Pro-rated taxes often confusing during closings

Both consumers and real estate agents alike often struggle to understand Ohio's pro-ration of taxes at closing. The latter part of the year is especially troublesome as sellers are often surprised by the amount that shows up on their HUD statement as it can be nearly a full year's tax that they get charged.

So what happens?

First, it's important to understand that Ohio property taxes are paid 6 months to 1 year in arrears. For example, the bills for your taxes from January through June of '09 are actually mailed in December of the current year or January of the following year. When you sell your home, the title company is required to collect the amount of taxes incurred while you still owned the property but are, as yet, unpaid.

Sellers often believe their tax bills are already paid since they are included with a mortgage payment. The thing to remember here is that funds are escrowed to pay future bills. What sellers overlook is that they will be refunded those amounts when the mortgage is paid off. (According to at least one title company, there are a few occasions where the mortgage payoff is reduced by the escrowed funds - but this is rare.)

Buyers, on the other hand, see the tax amount on their side of the closing statement as an "amount paid on their behalf." This is to address the situation where, initially, the buyer will actually receive a tax bill for the period before they lived in the home. In many cases, the buyer will be depositing at least 6 months of taxes with their new lender in an escrow account and won't realize that the initial tax bills paid from escrow were for the earlier period.

It really does balance out on both sides, but those that aren't familiar with this idiosyncrasy of Ohio real estate can sometimes get a little bit of a rude reminder at closing time.

Can hot water recycling save money?

Tired of waiting several minutes for hot water to reach your faucets in the morning, watching water wasted running down the drain? One technology that has gained some attention recently are "hot water recirculators" that promise to make hot water almost instantly available wherever you need it.

The notion of a hot water "recirculator" sounds pretty good on paper: less water used waiting for hot water to reach the tap, potential for less energy used for water heating, and relatively inexpensive to buy and install. Some localities have even implemented rebate programs for installing one of these devices as they have been shown to help conserve water.

While there are variations among designs, the basic operation consists of some way of returning cold water to the heat source until the temperature reaches a set level or alternately, keep hot water lines in the home filled with water at a set temperature.

So far, detailed third-party analysis of the savings obtained from these devices seems to be lacking. Water conservation seems the biggest return among users - not so much on the energy side. Without some hard data comparing different systems it's difficult to make a clear recommendation, but it seems reasonable that there are situations where the devices will come in handy and achieve some savings. Following are some pluses and minuses that you may want to consider:

Pluses -

• Reduces wait time for hot water at your tap
  
• "Unused" cold water not simply going down the drain, reduces waste
  
• Possibility for saving money on utility bills (should evaluate as a combination of water, gas, and electric usage)
  

Minuses -

• Some devices may not be usable or effective in certain situations (such as coupled with a tankless water heater)
• Some devices target only a specific location or faucet, not for the whole house
  
• May require installation of additional electric outlets adding to overall cost
• Other plumbing options may be available that are more cost-effective

While some of these devices may be cheap and easy to install, I would recommend checking with a plumbing professional to see if this is really the best option for your situation.

For more information, check out these websites:

• Demo and installation of pump attached to water heater (Lowe's product demo)
• Homeowner's experience with recirculation vs. tankless and solar
  
• Detailed analysis of a particular type of system at Oak Ridge National Laboratory
• Toolbase overview of hot water recirculator
  

October sales reflect tax credit uncertainty

Portions of October's home sales numbers quickly illustrated the effect that the first-time homebuyer tax credit had on the market. As uncertainty lingered on whether the credit would be extended (and, for better or worse, now expanded), the impact was seen most significantly in new home construction. According to the National Association of Home Builders:

• Housing production fell 10.6% in October
• Single family starts declined 6.8% and multi-family dropped 34.6%
• New permits declined 4% to an annualized rate of 552,000 units. Near the multi-decade lows seen earlier this year.
  

New housing was the "canary in the mine" since builders were the first to tell customers they could not guarantee closing on a home by the original credit deadline. It's somewhat likely that the big drop off in construction was what prompted implementation of the expanded credit.

While new home construction was worrisome, existing home sales continued to show positive signs we've seen in the past few months. Key stats in the Cincinnati area include:

• Inventory to sales (or absorption rate) stayed steady at 7.5 months.
• Inventory continues to come down which could help stabilize prices. However, a point of concern continues to be the expected downstream foreclosure volume as delinquencies hit an all-time recorded high.
  
• Average sale prices, while still down at approx. $150,000, seemed to be flattening out from earlier declines

(click to see related charts)

Now that the credit has been expanded beyond just first-time buyers, there's some expectation that sales will stay relatively active through the winter and the "spring market" will arrive early next year - possibly as soon as January.

Top 10 winter energy saving ideas

Scarier than Halloween, it's nearing time again for those winter heating bills. Gas and energy prices might give us a little bit of a break this year, but don't overlook some basic ways to keep dollars in your pocket. Here's 10 reminders for winter energy savings:

1. Have routine maintenance performed on your heating system. This includes changing filters. If you have a media filter that gets changed once every 6 months, now might be a good time to do it.
2. Insulate and close air leaks. Usually the cheapest way to save money on your heating bills.
   
3. Fix those window and door drafts. Storm windows, caulk, weatherstripping, plastic seal - whatever it takes.
4. If you have a fireplace, but don't use it, you may want to insert a chimney balloon into the flue to avoid your heat going up the chimney. A piece of insulation may serve the same purpose - but don't forget it's there!
   
5. If you are still doing some fall landscaping, look for ways to plant evergreens that will block cold northerly winds.
   
6. Have a hot tub? Empty and winterize unless you really plan to use it during the winter months.
   
7. Use windows and sunlight to your advantage. Let the sun shine in during the day whenever possible to gain some natural heating.
8. Program your thermostat for lower temperatures while you are away or sleeping. Don't have a programmable thermostat? Inexpensive ones can be purchased for less than $50 at places like Lowe's and Home Depot. Usually easy to install too. Another big bang for the buck item.
   
9. Reverse ceiling fans to push hot air off ceilings (especially helpful in rooms with a cathedral ceiling).
10. Put an insulation blanket on your water heater tank and limit the temperature to 120 degrees.
    

Visit energysavers.gov for even more ideas.