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It’s a sad story that we’re seeing more and more here in Cincinnati. A beautiful home in a nice suburb, literally torn apart by crack. Well, ok… not the drugs that you see on tv or hear about on the news. We’re looking at the physical structure that you live in once again. Cracks in the foundation of your home are becoming more common due to the drought that we experienced in southwest Ohio and all across the midwestern US this summer.

I discussed this earlier this summer when the “drought” was actually just a slight shortage of rainfall. My blog entry on July 16th entitled An Urban Legend in Gardening?! discussed what I thought at the time was just an interesting idea without much scientific support. But today I was on the Cincinnati Enquirer website and came across this article:

Drought Cracked Foundations article on Enquirer.com

I have also saved and uploaded this article in Adobe .pdf format, see link below, as I’ve learned that The Enquirer likes to archive its articles rather quickly… therefore making my links in my blog articles useless a few weeks later unless you wanted to pay $$$ to get the article.

Drought Cracked Foundations article in Adobe .pdf format

While the article does not come right out and say “water the ground around your foundation”, it spells it out pretty clearly. The ground we have here in Cincinnati, Ohio (and the same holds true for Ohio and much of the midwest) contains a lot of clay. As clay hardens it is prone to cracks and as the article further notes, it shrinks… hence the ground around your foundation can pull away from the walls of the structure.

This sets up a few problems: 1) the ground can shift causing cracks to form in the foundation, 2) the ground can settle unevenly and your house can settle unevenly and therefore not be level (also causing cracks) and 3) when you do get rain, the ground that has pulled away from your house can act as a funnel sending water against your foundation - compounding the problems in 1 & 2.

While I am not one to water my lawn just for the sake of wanting to mow the grass more frequently, I do see the value in spending $20 to $40 more on my water bill so I’m not spending $1,000… $2,000… $5,000… $10,000 or more repairing my foundation and sealing it from leaks. I don’t have a scientific study to prove that watering around your foundation in a dry time works to keep your foundation in good shape, but I do see the results in this Enquirer article of what happens if you do nothing and the soil shifts, shrinks, or pulls away from your foundation.

As always, I welcome you comments and feedback…

I just posted a blog entry about the latest in the national real estate news, as reported by Yahoo! Finance. It’s only fair that for comparison purposes we look at how the local market in Cincinnati, Ohio is doing as well.

September Home Sales Off 15% (Adobe .pdf version of the Cincinnati Enquirer article)

While the market is pretty slow here in Cincinnati, it’s not as bad as the national average. Of course, the national averages are being driven more by the larger markets and areas that are experiencing much sharper declines - such as many parts of California and Florida. The Cincinnati Enquirer article does a good job of summarizing the softening in sale prices and the supply of homes on the market.

The recent withdrawl of some prominent and national home builders from various new subdivisions in and around Cincinnati (namely Ryan Homes as mentioned in an earlier blog entry) has increased the supply of homes available in the short term through the sale of the already constructed model homes and any speculative construction - or “spec” - homes. The fact that these builders have stopped building new homes here will help ease the 10+ month supply of homes that are currently on the market. This is a much better scenario for the local real estate market in the long term.

It would be mostly through the sale of model homes though, as not many builders have been undertaking speculative construction in the past year. Speculative construction is when the builder will start to build a home before a buyer is found, in contrast to the pre-order scenario where a buyer picks out a plot of land, signs a contract with the builder and then has the home built.

As always, I appreciate your comments and feedback…

Home Sales Plunge 8% (Yahoo! Finance News Article in Adobe .pdf format)

We all know it’s a tough market to sell a home, so this news doesn’t come as a surprise. For sellers, this is the worst market in 16 years… and this article from Yahoo! Finance points this out: “more problems to a housing industry in its worst slump in 16 years.”

While I realize this sells a lot more newspapers than if you tout that this is the best market for buyers in 16 years, I don’t think it’s fair to paint the real estate market as something people should go running away from as fast as possible. That 8% decrease in sales means that people who are currently renting and can afford to purchase a home have more buying power now than they’ve had at any time in the past 16 years.

To further the point, those that can’t afford to purchase and those being foreclosed on and can’t afford to stay in their homes are driving up monthly rent prices in many areas of the country (yet another excellent buying opportunity for real estate investors/landlords - falling prices and increasing rental income).

I guess what it comes down to is this: if your area of the country is anything like the national average or trend of falling prices and increased buying power, anyone that is 34 years old or younger has the best buying opportunity in their lifetime (since turning 18 and becoming legally able to purchase real property).

So this news, while it’s not a surprise and it is not a good sign for sellers, is actually a good thing for buyers. It would be nice to hear the news tout the pleasant news for buyers rather than continue to bad mouth the industry. The media is essentially representing the seller-side in its reporting.

As always, I welcome your comments and feedback…

This is the introduction to a new article that I’ve written. You can read the full article by clicking on the link below to the Cinventure website.

Donald Trump is known for saying “there’s no such thing as too much exposure.” And certainly no one would disagree with this when you think about the good exposure. But I would venture to guess that no one likes bad press. And the only thing second to bad press is ineffective good press, or better stated… advertising that just doesn’t work.

Read the full article on the Cinventure website. Cinventure.com is a website for entrepreneuers. As a contributing author and blogger on the website, you will find this full article and many others written by myself as well as other entrepreneurs and bloggers like Aaron Forgue and Ryan Walker. You can read all of them free of charge and even subscribe via RSS or email.

As always, I welcome your comments and feedback…

The US Census Bureau is a great resource that most entrepreneurs over look. Aside from all of the excellent demographic information that you can find, the Census also handles industry classification codes, known as NAICS (pronounced nix), which stands for North American Industry Classification System. While it is certainly important to understand the demographics of an area to better target your advertising and marketing, it is equally important to understand who your competitors are, and the Census Bureau can help us there, too.

The NAICS code for a given business will be six digits long. For instance, I am engaged in the sale of real estate. But if you type in Real Estate into the search box on the NAICS website, you get numerous results. There is Lessor of Nonresidential Buildings, code 531120. Since I am a Realtor, I am better classified under Offices of Real Estate Agents and Brokers, code 531210. This is a good time to point out that any one business could fall into multiple class codes. If I was a Realtor that also handled the leasing of non-residential buildings, both codes might apply. You certainly wouldn’t be able to put General Electric into one classification code; rather, you would have to determine a number of codes that apply to its divisions.

One more important thing to note: the classifications can be very broad or very narrow. The more zeros there are at the end of a classification code, the broader the label. For instance, code 445000 is Food & Beverage Stores. Code 445100 is Grocery Stores. Code 445120 is Convenience Stores. This helps identify the industry and any particular niches within the industry.

So where am I going with all of this? If you know the classification that applies to your own business, your products and services, and your industry in general, then you can identify a number of things. You can identify who your greatest threats are with respect to competition. Then there are potential new customers if you’re a Business-to-Business (B2B) entity. You can even see whom your suppliers’ competitors are in your supply chain to help you find the best prices for the things you need to run your business.

So you’re saying to yourself: so I have a few numbers scribbled on a sheet of paper. What do I do with these things?! Well, aside from scouring the Internet and researching individual companies, my best advice is to walk into any public library and head to the reference section. Ask any librarian where you can look up companies by NAICS codes and they should have a directory to assist you. You may have to specify the full name of the NAICS when asking for its directory.

Also, as a brief side note, the NAICS replaced the US Standard Industrial Classification system (known as the SIC). Since the NAICS is relatively newer, you will see references to both codes. Just know they are essentially serving the same purpose, to identify industries and classes of businesses.

This same data can be used by investors when deciding whether to invest in a company or not! Using this data can help compare a company to its peers and the industry as a whole. Is the company considered a leader or a laggard?! Even if they are a leader, is this an industry that you want to be investing in right now?! This data helps find answers to these questions.

As always, I welcome your comments and feedback…

You will notice that I posted this same entry on the Cinventure.com website, where I am a regular guest blogger. CinVenture is a website geared toward entrepreneurs in the Cincinnati, Ohio metropolitan area (but is not restricted or limited to people in the area). Please check out the other interesting articles and links on the CinVenture website… and tell them Thomas Goodwin sent ya!!! Well, better yet… subscribe to the feed or check back often to get the latest news and columns on business start ups in the Cincinnati area! Leave comments and feedback, network, and feel free to email and submit ideas for new articles. We’d love to hear from you on CinVenture AND on ThomasGoodwin.com…. Thanks!

Ok, I realize this is a financial blog and Chris Henry, the suspended Bengals football player, has absolutely nothing to do with real estate, insurance, or investments… but I just couldn’t resist.

According to the Cincinnati Enquirer, the Cincinnati Bengals have applied to the City of Cincinnati requesting permission to shoot pigeons. Apparently these pesky birds are creating quite a mess in the stadium, even during games. The Bengals are requesting permission to shoot the birds to remedy the problem.

One can’t help but think this is amusing given the fact that the Bengals’ players have some legal problems off the field, notably for weapons charges (that would be you Chris Henry!!!) I guess this will give Chris something to do during his eight game suspension… hey, he needs to make a living too ya know!

May I also suggest to the Bengals that they have Deltha O’Neal and Odell Thurman serving up beer in the stadium’s concession stand while they serve their suspensions?!

Here’s an excellent story on ESPN.com citing the problems with the Cincinnati Bengals and also pokes fun of this town in general! I think it’s rather humorous and I even live here so it’s healthy to laugh at ones self every now and then. Enjoy!

The only thing fitting that I simply have to add to the ESPN article is a quote by Mark Twain: When the end of the world comes, I want to be in Cincinnati. Because Cincinnati is always 20 years behind the times.

As always, I welcome your comments and feedback…

Just a reminder that the deadline to file/apply for the Homestead Exemption is October 1st, which is this coming Monday.

The Homestead Exemption is a tax break for homeowners age 65 or older or disabled. If you are not yet 65 but will turn 65 prior to the end of this year (this tax year I should say… which for the vast 99.9% of us is the same as the calendar year) and owned your home as of January 1st of this year, then you are able to apply as well. Furthermore, it is my understanding that only one of the owners (if the property is jointly owned by a husband and wife) needs to qualify in order to claim the tax credit. When in doubt, submit the application and if it’s rejected you will be notified why. The county auditor is required by law to notify owners being rejected by November 1st, so within a month of the deadline. Or you can simply call your local auditor’s office, your accountant/CPA, or tax attorney for advice.

You can download an application (in Adobe .pdf format) from the State of Ohio’s Department of Taxation website or you can get them at the county auditor’s office. You cannot file the form electronically; you must submit it to the county auditor’s office in the county that you own your home. A signature is required on the form and proof of eligibility.

Previously the Homestead Exemption was only available to those individuals that were 65 or older and made no more than $26,200. The income qualification has been removed, thus making all seniors who own their homes eligible for the tax credit. The tax credit previously only made the first $5,700 of a home’s value exempt from property tax, this has been increased to the first $25,000 of the home’s value being exempt along with the elimination of the income requirement.

As always, I welcome your comments and feedback…

The non-compassionate housing market. We hear about those people that were duped into biting off more than they could chew in a mortgage payment, often by using Adjustable Rate Mortgages (ARMs) or nonconventional loans and subprime loans.

But when the housing market pulls back there is an interesting bunch that is also affected, and you usually don’t hear much about them. These are the people who buy houses in a new community or subdivision, only to end up seeing the subdivision fizzle and be surrounded by empty lots. The Cincinnati Enquirer did an excellent job of bringing this problem to light in an article on its website: Ryan Halts Building in Some Areas

There is an added risk to being the first person to buy a home in a new subdivision. Sure, you get your choice of lots. But you also are living in your home and making payments long before the subdivision is finished. It’s not uncommon (at least in the greater Cincinnati, Ohio area) for a decent sized subdivision to take anywhere from 2 to 4 years to complete. And that was in the good times when homes were pre-sold prior to construction and they were backordered.

The Enquirer article mentions a couple that bought a home and are now one of only 4 homes in the new development. The homebuilder (Ryan) had promised a walking trail, community pool, play areas for kids, and two fishing ponds. Well, there are 4 homes out of 200 possible homesites and there are none of the ammenities that Ryan promised. To top it off, Ryan Homes pulls out of the community and says they will not be building any more homes (which of course means they won’t be adding a pool, trail, etc.)

These four buyers now live in a subdivision filled with graded lots, empty and unfinished streets, and a generally depressing looking, undeveloped neighborhood. I’m sure if you drove through the area and were not familiar with the situation you might think some kind of war took place, or a pandemic occurred.

The rest of us need to learn from this. It’s much better that we learn at others’ expense rather than our own. When you go to buy a newly constructed home, or when you plan to build a home, consider the following:

Many people go straight through the builder and the builder’s sales representative. Resist this urge. Builders are almost always happy to work with Realtors; let’s face it Realtors help them sell “spec homes” (speculative homes built without buyers to be sold on the open market) as well as sending the builder referrals for custom built homes and pre-built orders. I also don’t know of a builder that would refuse to let you hire your own real estate attorney. Considering most builders have their own pre-printed real estate contracts, having an attorney is a great idea!

Back to our Enquirer article and the people who make up 2% of the lots but 100% of the subdivision’s population. While the homebuilder promised all these cool ammenities, I am almost willing to bet there was no mention of walking trails or a pool in the contract to buy the home at whatever price they agreed to pay. Without a doubt, these homeowners have suffered a decrease in property value since the builder pulled out of the subdivision, especially without the ammenities that they were promised and were naturally taken into consideration when the buyer agreed to pay the contract’s stated amount. But without those ammenities being expressly written into the contract, are they owed such ammenities?! That would be a legal question that I as a Realtor cannot answer. This is where having an attorney that specializes in real estate would make all the difference in the world.

Remember this if you remember nothing else at all: the builder and the builder’s sales representative will ALWAYS be working in their own best interest, their own self interest, and NEVER yours. You are their CUSTOMER, not their client. They want to get the highest sale price out of you that they possibly can. And by going directly through the builder you are letting down your guard and showing them your poker hand. When you go through the builder you will never see their cards but they will see yours. That doesn’t sound like a fair handshake.

Have a pre-closing home inspection by an independent, third party certified home inspector of your choice. Construction defects can sometimes take years to discover. If the basement starts leaking 4, 5, 6 years or more down the road it will be difficult to tell whether this was a construction defect or something that happened later down the road. A good home inspector can help detect problems early on and you can have them corrected before you even close on the house.

We could go on at great length about new construction and the many ways you need to protect yourself during a deal to buy a new home. This article is just scratching the surface, and the Enquirer article helped remind us to watch out for our own best interest in these types of deals. If you’re considering buying a new home or having one custom built, you are wise to have people on your side to protect your investment.

As always, I welcome your comments and feedback…

In a follow-up to my Sept. 11th blog entry regarding my real estate license renewal, I have met the continuing education requirements for my Ohio insurance license as well now. My insurance license requires 20 hours of continuing education every two years. I hold both the property/casualty (Series 11-35) license as well as the Life/health/variable annuities (Series 11-36) license. I have been an Ohio licensed insurance agent since 2002. You can read more about my licensing and professional designations on the About the Blogger page.

As always, I welcome your comments and feedback…

Although I do have a category in my blog for Entrpreneurship here on this website, I am also a columnist for Cinventure.com. If you haven’t seen the Cinventure website and are interested in entrepreneurship, I would encourage you to visit the website and even subscribe to the feed. You can even subscribe by email.

Today I posted a new article to the Cinventure website regarding negotiating skills. Now, most of the articles you read about negotiating focus on how to actually think and act in the negotiation itself. My article takes a step back and examines the things you should do to prepare for the negotiation ahead of time.

In the future I may post my articles on both this website and the Cinventure website (as I have even done in the past for some articles), but it seems like a lot of extra work for the same article. Please take a minute to visit Cinventure.com and read the newest article about preparing for a negotiation.

As always, I welcome your comments and feedback…