By Elizabeth Razzi
Sunday, August 31, 2008

Useful advice, along with the occasional touch of real estate agent defensiveness, came in through the mailbag this summer. Here's an edited sample.

A column about paying off a mortgage early drew comments addressing both the financial and emotional considerations.

Gerry Griffin, a real estate agent in Arlington, offered a useful comparison. "Since 1926, three years before the Depression, the stock market has returned an average of about 10 percent annually," Griffin wrote. "Six percent [for mortgage interest saved] is pretty good. Ten percent isn't bad either. Both should be carefully considered."

Mike McGinn, of California, Md., wrote: "In January I paid off the 30-year adjustable-rate mortgage that I took out to buy my home in1997. It took 10 years and 5 months and wasn't that hard to do. I feel great!

"As I watch the foreclosure storm raging around me, I know that I have nothing to worry about. Banks are more than happy to extend me a line of credit since I've got a 100 percent paid-in-full property. With the market in the tank, and my bank account flush with cash, I can snap up great deals that in five to 10 years will be paying me back in spades."

Doug Alexander of Cheverly wrote: "The benefit we've seen since paying off our mortgage is that we have been able to invest the freed-up cash to max out our 401(k)s, which we were not able to do before. Even though we don't get the mortgage tax deduction, we do get the deduction from investing in our 401(k)s."

But not everyone was a fan.

Greg Peterson of Seattle wrote: "I paid extra on my mortgage every month for years, sometimes double payments. I got laid off and had trouble making the payments and the bank absolutely did not care about my past payment history. All they were concerned about was the last three months. I had tons of equity in the house, but couldn't tap it because I wasn't working. I got out of it, but it was a terrible position to be in."

People who make a living as home stagers were displeased that I questioned whether sellers need to pay their fee when they're already paying a real estate agent.

Sharon Beardsley, a stager in Fairfield, Conn., wrote: "Staging is not decorating. It is turning a home into a product to be sold. Not everyone, including Realtors, can or wants to stage a home. Stagers know how to read rooms so that we can direct the buyer's eye to a beautiful focal point and help the buyer feel comfortable and imagine themselves living in that home."

Jan Maloney, a stager in Germantown, wrote: "I've worked with many real estate agents who are most hesitant, even afraid, to tell their clients the truth about what their homes need to look like to be competitive with others in similar neighborhoods or even with new construction."

Andy Kraus, a real estate agent in Frederick, wasn't pleased, either. "We agents can go get home staging training, but for a lot of us, we'll never be as good as somebody who's got the natural talent. If I know somebody who's a star home stager, I'd be a fool not to recommend his services to my clients. I'm willing to pay for it-- but not upfront -- rather, at settlement off the top of my commission. Having a seller put some capital into the mix helps me know that they are really committed to getting their home sold. Otherwise I run the risk of putting out significant amounts of cash to list homes where the sellers, for one reason or another, fail in their part of the process of getting their home sold."

But Jo-Ann Fiscina,a homeowner in North Bethesda, shared my skepticism. "When we sold our house in Chevy Chase 10 years ago, 'staging' was in its nascent form, or so it seemed at the time. Since that time, I have watched the 'profession' establish firm footing in the world of real estate, but I still harbor the same doubts you express about putting pre-sale fix-up money in that basket. The growth there is akin to the expansion of the wedding planning industry which, thank goodness, did not come into its own until after my three children were married."

And some lawyers offered advice about short sales, foreclosures and bankruptcy.

Christopher L. Rogan, a bankruptcy lawyer in Leesburg, wrote: "I suggest that sellers rethink the short-sale option, as often a bankruptcy will still be necessary to clean up the deficiency (the difference between the sale price and the debt) along with other debts incurred while trying to sell the house.

"Under the 2005 revisions to the Bankruptcy Code, debtors are often more likely to qualify for Chapter 7 relief if they still have a mortgage expense. So, borrowers faced with the loss of a home (through a short sale or foreclosure) should evaluate whether a bankruptcy is ultimately going to be necessary and consider filing before the property is lost.

"In some cases, a short sale may still be appropriate, if one can be achieved, as the resulting deficiency will be less than that which is likely to result from a foreclosure. If the borrower has the ability to pay the deficiency and avoid bankruptcy, that may be the best option."

Andrew G. Pizor, a Washington lawyer working for the Connecticut Fair Housing Center, wrote: "I was especially pleased to see you discourage use of for-profit counselors. Some of these companies, along with so-called 'mortgage auditors' and foreclosure rescue scammers do far more harm than good. They are merely profiteering from borrowers' misery." He recommends searching for a counselor certified by the U.S. Department of Housing and Urban Development at http://www.hud.gov.

E-mail Elizabeth Razzi atrazzie@washpost.com.