Archive for April, 2012

The Problem With Synthetic Stucco

Posted on: April 30th, 2012 No Comments

Stucco is a versatile building material that has been around for centuries. It was used extensively in Europe to repair damage to stone, brick and concrete buildings after World War II. North American builders began adapting it to wood-framed houses in the 1980s, and therein lies a problem.

Modern stucco is technically known as Exterior Insulation and Finish System (“EIFS” or “synthetic stucco”). The inner layer is a foam insulation board that’s secured to a wall’s surface. The middle layer is a cement base coat reinforced with chicken wire or fiberglass mesh. The exterior finish coat is the textured and often colored cement plaster. The final product is beautiful, durable and air tight.

Being air tight is an advantage, unless of course moisture somehow finds it’s way behind the layers. In a subtropical climate such as Tallahassee’s, wood destroying organisms are quick to take hold in moist environments. If stucco cracks, is applied incorrectly, or is not maintained properly, water can readily find its way through. In no time, wood will start to be destroyed. Signs that stucco has been compromised include:

Well applied and maintained stucco can last forever. Before buying a stucco home, make sure to hire a specialist to inspect the home for damage. They will likely have some sort of humidity reader to detect where moisture may have found a way in and advise you on costs to repair damage if it is found.

 

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What is Title Insurance?

Posted on: April 29th, 2012 No Comments

Title insurance protects against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. Prior to a buyer’s purchase of a home, the property is likely to have gone through several ownership changes. In each instance of ownership, there may be issues that could cause problems to emerge with the property’s title, such as:

When issues do arise, title insurance covers the insured party for any claims and legal fees that arise. If a home is being financed, the lender will require title insurance be purchased with protection in an amount equal to the unpaid loan. This is called a lender’s policy. Of course the value of the loan decreases over time as the balance is paid down and the property owner’s equity increases. To cover this equity, an owners policy is also available for an amount up to the purchase price of the home. Some owners policies will actually increase to cover appreciation of the home, up to a set limit. Though not required, buying an owner’s policy is highly advisable.

To check that a property qualifies for title insurance, a title company (usually the one performing the closing services) will do a title search. If the title is deemed clear, owners and lenders policies can be issued.

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Why Should Sellers Buy a Home Warranty?

Posted on: April 27th, 2012 No Comments

It’s very common for a buyer to get a home warranty with the purchase of an existing home. What most people don’t know is that home warranties are also available to sellers. Not only does a home warranty help reduce a seller’s exposure to risk but it also adds to the attractiveness of a home sale.

Home warranties are available to sellers of single family homes, townhomes, condominiums, and mobile homes. Coverage becomes effective the day of application and continues until the expiration of the initial listing period (up to 180 days), close of sale, or listing termination; whichever occurs first. A buyer’s home warranty can cost up to $400, whereas a seller’s policy is less than $70.

The sellers warranty is actually packaged with the buyers warranty. The seller agrees to purchase the buyers home warranty at closing and the insurance company issues coverage to the seller while they sell their home. If the home doesn’t sell, the owner only pays the sellers home warranty premium. If the home does sell, the cost for both sellers and buyers home warranty is paid for at closing. Keep in mind that a sellers warranty will likely have more restrictions than a buyers warranty (i.e. certain appliances excluded, limit on HVAC expenses). The seller will also pay for each trip a technician makes to the home for repairs (“trade call”), and it will correspond with the cost set in the buyers warranty.

Homes that come with home warranties spend significantly fewer days on market than those without and sell at a premium to non-insured homes. Considering most buyers are now insisting that warranties be included with their home purchase, it only makes sense to purchase the sellers warranty at the start of your listing.

 

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Pops in the Park

Posted on: April 26th, 2012 No Comments

Once a year, the Tallahassee Symphony Orchestra plays under the stars in Southwood at Central Park Lake. I like this event more for what it’s not than what it is. It’s not pretentious. It’s not just for families. It’s not a snoozefest. The symphony does a great job of mixing classics with tunes you’ll recognize. This year includes a tribute to Cinco de Mayo. You can bring your own food and drinks (including booze), or you can purchase them at the park. Red Elephant, the Cravings food truck, Sno-Cones, and Early’s Kitchen will be slingin’ food this year. The most interesting new twist has got to be the all-you-can-drink-beer wristband for $10. I know Southwooders love to party, but all-you-can drink?

Tickets are $10 per person, children under 12 are free. Seating is general admission, but if you’re a high roller you can purchase an eight person table for $500. The park opens at 5:30pm and concert begins at 7:00pm. Parking is available at the Southwood Town Center. Visit the symphony’s website for more information.

 

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The Home Loan Checklist

Posted on: April 26th, 2012 No Comments

When a home buyer eventually gets a contract on a home, they’ll likely need to talk to a lender about getting a mortgage. That process starts with the loan application. The application is much easier if you know what documents the lender is going to require.

Personal Information

Income

  • Names and addresses for each employer for the past two (2) years.
  • If a W-2 wage earner: most recent two (2) years W-2s and most recent pay stub covering a 30 day period, including overtime, bonuses, and commission income.
  • If receiving Bonuses and/or Commissions: provide signed copies of complete personal federal tax returns with all schedules for the last two (2) years.
  • If a Self-Employed borrower: most recent two (2) years personal tax returns including all schedules. Also provide a copy of your Profit and Loss Statement through the most recent quarter/year.
  • If Self-Employed, other than a sole proprietor: complete copy of Corporate, S-Corporation, or Partnership tax returns for the last two (2) years, including all schedules and signed by a company officer.
  • If receiving Social Security: a copy of your most recent Social Security Award Letter.
  • If receiving Pension/Retirement: a copy of your most recent Pension/Retirement check or if direct deposit, a copy of your bank statement showing the deposit source and amount.
  • If receiving Disability: a copy of your Disability Award Letter.
  • If receiving Child Support or Alimony (and wish to include as income): a copy of the divorce decree, including all

Assets

  • Statements for each bank, mutual fund, and investment account for the last three (3) months.
  • If you have any large deposits in your accounts: an explanation and source for the deposit.
  • If a large deposit was a gift: signed gift letter, copy of gift check, copy of deposit receipt.
  • Estimated value of personal property.

Debts

  • Names, addresses, account numbers, balances and monthly payments on all current loans.
  • Explanation of negative credit report items.

Property Information

Miscellaneous

  • Divorce decree, if applicable.
  • Personal check for loan application fee to cover the appraisal, credit check, and administrative costs.
  • Copy of the front and back of your green card for non-citizens.

Not all the information listed above is required by every lender, but it’s a good idea to have it handy just in case!

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Buyer Inspections

Posted on: April 25th, 2012 No Comments

You’ve made an offer on a home and it’s been accepted. Congragulations, you have a contract! Don’t celebrate just yet though. You’ll still need to put the home you’re buying through some inspections.

Home Inspection

The home inspection is the first that you’ll need to schedule. A home inspector will review the condition of the home’s heating and air conditioning (HVAC) system, interior plumbing, electrical system, roof, attic, visible insulation, walls, ceilings, floors, windows,doors, foundation, basement, and visible structure. Make sure if the home is older than 20 years that you have a four-point inspection included by the home inspector for insurance purposes.

Wood Destroying Organism Inspection

Wood destroying organisms include termites, powder post beetles, carpenter ants, and fungus. You should expect to find WDO damage to some extent since Tallahassee has a subtropical climate. In your offer, you can either ask the owner to treat WDO damage, or you can address it yourself. Keep in mind some lenders may require a clean WDO inspection prior to closing.

Survey

If a survey will not be done on a home, the title company can still issue title insurance with survey exceptions. However, since lenders will require a clear title insurance policy covering the face value of the mortgage, it becomes necessary to obtain a survey to satisfy the lender’s requirements.

Appraisal and Flood Certification

When getting a home loan, there are some inspections that the lender will likely take care of for you. During your loan application, you will pay a non-refundable application fee that goes towards an appraisal. The lender will schedule the appraisal, often with a certified appraiser. The lender will also order a flood certification to verify which flood zone the property is in. If the property is at risk, it doesn’t necessarily preclude a loan, but flood insurance could be required.

Radon (optional)

Radon is dangerous, but it can also be expensive. Suppose you don’t do a radon test. In 5 years you put the home up for sale. A potential buyer tests for and finds radon. Buyers don’t want a home with radon problems, so now you have to fix it. It’s better to address radon at the time you buy than at the time you sell.

Wind Mitigation Inspection

To get the lowest rates on an insurance policy, a homeowner may need to show that their home, and particularly their roof, is built to withstand extreme weather. Roof deck thickness, deck and shingle nailing pattern, the presence of roof to wall attachments (toe nails, clips or hurricane straps), and the presence of a secondary water resistance barrier are all construction features that have been show to reduce losses in hurricanes. Talk to your insurance agent to make sure you’ll benefit by having a wind mitigation inspection done.

Four Point Inspection

A four-point inspection has far less scope than a home inspection and can usually be done by a certified home inspector for an additional $100-$150. It is a limited, visual survey of the roof, HVAC, electrical, and plumbing systems. Most insurance companies will require homes older than 20 years to have a four point inspection done before they will insure the home.

Stucco (optional)

After WWII, stucco was developed as a repair tool for war-damaged buildings. Most of the buildings being repaired were stone, concrete, brick or other durable material. In the 1980’s, North American contractors began applying those same techniques to wood-frame houses. Stucco forms a barrier that doesn’t breathe. If moisture gets trapped behind the stucco, it will likely lead to wood rot and other problems in the home. A stucco inspector will test for moisture around stucco seams and look for damage that may allow moisture to pass through to the wood frame.

Roof (optional)

If a four-point inspection shows a roof with considerable age (shingles curling, cracking), your insurer may ask that you get a roof inspection to verify its remaining life. Many insurers won’t insure a home if the roof has less than 5 years remaining; a few will but at a much higher cost.

Septic Tank (optional)

Most septic tanks have a useful lifetime of 20-25 years. After that, the concrete tanks can become cracked, drain fields become clogged with solids or roots, and sewage pipes become blocked or broken. If home is older than 20 years and  there is no record of septic tank maintenance, it’s best to have a septic tank inspections

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Why Have a Radon Test Done?

Posted on: April 23rd, 2012 No Comments

Over 120,000 people died in the U.S. last year from smoking related lung cancer. Do you know what the second leading cause of lung cancer deaths was, killing an estimated 21,000 people? Radon exposure. Unfortunately, the majority of people have no idea what radon is or that it may be silently killing them.

Radon is a colorless, odorless, chemically inert gas. It is produced from the natural breakdown of uranium ore in the soil. Radon is highly radioactive and easily permeates common building materials such as wood, drywall, paint, concrete block, mortar and most insulations. The greatest risk of radon exposure arises from buildings which are tight, insufficiently ventilated and have leaks that let in soil air from the ground into basements and dwelling rooms.

Outdoor concentrations of radon average about 0.4 pCi/L (picocurries per liter), whereas average indoor quality is estimated at 1.3 pCi/L. The EPA recommends you have your home fixed if radon levels are found to be 4.0 pCi/L or higher. The US Congress has set a long-term goal that indoor radon levels be no higher than outdoor levels. Though this is not readily achievable in all cases, most homes can be reduced to 2.0 pCi/L and lower.

Electronic radon detector recording data at a recent inspection.

There are simple tests available for radon detection. Most tests include a collector that sits in a home for 2-7 days and is then mailed to a lab where it is analyzed. Radon levels in a home can vary wildly based on weather conditions, temperature, and barometric pressure. It is recommended that if you’re conducting a test as part of home buyers’ inspections that you consult or hire a radon professional. For a sample radon test report, click here.

If radon is found to be at high concentrations in your current home or the home you’re considering buying, there are very affordable solutions to mitigate it. The four primary ways to reduce the level of radon in a home are:

More information is available for home buyers and sellers at the EPA’s website.

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What Is a Property Survey?

Posted on: April 21st, 2012 No Comments

Max, making it look easy

If you’re in the market for a home and plan on financing, your lender will probably require you have a property survey done before they’ll give you a loan. The survey protects both you and the lender from becoming involved with a property that may have serious problems.

A survey is a map of the property showing its boundaries and other physical features. A residential property survey will show buildings (i.e. house, sheds) and their relative positions on the property, as well as fences and easements. A survey can help you avoid serious problems by identifying encroachments, or when part of your property extends onto the property of another and vise versa. For example, if your recently-added sun room crosses over a neighbor’s property line, they can legally force you to have it removed. Such issues can still be overcome, but you wouldn’t know they even existed without a survey. In the worst cases, a home can even become unsaleable.

Staking things out

For an average residential survey, you can expect to pay from $300 to $500 dollars. It may be possible for you to save some money by using an existing property survey. In this case, the lender will require that the survey have been done within a certain time period and that the seller sign an affidavit stating no changes or additions have been made to structures on the property since the survey was done. If you don’t have the old survey but know the company that did it, you can still save yourself some money by asking them to re-certify the old survey. For a re-certification, the survey company will come back out to the property and do a visual inspection to confirm no additions or changes have been made.

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What Does Home Owners Insurance Cover?

Posted on: April 19th, 2012 No Comments

Homeowners insurance is something all homeowners should have. Also called hazard insurance or home insurance, it is an affordable and often necessary way to protect your home against loss. If you will be borrowing money to purchase a home, most lenders will require that you obtain and maintain a certain level of insurance on the home as a condition for the loan.

The most basic form of homeowners insurance covers several included perils, such as fire or lightning, windstorm or hail, vandalism or malicious mischief, damage from vehicles or aircraft, explosion riot or civil commotion, glass breakage, smoke, volcanic eruption, and personal liability. The most comprehensive and common type of insurance on single-family homes used today is called an HO3 policy, or “All Risk Policy”. Instead of specifically naming the perils, this policy will cover any peril except those specifically excluded. Excluded perils most often involve damage caused by earth movement, power failure, war, nuclear hazard, freezing of a plumbing system, septic tank backup, or damage done intentionally.

It’s important that you review either what is included or excluded in your homeowners insurance with your insurance agent. If you’re in a flood zone, make sure flood insurance is included or not specifically excluded. If sinkholes are a problem in your area, they need to be included or not specifically excluded as well.

 

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What Does a Home Warranty Cover?

Posted on: April 18th, 2012 No Comments

One of the problems with older homes is that they come with old stuff. And old stuff tends to break down. Let’s say you’re in the market for an older home. Inspections don’t turn up any problems, all appliances and systems are in proper working order. But they’re old. Are there any guarantees against something breaking down and you having to pay the bill? There is and it’s called a buyers home warranty.

A home warranty is a one-year residential service contract that provides repair or replacement coverage for the major operating systems and appliances in a home that fail due to normal usage. While a home warranty cannot prevent systems and appliances from failing, it can save you money on costly covered repairs and replacements. Some of the items that are covered in a standard home warranty are:

But doesn’t my homeowners insurance cover these things?  Some homeowners policies may, but most only cover damage from events such as fires, hurricane, tornados, hail, lightning or theft. It should also be noted that some home warranty companies require an inspection prior to issuing a policy, but most don’t. A standard home warranty may charge a one time premium of $300-$400 for a home with up to 5000 square feet. Additionally, the home warranty company will charge $50-$100 per visit by a technician.

 

 

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