser or surveyor (to assess a problem utility easement), or an environmental specialist (if a conservation area or geological rights are at issue).

What's It Worth? CMA's vs. AVMs

It is estimated that 80% of homeowners are starting their shopping online, eager to take advantage of publicly accessible listings, photo tours and other online tools to acquire information about the homes and neighborhoods they are interested in. the proliferation of online tools available to these highly motivated home buyers continues to increase

Readers of this newsletter are familiar with the Comparable Market Analysis (CMA) is to determine the market value of a property, by comparing it to similar, recently sold properties nearby. the market value represents an educated estimate, based on an agent's personal experience and knowledge of the area and recent market activity.

Many online real estate sites are promoting the AVM as a replacement for the CMA. An AVM (Automated Valuation Model) is an automated software tool that establishes a market value for a property by aggregating information harvested from county and tax records, census data, and proprietary databases. AVM's have been a popular resource in the lending ccommunity for a while, and are utilized to validate and supplement the findings of traditional appraisals when financing requires expedited turn-arounds. AVM reports typically include property valuation, comparable sales, and demographic information, supposedly providing up-to-date information on demand; their use is increasing in real estate.

Unfortunately, AVMs can only perform their calculations based on published information which may or may not be complete or accurate. And, the computers generating the AVM can not see the view, or the quality of construction of that recent kitchen remodel, or assess first-hand a home's condition. It takes a trained eye and someone who knows what buyers are looking for in a given market to make an accurate appraisal of a home's worth.

Where AVMs are most accurate in highly uniform neighborhoods such as condominiums or developments with identical floor plans, they are inaccurate in areas where homes have different floor plans, features and desirability. An agent who has personally toured recently sold homes nearby will be able to report on the desirability, condition, and both the listing and ultimate sale price of competing homes; an AVM based on county records will only be able to report the sale price.

Not surprisingly, a dispute has broken out between traditional home appraisers and the data companies that harvest publicly accessible information for use in AVMs, and claim that appraisal reports are systematically being looted of key information without permission or compensation. They say that while AVMs are cheaper than appraisals, you get what you pay for.

While AVMs can provide a home buyer with supplemental information, a CMA provides a seller with an accurate, informed and realistic valuation of their home..filtered through the experienced eyes of an neighborhood specialist whose job it is to know the inventory and stay current.

Although we will certainly see AVMs moving forward, current technology is no replacement for an experienced professional when it comes to putting a value on the your home.

To Gift, or Not To Gift

Considers gifting real estate to a loved one? If so, it is important to consider the tax implications.
The higher the cost basis for a piece of real estate, the lower the potential capital gain (and taxes) when that asset is sold. When someone dies, and again six months later, the executor of the estate values all the property in the estate and chooses whichever valuation dates result in the least possible tax consequences. The cost basis for the heir (s) of a property will be the fair market value on the chosen valuation date. This is called "stepped-up basis. Inherited property should be appraised shortly after title is changed, to establish the new stepped-up basis. If you inherited property but have no evidence of your stepped-up basis, hire an experienced licensed appraiser to appraise the property's fair market value as of the date you received title. Such an appraisal is well worth the cost, because establishing a stepped-up basis allows you to minimize further capital gains taxes when you decide to sell or trade the property.

Federal Estate Tax Exemptions for decedents dying in:
2004: $1.5 million
2005: $1.5 million
2006: $2 million
2007: $2 million
2008: $2 million
2009: $3.5 million
2010: unlimited
2011: $1 million

In a gift situation, however, the recipient's cost basis is the same as the donor's cost basis. If your home was purchased ten years ago for $100,000, that cost basis would be passed from you to the recipient of your generous gift. Unless they are a charity, they would have to pay the same capital gains tax on the appreciated value of the property that you would, were you to sell it. Another possible issue is that most states have laws that prohibit people from receiving state aid if they have given away assets that could have been used for things like medical expenses or nursing homes; judges can unwind financial transfers of assets that occurred within three to five years of a request for state aid.
Savvy homeowners can deed title into a revocable living trust. When the principal or trustor dies, the living-trust becomes irrevocable and its assets are distributed. Probate cost and delays are avoided, and the new owner receives a stepped-up basis of market value as the date of the decedent's death.
If the total net estate exceeds the allowable federal estate tax exemption (see above chart), the estate pays any federal estate tax due before title is transferred to the heir(s); assets left to a surviving spouse are free of federal estate tax under the marital exemption, regardless of total estate value.
If you are gong to keep your property of the rest of your life and pass it on to your children as an inheritance, there's really nothing you need to do right now. Eventually, though, someone will have to pay the tax on the gains. the best strategy is to sit down with a tax professional who can help you explore the tax consequences of your various options, and choose the most profitable path.
Please no NOT act of the information contained in this article without talking to a qualified tax professional or estate planner! Please DO call for a referral to a qualified tax professional or appraiser, or with any comments or questions about this article.

Who's Keeping Score?

Your credit score is a numerical summary of how much you owe and how promptly you pay your bills. A higher credit score will save you thousands of dollars on your mortgage, insurance, car loan, and credit card costs. Auto insurers, for example, use credit scores to assess your risk of getting into an accident because studies show that consumers with high scores tend to file fewer claims.
The most commonly used credit score number is the FICO score, which ranges from 300-850. Only 13% of consumers have scores above 800 (with a median score of 723) and many lenders require a score of 760 or higher to get the best interest rates. In a recent comparison, borrowers with a score of 760 or higher qualified for an average interest rate of 5.8% on a 30 year fixed-rate mortgage, while borrowers with scores of 620 to 639 qualified for an average interest rate of 7.4%. For a $216,000 mortgage, that translates into $227 more each month, or $2724 per year.
In addition, a higher credit score will reduce the amount of documentation you are required to provide when applying for a loan.

Score What To Expect
720-850 lowest rate, with little or no documentation
680-719 marginally higher rates, full documentation
620-679 rates .5-1.5% higher, full documentation
below 620 rates 2-2% higher, full documentation

Quick Credit Score Tips

Your credit score is tabulated from you payment history (35%), outstanding balances (30%), length of credit history (15%), type of credit (10%), and credit inquiries (10%)

*Pay your bill on time. More than 1/3 of your score is based on your payment history; the later you are, the more points you lose. If you've fallen behind, pay up now.

*The percentage of your credit limit that you've actually used is more important than the amount of credit to which you have access. Experts recommend keeping the balance on your credit cards below 25% of your available credit; you can also ask your creditors to increase your credit limits.

*The length of your credit history accounts for 15% of your FICO score. If you open a flurry of new accounts, lender worry that you might go on a borrowing binge. Don't apply for new credit within three to six months before applying for a mortgage.

*Closing old accounts can actually hurt your score by raising your utilization ratio. Owing $5000.00 looks a lot better when you have a $20,000 maximum on all of your credit cards (a utilization ratio of 25%) than it does when you have a limit of $7000 (a utilization ratio of more than 70%)

*More utilities are reporting to the credit bureaus...which means that paying your electric and cable bills on time is just as important as paying your credit card bills.

As discussed previously in this column, consumers are now entitled to one free credit report per year (visit https://www.annualcreditreport.com for more information). Your mortgage broker is a good place to start to discuss credit score strategies.

HOME PRICES ON THE RISE IN OAKLAND

The Contra Costa Times reported on February 7,2007 that Oakland was one of the few areas in the East Bay that reported a rise in the median home price in December year over year, according to Data Quick Information Systems Inc. The city's 332 houses and condos that were sold in December had a median sales price of $534,750, a jump of $35,250 (7.1%) from December 2005.

HOME PRICES ON THE RISE IN OAKLAND

The Contra Costa Times reported on February 7,2007 that Oakland was one of the few areas in the East Bay that reported a rise in the median home price in December year over year, according to Data Quick Information Systems Inc. The city's 332 houses and condos that were sold in December had a median sales price of $534,750, a jump of $35,250 (7.1%) from December 2005.