My Home Passed Inspection, So It’s Perfect, Right?

This month's article is brought to you by Zillow's blog and author Mary Boone

Home inspectors are skilled at sniffing out wood rot and locating cracks in foundations. But even the most experienced inspectors can’t tell you about problems that lurk behind walls, between floor joists or inside sewer lines.

“The purpose of a home inspection is to find material defects that might have an adverse effect on the value of a home or its safety,” said Curtis Niles Sr., president of Armored Home Inspections in Pottstown, PA, and past president of the National Association of Home Inspectors. “We do that through a visual inspection, and we do it to the best of our ability. But we can’t find every single problem; no one could.”

A home inspection can help ensure your new home is both a good investment and a safe place to live, but it’s important to be aware of some key defects that can go undetected:

HVAC deficiencies

Problems with heating, ventilation and air conditioning systems (HVAC) can be difficult for home inspectors to uncover. Many inspectors are hesitant to run the air conditioning in extreme cold or to check the heat on a hot day because they don’t want to damage the unit by running it too long in adverse conditions.

“I can tell if a unit isn’t working, but I don’t have time during a home inspection to determine if the system is adequate for the house they’re trying to heat or cool,” Niles said. If you have concerns about the HVAC system, you may want to have it checked by a licensed HVAC specialist – separate from the home inspection.

Water damage, leaks

Your inspector will turn on faucets, but if a house hasn’t been lived in for a while, any previous water damage may be dried up and it will take a few days of use before leaks reappear. Even damage to walls or ceilings can be camouflaged by paint, making them difficult to detect.

If a faulty roof is the source of the leak, there’s a good chance your inspector won’t find it. Many inspectors visually assess roofs from the ground, but don’t go up onto them. Even if your inspector climbs onto the roof, snow, ice or fallen leaves may make it difficult to examine.

Environmental toxins

In 1978, the federal government banned the production of lead paint and asbestos-based construction materials. If the home you’re purchasing was built prior to 1978, you may want to invest in specialized testing for these toxins. Elevated radon levels, which can also be detected by a qualified radon tester, can occur in any home, regardless of its age, foundation type, location or heating system.

Lead paint, asbestos and radon can pose significant risks, but they’re not the sort of issues most home inspectors test for. If you are aware of these toxins before closing, you can ask the seller to help pay for abatement, containment or removal – and those costs can be significant. According to the Environmental Protection Agency, professional lead-based paint removal, for example, costs $8 to $15 per square foot – that’s $19,200 to $36,000 for a 2,400-square-foot house.

Blocked, damaged sewer lines

Property owners are responsible for the sewer line that runs from their home to the city main, and the best time to find out if that line is blocked or needs replacement is before buying a home – not after. A sewer line clog could lead to raw sewage backing up, out of the drains.

A standard home inspection will likely determine the type of drain pipe used and estimate its age but, it won’t cover the structural integrity or condition of sewer lines. If the home you’re thinking of buying is more than 20 years old, you may want to pay for a separate sewer scope to ensure the sewer line is in good shape and that tree roots have not worked their way into the line. Expect to pay $250 to $500 for a video sewer inspection, a fraction of the cost of sewer line replacement, which can run upward of $25,000.

An experienced home inspector can provide important information about the condition of the house you plan to buy, but to avoid unexpected costs after closing, you may need to go beyond a standard home inspection. Those extra tests and inspections won’t come cheap, but they may help you avoid unpleasant surprises later on.

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Tips and Tricks to Get Your Home Ready for Spring

Many of us are beginning to see the first signs of spring, and I have been talking about those things that you can do during the winter months to get your home ready to sell in the spring.

I covered de-cluttering and cleaning out closets, and I also talked about addressing the list of “honey do” items that all homeowners have.  Now that spring will soon be upon us you really need to move into high gear if you want to hit the market with the spring tide of homes.   IF you still need to freshen up your home this is now the time to paint any rooms that may need to be painted and to tackle the outside items.   

A recent article on realtor.com focused on 10 items that a home owner needs to address.  I’ll paraphrase those items here now – many of them I have already addressed, but it’s good to go over them again.

Paint colors that just don’t blend in (with the neighborhood):
The color of your home is one of the first things a buyer will notice. If it’s a very different color from the neighborhood, you should paint it something more innocuous.  If you like color, this doesn’t mean that you cannot add a splash of color to the front door, or with colorful plantings.
The same goes for the interior. If your living room is bright orange, paint over it. Choose a neutral color so buyers can project their own ideas onto it.

A front door that’s not inviting:
The front door is one of the next things a buyer will notice. If the door is flimsy, cheap, or outdated, it’ll discourage the buyer before it’s even opened. Spring for a new one—it’s the most reliable update you can perform to recoup your cost.  If the door is in good condition, but needs a paint job – give it a splash of color, and while at it make sure that the doorknob and locks work effortlessly.  If it’s hard to get the door open buyers wonder what is doesn’t work.

A busted doorbell:
While you’re at it, don’t forget the doorbell! Having one that works with a friendly, crisp chime is a sign that your house has been well taken care of.

Tattered window and door screens:
Buyers will notice screens that look more like Swiss cheese than insect shields. You don’t necessarily have to spring for a whole new set— screens can be re-screened or patched, this is an easy handyman job.

Depressing landscaping:
As potential buyers drive up to your home, they notice everything—the trees, the grass, the rock pathway, and the plants out front.   If your lawn is home to a half-dead tree, yellowing grass, unkempt shrubs, and a pathway swallowed by weeds, you might get more lowball offers than you anticipated.
Keep the plants trimmed and the grass freshly cut. Make sure the walkway is clear and fallen branches are removed from the lawn. A fresh layer of mulch will brighten up the outside, too.

An unpleasant smell of … something:
Nothing can turn a buyer off faster than the stench of faded cigarettes or poorly trained pets. Of course, it’s hard for us to smell our homes after we’ve lived in them for a while, so ask a diplomatic friend to sniff your place. If it stinks, start cleaning.
 

Eerie dripping sounds:
If potential buyers hear a dripping faucet or running toilet when touring the house, they might start questioning the building’s integrity or the seller’s level of care. These are quick DIY fixes that can tell a buyer that you care about the home.

Bad lighting:
Replace harsh lights with bulbs that have a softer glow. Clean out light fixtures to get rid of dirt or dead bugs that can mute the lighting.  You want your house to sparkle and lighting makes a difference.

Squeaky hinges:

Doors that groan when they open are an easy fix. Grab a lubricant (such as white lithium grease, but in a pinch you can use cooking oil) and grease the hinges to stop the squeak.  You can also adjust the hinges at this time to insure that open doors stay open and don’t swing closed unassisted. 

An outdated kitchen:
Completely renovating a kitchen can get real expensive, real fast. Again, keep it simple by cleaning out cabinets and drawers, and as old fashioned as it seems putting down shelf paper      is a clean fix.  Adding a fresh coat of paint, if necessary, and while it’s advised to keep neutral      colors throughout the house a splash of color in a kitchen is very inviting so try something like a like pale yellow or a sage green.  Switch out old cabinet knobs and handles for something fresher.

Half of Americans Can't Afford Their House

I found this great article on realtor.com and had to share it with you. Such good information to know.

As the housing market slowly recovers, a majority of homeowners and renters are finding it hard to meet rising rents and mortgage payments, new research finds.

Over half of Americans (52%) have had to make at least one major sacrifice in order to cover their rent or mortgage over the last three years, according to the “How Housing Matters Survey,” which was commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation and carried out by Hart Research Associates. These sacrifices include getting a second job, deferring saving for retirement, cutting back on health care, running up credit card debt, or even moving to a less safe neighborhood or one with worse schools.

“Affordability issues are real and a major hurdle,” says Lawrence Yun, chief economist at the National Association of Realtors, an industry group. Home prices have increased 20% over the past two years while wages have barely gone up, he says. “Only by adding more new supply, via housing starts, can home prices be tamed,” Yun adds. In fact, construction of housing units has averaged around 1.5 million a year for the past five decades, he says, but it’s likely to be less than 1 million in 2014.

What’s more, at least 15% of American homeowners (or residents of 78 counties across the country) were living in housing markets where the monthly mortgage payment on a median-priced home requires more than 30% of the monthly median household income — long considered the maximum for rent/mortgage repayments. Housing costs above that threshold are “unaffordable by historic standards,” says Daren Blomquist, vice president at real estate data firm RealtyTrac. In New York county/Manhattan, mortgage payments represent 77% of the median income and in San Francisco County represents 70%.

Although mortgage rates are still quite low, down payments, poor credit and tighter lending standards remain three of the biggest hurdles for buying a home, especially among young people, Blomquist says. “The slow jobs recovery for young adults has made it harder for them to save and to get a mortgage.” Some 84% of young people are delaying major life decisions due to the poor economy, according to a 2013 survey by Generation Opportunity, a nonprofit think tank based in Arlington, Va.

Some people also appear to be cooling on one facet of the American dream. About 43% of respondents in the “How Housing Matters Survey” say owning a home is no longer “an excellent long-term investment and one of the best ways for people to build wealth and assets,” and over half say buying a home has become less appealing. Although 70% of renters aspire to own a home, some 58% believe that “renters can be just as successful as owners at achieving the American dream.”

But they’re still suffering the aftershocks of the property bust, experts say. In the years after the recession of 2008, more than 7.5 million homeowners lost their home to foreclosure or short sale and about 9 million more homeowners are still underwater and owe more than their property is worth, Blomquist says. “If one looks at the last seven years as a predictor of housing market behavior in the future, it certainly should give one pause about whether buying a home is a good investment or not,” he adds.

That’s not necessarily a bad thing, says Stuart Gabriel, director of UCLA’s Richard S. Ziman Center for Real Estate. “From a policy perspective, we overshot in prescribing homeownership too often and to those who would have benefited more from other housing solutions,” he says. Homeownership rates hit 64.8% in April, the lowest since 64.7% in the second quarter of 1995, according to the Census Bureau. “It’s wise to approach homeownership with more skepticism and more trepidation,” he says.

The good news: Rising prices have lifted millions of homeowners out of negative equity. Since the lowest point in the housing market crash, rising prices have led to an additional $4 trillion in housing equity, going to existing homeowners, smart investors and those who can afford to buy, Yun says. Home prices, including distressed sales, increased 10.5% in April 2014 year-over-year, according to the latest survey from mortgage-data firm CoreLogic, representing the 26th consecutive month of annual increases in home prices.

This story was originally published Jan. 31, 2015, on MarketWatch.com.

The Five Golden Rules of Home Staging on a Budget

Our friends at Moshells.com have put out a great guide for staging your home on a budget. Properly staging your home is an important, cost effective part of the home selling process. Staging not only helps show off the best qualities of your home, but when done correctly it can also add to your final selling price!

Rule #1: De-Personalize

Buyers want to picture themselves in the house, so that wedding photo over the mantel might distract from that. Safely tuck away your photos while your home is on the market to prevent the distraction that prevents them from seeing a home for their family.

Rule #2: Maximize

Declutter and maximize the space in your home. Consider storing any clutter at an offsite location until you move into your new house. Closets that are packed tight make your home look like it lacks closet space.

Rule #3: Sanitize

Make sure you keep the house clean. This is the easiest and cheapest way to stage your house. A sink full of dirty dishes is as unappealing to you as it is to the buyer.

Rule #4: Modernize

All homes can benefit from some updating. If the buyer feels the home is dated they may reflect that feeling in a lower offer. Updating does not have to be expensive though. Consider a simple update such as changing out gold fixtures for nickel or chrome.

Rule #5: Neutralize

We have all seen on HGTV House Hunters how a paint color can make or break a buyers decision on a home. You may love the colors in your house, but the buyer may be turned off by the amount of painting that needs to be done because the colors clash with their style.


Visit the article to find more helpful staging tips to maximize the return on your home and speed the sale of it.

Your Journey Home – almost there!

You're almost to the finish line. You've found the home of your dreams, secured financing, and your offer has been accepted. You've been thru inspections and negotiated any repairs with the home owner. Now all’s that left to do is pack and wait till the day of closing.

The next few weeks should be pretty quiet, but there will be several things going on.

Quickly, after inspections have been done and all repairs items negotiated, the bank will order an appraisal.  An appraisal is an independent look at the property that the bank orders to determine the value of the property in relationship to the neighborhood. Your lender will require an appraisal as security for your loan.  Don't confuse an appraisal with a comparative market analysis, or CMA.  Your  real estate agent probably used some version of a  CMA when you were first considering making an offer on the property.   Realtors use CMA’s to help home sellers determine a realistic asking price. Experienced agents often come very close to an appraisal price with their CMAS, but an appraiser's report is much more detailed--and is the only valuation report a bank will consider when deciding whether or not to lend the money.  There are several ways that an appraiser will look at your new home.

Sales Comparison Approach

The appraiser estimates a subject property's market value by comparing it to similar properties that have sold in the area (within about a 1 mile radius). The properties used are called comparables, or comps.  Since no two properties are exactly alike, the appraiser must compare the comps to the subject property, making paperwork adjustments to the comps in order to make their features more in-line with the subject property's. The result is a figure that shows what each comp would have sold for if it had the same components as the subject. 

Cost Approach

The cost approach is most useful for new properties, where the costs to build are known. The appraiser estimates how much it would cost to replace the structure if it were destroyed.

So What Does the Appraisal Mean to You?

Your personal loan approval is accomplished early in the loan process, but final loan commitment usually hinges on a satisfactory appraisal. The bank wants to be sure its investment is covered in case you default on the loan.  If the property appraises lower than the sales price, the loan might be declined, but that isn't the only hurdle it must pass. Other facts on the appraisal can be a problem, too: if the appraiser notes some building defects, the underwriter can call for additional inspections.   If during inspections a price reduction was agreed to, and it was noted that the price reduction was in lieu of repairs being made, the underwriter can request the inspection report and ask for any of the items to be corrected before closing.  Those are just a few examples of negatives that could stall your purchase.

An Appraisal Isn't a Home Inspection!

Appraisers make notations about obvious problems they see, but they are not home inspectors. They do not test appliances, look at the roof, check the chimney or do any other typical home inspection tasks. Never count on an appraisal to help you determine if the home is in good condition.

If the Appraisal Comes in Low

Don't panic if the appraisal comes in low, because there are often steps you can take to make the deal work. If the appraisal uncovers other problems, remember that most problems are correctable. Try to keep your cool and work through issues one step at a time.

At the same time you are waiting for the appraisal the bank is finalizing your financial approval – there are still some loan questions that you will probably encounter.  In your haste to pack … do not pack any important financial documents.  TRUST ME, the lender will be calling and asking for some document that you know you have already provided.  But even more important than that is … under no circumstances should you incur any new debt.  While it may seem like a good idea to go out and buy that new refrigerator so it can be delivered the day of closing, it isn’t.  I promise you the lender will pull your credit report 24hrs prior to closing. Any new expenses, especially big items, will become a disaster, and could derail the closing.  My advice to buyer – especially to a first time buyer is if you cannot pay for an item in cash … don’t purchase it.

It’s getting close to closing time … so keep you cool and you will soon be in your new place. 

Your Journey Home – Getting a Home Inspection.

Home buyers are often clueless about home construction and its components, and getting a Home Inspection is the first step to understanding how your new home works. 

It’s very important that Home Buyers get a home inspection – this is not the place to try and save money.  Sometimes Buyers begin to think with their eyes – and not their heads.  Don’t let a shiny clean home lure you into believing that there are no issues.  Remember it’s the job of the home inspector to report on the condition of the home, and as I like to say “it’s their job to find issues.”  That does not mean that the issues that an inspector will find are what we like to call “deal breakers.”   A home inspection is just that a means for a buyer to have a neutral 3^rd party look at the condition of a home. Home inspections are not just for existing homes either; Builders' make mistakes, too.  So even with new or newer homes having the unbiased eye of a home inspector is very important. 

All home inspections are different and can vary dramatically from state to state, as well as across counties and cities. Much depends on the home inspector and which association, if any, to which the home inspector belongs.  In my marketplace the most prominent home inspection association is ASHI (American Association of Home Inspectors.  For a while the State of Kansas was requiring that all Home Inspectors become licensed and registered by the state and that licensing requirement followed the ASHI standards.

What does a home inspection report disclose? Inspection reports can be pretty intimidating.

General Home Inspection Checklist Items

Structural Elements including Garage-

This portion of an inspection covers the construction of all walls, ceilings, floors, roof and the foundation. It also covers the fascia, trim, doors, windows, lights and exterior receptacles.   The inspector might also comment on wall coverings (typically cosmetic, but can become an issue with a lender). Also included are landscaping, grading, elevation, drainage, driveways, fences, sidewalks, garage firewall, garage door, garage door openers and exterior windows.

Roof and Attic -

This portion will covers the framing, ventilation, type of roof construction and materials, flashing and gutters.  This part of the inspection is not a guarantee of roof condition nor is this a roof certification.  If an inspector feels that the roof is getting towards it’s useful life they may call for an inspection by a roofer.

Plumbing -

This portion will try to identify the type of pipe materials used for potable, drain, waste and vent pipes. It will also include the condition of toilets, showers, sinks, faucets and traps. It does not include a sewer inspection.  Understand however the inspector will not open up the walls to see what’s behind the sheetrock.

Systems and Components (Mechanical Items)-

This portion focuses on water heaters, furnaces, air conditioning and duct work.  Often it does not include chimney, fireplace and sprinklers (either lawn or fire suppression).

Electrical-

This portion will include the main panel, circuit breakers, types of wiring used, grounding, exhaust fans, receptacles, ceiling fans and light fixtures.

Appliances -

This portion covers the dishwasher, range and oven, built-in microwaves, garbage disposal and, yes, even smoke detectors. Typically however it will not cover washing machines, dryers, refrigerators or freezers.

However, a home inspector's standard practice typically does not include the following, for which a specific license to inspect and identify may be required:

Items typically not covered in a General Home Inspection

Asbestos

Radon, Methane, Radiation and Formaldehyde

Wood-Destroying Organisms & Rodents/Pests

Mold, Mildew and Fungi

Lead

I have rarely seen a perfectly clean inspection report, so don’t be surprised to see a 30+ page report.

Home Inspection Checklist Items Sellers Should Fix

So while Home Inspection Reports do not describe the condition of every component if it's in excellent shape, these reports should note items that are defective, needing service, or not operating in the manor that they were intended to operate. 

The serious problems are to look for are those that affect

 -Health and safety issues

 -Roofs with a short life expectancy

 -Furnace / A/C malfunctions

 -Foundation deficiencies

 -Moisture / drainage issues

Typically these are major components and are expensive to correct. So these are the items that you want to consider asking to be repaired or replaced.

Most contracts allow for a renegotiation time frame and use this time to discuss which items are minor, and which items are serious.  Every home will have issues noted or flagged in a home inspection, even in new and newer homes.  A repair issue that will be a deal breaker for a first-time home buyer, causing the buyer to cancel the contract, will not faze a home buyer versed in home repair. Talk to your agent, family and friends about the inspection report. 

Before issuing a formal request to repair, consider the seller's incentive to hire the cheapest contractor and to replace appliances with the least expensive brands.   So, if you have a choice, it might be smarter to hire your own contractors and supervise repairs.  In my marketplace this is typically done by asking the seller to pay some closing costs (as long as the amount you are asking for is not more than the amount allowed by the lender – this may not be an option if you have already asked for the maximum amount allowed in the original negotiations).  If you have already asked for the max closing costs to be paid for, your next option is to ask the seller to reduce the sales price.  If your only option is to have the Seller make repairs, such as repair requirement for some government loans like FHA or VA, ask that the Seller provide you with paid receipts for work done and the names of the individual who did the work.  Sometimes if the repairs are minor it can be acceptable for the seller to make the repairs - perhaps a simple solution is available such as replacing a $1.99 receptacle, which can resolve many outlet problems, and can be done by a seller.

So pat yourself on the back, for getting a home inspection. Once your inspection is done, and you and the Seller have agreed to repairs you all you need to do is to gather boxes and start packing …. Well maybe??