Friday, May 16, 2014

What Makes a Good House Go Bad?

It’s a rainy Friday and I’m sitting at my desk looking at the soggy earth, wondering how it would affect the deck party that my wife and I plan to attend.  As I look out the window, I notice that the downspout from my porch roof is disconnected.  The rain water is being dumped right next to the footer. 

I should go right out and reconnect it but it’s raining pretty hard.  I might get wet.  Maybe I’ll wait until the rain stops.  The trouble is, that is what I thought the last time it rained.  So as soon as I’m done with this blog I guess I’ll go out and fix it.

A few years ago, I taught a continuing education class for real estate appraisers.  The title was “What Makes a Good House Go Bad”.  It covered a number of items that can affect the structure and value of a house.  Two of those items have to do with water and one of its characteristics.  When water freezes, it expands.  Fill a cup to the top with water, put it in the freezer and watch what happens.  So, how can that cause your house to go bad?  

Expanding water can cause sheetrock cracks and it could also cause foundation failure.  Let me first address sheetrock cracks.  Many homeowners, in the Poconos and elsewhere, head south for the winter.  When they do, they “winterize” their houses.  Typically, that includes draining the plumbing system and turning off the water and heat.  It may not be obvious to the homeowner, but wood framing members contain small amounts of water.  When the water freezes, it expands.  The freezing/thawing cycle causes the wood to expand and twist.  Over time, sheetrock cracks can develop.  The solution is to prevent the house from freezing.  Most home builders recommend that the heat should not be reduced below 55 degrees (F).  I know that the homeowner will have to pay for the cost of heat, but in the long run, the house will last longer.

Now, back to my rainspout, when storm water is allowed to infiltrate the soil adjacent to the foundation the long term effect can be catastrophic.  Figure 1 below illustrates how water can wash out the soil that has been backfilled next to the foundation.  The same freezing/thawing cycle discussed above can, over time, cause foundation failure.  Rainwater is more plentiful than the small amounts of water that can be found in framing lumber and, when frozen, it can expand dramatically causing the foundation to heave.  One indicator that this is occurring is a horizontal crack that can develop along the basement wall at about the mid-height, see Figure 2 below. 

Figure 1

Figure 2

If you see cracks like the one above, call a foundation expert as soon as you can.  If you haven’t got any cracks yet, fix the downspout, which is what I’m going to do right now.

The next time it rains, I’ll write a blog about another item caused by water that will make a good house go bad -- mold.

Thursday, May 8, 2014

What the Heck is Radon and Why Should I Be Concerned About It?

Recently, one of my clients had a home inspection performed, in anticipation of listing his house for sale.  To his horror, the results were well above the action level.  His results were above 30 pCi/L (pico Curies per Liter).   Test results below 4 pCi/L don’t usually require remediation.   He and his wife were aghast.  So, what is radon, what are its’ health effects and how can we get rid of it?

Radon is an odorless, colorless gas that is produced by the decay of uranium.  It is found in some concentration almost everywhere in the world.  The map below shows approximate areas of concentration in the U.S.  It enters a house through openings in the foundation.  Different types of soil account for different amounts found within the same area.  

Once in the house, it is spread throughout the house by a process known as the thermal stack effect.  As air is heated, it rises taking the radon along with it.  Warm air heating and air conditioning systems can also contribute to distributing it around the home.

Radon affects DNA within the lungs which can lead to pre-cancerous cells.  Radon has been linked to lung cancer, affecting children, pregnant women and smokers more severely. 
The good news is that radon is lighter than air, so, if it can be channeled to above the house’s roof, it won’t reenter the home.  This is accomplished by installing a set of PVC pipes to carry the radon from below the foundation to above the roof.  The remediation system has a fan, usually installed in the pipes, above the attic floor.  The cost of a remediation system usually runs between $300 and $1,000.

The interesting fact is that people often live in a house for many years and only have it tested for radon prior to its’ sale to new owners.  I suggest that homeowners have their house tested for radon within a year of moving in, especially if they live in an area like northeastern Pennsylvania which is rated level 1.

Sunday, May 4, 2014

Do You Know Someone Having Trouble Paying the Mortgage?

Most people do know someone.  Every three months, 250,000 new families enter into foreclosure[i].  Most folks, who are in danger of foreclosure, are not advertising their situation to friends and neighbors because the public notoriety of a foreclosure can be devastating.  Many of them do not have to lose their home, but no one has told them about the options. 

Foreclosure is the legal process used by a lender to force the sale of real property that has been pledged as security for a mortgage.  Below are a few of the options to foreclosure available to a homeowner:

·         Deed in lieu of foreclosure
·         Bankruptcy
·         Short Sale
·         Refinance
·         Loan Modification

Since I am an Associate Real Estate Broker, and not an attorney, tax advisor or credit counselor, I advise my clients to seek advice from a HUD authorized credit counselor, an attorney and tax expert, before deciding on a course of action.  The credit counselor will be familiar with any help that might be available through federal, state or county agencies.  HUD counselors can be reached at 800-569-4287 or by visiting HUD’s website[ii]

Sometimes I am contacted by a homeowner, who has been advised to proceed with a short sale[iii].  In that case, I do my best to sell their home, in a reasonable period of time, for the highest price that the market will bear.  A properly handled short sale can sometimes result in a more favorable credit score than a foreclosure. 

I have to stress however, that often, if not most of the time, the homeowners can find a solution that does not end with the loss of their home.  Most mortgage servicers today would prefer to find a way to help.  Foreclosure results in a financial loss for the homeowner and the lender.  If it can be avoided, everybody wins.  If you know someone in danger of foreclosure, do them a favor.  Advise them to contact HUD.  It will be the best advice they will receive in some time.

[iii] A Short Sale is a transaction in which the Seller’s proceeds are less than the amount necessary to pay off liens secured by the property.  Examples of such liens include, but are not limited to, mortgages, home equity lines of credit, tax claims, homeowners’ association fees and legal judgments.

Wednesday, April 30, 2014

So... What is Eminent Domain and How Does It Impact Private Property Rights?

 In recent weeks, the term eminent domain has been in the news.  Nationally, Fox News reported a story about a Colorado couple, that was about to lose their land to the county, reportedly because the Summit County authorities disagreed with the vehicle that they used to access their property[i].  The Federal Government is threatening to confiscate several hundred acres of Texas ranch land from a rancher without offering the owner any compensation.  And, closer to home, the City of Scranton was looking into using Pennsylvania’s eminent domain law to take possession of the Mall at Steamtown, in an effort to save it from bankruptcy[ii].

So, what is eminent domain and how does it impact private property ownership rights?

By definition, eminent domain is the power of the state to take possession of private property for public use, but just compensation must be paid.  Both federal and state governments may exercise this power.  Additionally, federal and state governments may delegate that power to local governments.

The Fifth Amendment of the U.S. Constitution requires that property acquired through eminent domain must be for public use and that just compensation must be paid to the owners.  Prior to 2005, the definition of public use was generally limited to acquiring land to be used for public transportation or the government’s need for space to do business.

In June, of 2005, the U.S. Supreme Court, in a landmark case, Kelo vs. City of New London[iii], ruled that a government may invoke eminent domain to promote economic development.  That decision has been widely criticized because it dramatically expanded the government’s power to take private property. 

It appears that local authorities in Scranton do not expect to use eminent domain, since Steamtown’s bankruptcy should solve its financial woes.  It will be interesting to see if the Colorado case will be upheld, since this may be the first time that public use is defined as officials wanting the open space.