We get this question a lot, and here's our answer (names obviously hidden to protect identity!).  It's especially surprising to buyers because the press is portraying the market as being "dead" - but when a property comes on the market that is hot, there are a lot of people out there that want to jump on it!

ØØØØØØØ, are you on alerts on for this area? If not, we should definitely get you on the alerts so you can find out about these properties within 1 hr of coming on the market.  You can find instructions at www.DROdio.com/alerts

Also, as listing agents for the two largest foreclosure banks in our area, I can tell you what these multiple offer scenarios are going to look like. We just accepted an offer on a property that had 10 offers - it was listed at $434,900 and we accepted a contract $30K+ above the listing price. This, by the way, is not uncommon. For every property that we've had multiple offers, the property has sold for above the listing price. If you are looking to lowball, foreclosures with multiple offers are not going to be your target properties. Through experience, we can also tell you with 100% certainty that banks will NOT accept a contract which is contingent on the sale of your property.

Here are some options in plan of action for you.

1. Wait until the sale of your home closes. 100% loans are all but gone and your buyers are probably scrambling to get themselves into other loan programs, which will take time. So, the settlement date may or may not change. However, this ensures that you are able to fully execute your own purchase contract. The biggest risk you run here is that if you need the proceeds of the sale of your home, and that deal is delayed, then you will have to delay your purchase deal. If the sellers of your property do not wish to allow you the extension, then they can potentially cancel the contract and take your earnest deposit.

2. Wait until you have a loan commitment letter from the current buyer's lender. We don't know your relationship with your realtor, but you should be able to ask for a loan commitment letter from the current buyer. Once you have that, you have the assurance from the lender that they will fund the loan. This is not a 100% guarantee, however, it is of greater confidence that the transaction will settle.

3. Put in non-contingent offer on foreclosures with a longer closing date. Banks do not accept contracts that are contingent on sale of homes. They also charge a per diem for every day that the loan does not close with the delay caused by the buyers. Countrywide charges $150, most banks charge between $100 - $200. This means that for every day that you are late, they charge you this amount. So if you put in an offer not contingent on the sale of your home with the bank (because we know they won't accept it), with the confidence that your property will close, however, if there are delays, then you will pay the bank the per diem. So, if your buyers delay the contract on your home by 10 days, it will cost you an additional $1,000 - $2,000. You will have to put in a cushion of extra time to close. Most banks expect 30-45 days of closing. We can try to negotiate 60 days, but that really depends on the bank. They usually counter with 30-45 days.

4. Look for non foreclosures and put in contingent offers. The market, as you have experienced first hand, is pretty hot for single family homes below $400K and they are flying off the shelves if it's priced right. So you will have to put in 10-20 offers before you might even find a seller who is willing to accept a contingent offer. Also, savvy sellers usually accept sale of home contingency offers with a "kick-out clause". The "kick-out clause" essentially means this - the seller will continue to market the property, and if they get in another offer, you have a first right of refusal to then close on the property in a set number of days, if you cannot close, then the seller can "kick-out" your contract and accept the other one.

We know you're in a difficult position and would like to move as quickly as you can. However, we also know that a misstep in any of these choices can cost you significant amount of money, so it will be important to align your tolerance for risk with your need to move quickly. The options outlined above are in order of risk - #1 being lowest risk, and #4 being of highest risk.

Take your time to consider all your options - as you know, we are able to put contracts together very quickly, so when you are ready, we can put in an offer within hours and if you have the right loan officer, we can even get you to closing within 2 weeks of ratifying a contract.

Share This

Anytime a home sits vacant, it can turn into a potential liability for the owner (the bank), as well as the surrounding neighborhood. All too often, the home can become a target for vandalism and I have also heard several reports of “squatters” moving into these properties as well. These two things alone can profoundly affect the look and the feel of a neighborhood and lower property values.

Local governments face consequences:

USA today reported in their May 15, 2008 edition that many cities are fighting back and suing the home lenders who are not taking responsibility for these foreclosed properties which they now own. “The Mortgage News Daily” says that typical local government “loses $19,227 through diminished taxes and fees and a shrinking tax base as home prices decrease”. Factor in the cost of the cities to take whatever action they deem necessary (including suing the lenders) to protect the neighborhood against loss, damage or the threat of the neighborhood values declining and those costs skyrocket. This doesn’t even take into account the peripheral damaged caused by the loss of revenue from the taxes that would normally be collected in a healthy market. The local governments will find a way to re-coup their losses and more than likely the neighbors of these homes will pay a higher cost tax-wise to compensate for these losses.

Renters pay the price too:

Homeowners are not always the only victims of foreclosure; renters can become unintended casualties in the foreclosure process as well. “CNN.com” reported that a resident of Laguna Hills, California, who had paid his rent on-time every month, was now being evicted as his landlord did not pay his mortgage. Realty Trac, a company that tracks foreclosures around the country estimates that at least 38% of the properties that go into foreclosure are not owner occupied and many of these have tenants in them. The thing that makes this especially frustrating for tenants is that they have fulfilled their obligations in relation to their lease terms. Many times, the tenant would even be willing to purchase the property but unfortunately, these renters end up mired in a lending bureaucracy backlog and are unable to make any in-roads with the banks who own the properties.

What about the animals?

Pets too can get sucked into the fray when someone loses their home through foreclosure. Many of these animals are either turned over to agencies to be “euthanized” or left for dead in the now abandoned homes. “Business Week” in an article entitled “Foreclosure’s filthy aftermath” reported that an animal rescue worker in Cincinnati, OH came across a home where the owner had been evicted that was housing more than 60 cats!

Are we done yet?

HUD Secretary, Alphonso Jackson, has estimated that one in four homes will go into the foreclosure process by the end of 2008. Unfortunately, it seems unlikely that we have even reached the height of this crisis. The “Mortgage News Daily” states that “according to the Joint Economic Committee of Congress, the average foreclosure costs $77,935 while preventing a foreclosure runs $3,300.” If this is truly the case, then common sense would say that steps need to be taken to put more foreclosure prevention programs in place.

Although the Bush Administration did introduce “FHA Secure” which is designed to help homeowners whose original interest rates have re-set and can no longer afford their mortgage payments refinance into an FHA mortgage, anecdotal evidence reveals that this measure is not quite living up to its expectations. Lenders have said that the restrictions for use are too narrow and that in order for someone to re-finance under this program, they still need to have made all of their mortgage payments on-time at their original payment amount (before the re-set) and have paid all of their other credit obligations on-time. Therein lies the rub….If a homeowner cannot pay his/her mortgage payment, which is the one bill that most everyone would pay first, how can a lender expect his/her other bills to be paid on time?

A silver lining? just maybe

If there really is a “silver lining” in all of this bad news, I think it’s this: The mortgage industry is in the process of a major reform that will benefit all both consumers and the real estate industry alike. Reuters says that “Congress and the Bush administration are pursuing reform proposals on how brokers qualify to do business; how they get paid; and how much information they share with borrowers.” As the American philosopher, George Santayana, said “Those who do not remember the past are condemned to repeat it”, let’s hope the message comes through loud and clear the first time around!

Share This

The Odyssey

The Odyssey is one of the more popular condos in Arlington, VA given the impressive views of the Washington Monument and the Capitol, quality high end architecture and sought after amenities. Who can resist that? Apparently, quite a few are resisting the Platinum Penthouse Suites with high end price tags that rival the Wooster and Mercer Lofts. Competition is fierce but the market simply won't support such pricing in a down market. Sellers need to be realistic or take the units off the market. Why? Condos here have been notoriously overpriced for some time and as the saying goes, what goes up must come down.

The Eclipse at Center Park

The Eclipse at Center Park converted to rental units in early 2007 due to cancellations and sluggish sales. Comstock sold a substantial amount of pre-sale units in 2005, however, sales started to slip and cancellations abounded, so the project headed down hill as they extended delivery dates due to slow sales. Their average sales for new orders decreased by $120,000 from $365,000 down to $245,000 which is a significant loss. The company was also especially hit hard in the Washington DC market where they experienced 122 cancellations on 625 contracts or 19.5%. Specific to the Eclipse project, they experienced 35 cancellations on 46 new contracts. Ouch! Still they state that most cancellations were related to contracts entered into during 2004. I'm not sure how much of a release that is because in 2004 the prices were lower given that many of those sales were lower do to those units being pre-sale inventory.

via Comstock SEC Filing

Fairwood, Bowie, MD

Some of Fairwood's "specuvestors" who got in early on the project made away like bandits, however those who got in to the market late are now feeling the pinch. Many of them unable to sell and break even, forget making a profit. And, that was in 2006-2007. Now, some sellers aren't able to refinance due to declining property values all around the Bowie and Glenndale, MD areas.

The DC Examiner reported: "No region in Maryland has been harder hit by the foreclosure crisis than Prince George’s County, and no neighborhood in the county has likely been rocked like the Retreat in Bowie’s Fairwood community.".

Those are pretty strong words but when you think that in just 2005 when this development was in its early stages, many potential buyers were being lured in with the idea they could own a luxury home just by signing a contract for an interest only loan or an ARM. Phases I, II, III and IV sold out in record time with prices increasing with each phase completion. Just three years later, many of them are in foreclosure, unable to sell or refinance. When talking with one of their Realtor's back in 2006, buyers were reassured that the market in DC was only on its way up because of all the developments in the pipeline.

Now, just 2 years later the Examiner notes... "In one four-block area, there are seven homes in various states of foreclosure, many others sit empty and others have sat with “for sale” signs on their lawns for months. Between 2005 and 2006, as developers Rocky Gorge and K. Hovnanian Homes put the Retreat’s condominium-town houses on the market, they snagged many buyers with no-money -own loans that residents and Realtors now point to as the primary cause for the neighborhood’s fast-falling market values.

I would also contend that greed got the best of all parties involved.

Clarendon 1021

Clarendon 1021 is another popular community, now dubbed "Flop City" due to flippers having a hard time turning a profit, has been plagued by foreclosures. Many "specuvestors" started selling at a loss in efforts to avoid a foreclosure with little success. Given the market climate this was bound to happen and now many are paying for it in lower comps, missed payments, and lost opportunity due to the increase in foreclosures. "Specuvestors" saturated and inflated the market along with builders offering pre-sale units at a substantial discount. Add to that, the abundance of sub-prime mortgage activity and you've got the perfect storm.

What are your thoughts? Have you experienced a foreclosure in any of these buildings or communities? If so, please share your story in the comments area. Alternatively, you can meet with Daniel to discuss your situation and he can answer any questions you may have around market concerns.

Share This

Keep in mind that with recent volatility in the real estate market, there are quite a few condos that have gone the rental route. However as of this writing, the condos/townhomes listed below currently have new construction and/or resales on the market.

Maryland

Midtown at Largo Station, Largo MD

• Walking distance to the metro
• 1 BR- $250k-$311k
• 2BR- $385k-535k
• These units are situated right across the street from the metro in addition to being walking distance to the supermarket, bank, movies and the shopping center at the Boulevard.

Victory Promenade, Landover MD

• Walking distance to Morgan Blvd Metro and a short drive from Fedex Field
• 2BR/2BA-Starting from $299k
• 3BR/2BA-Starting from $330k-$356k

Metro Place, Suitland, MD

• Walking Distance to Branch Ave Metro
• Garage townhomes starting from mid $300ks
• The metro is situated right outside of the development and offers quick access to DC via 495, Branch Ave and Pennsylvania Ave.

Mica Condos, Silver Spring, MD

• Walking distance to Silver Spring Metro
• Starting from $200k-$600k depending on unit and floor plan

Virginia

Cameron Station

• Shuttle to Van Dorn Metro
• Starting from upper $300ks
• Resales:
  • Condos $315-540k
  • Townhomes $599k-$850k

The Phoenix at Clarendon Metro, Arlington, VA

• 1 block from Clarendon Metro
• Starting from $mid $300s

The Odyssey, Arlington, VA

• Walk to Courthouse Metro
• Resales starting in the $400s

Wooster and Mercer Lofts

• Walking distance to Rosslyn and Courthouse Metro
• Starting from $700k-$2 million

Keep in mind this list is in no way exhaustive and one should conduct further research to determine which home best fits their needs based on location, personal preference and finances. If you have questions and would like to discuss your strategy or perhaps borrow our free GPS machine to see one of these homes, give us a call!

Share This

What are your rights with regards to Realtor representation agreements? Did you sign a buyer representation agreement? A seller representation agreement? If so, or if you're considering it, this article is for you.

Realtor representation agreements are legally binding agreements which inform the buyer and agent of their rights and responsibilities to each other while engaged in a contract for services. This is known as agency The buyer grants the Realtor agency and the Realtor provides a service within the bounds of the agreement. However, every agreement doesn't always end in a happy purchase or sale of a home. Sellers and Buyers may choose to terminate agreements for a myriad of reasons. Whatever the reasons, make sure that you read the fine print before signing the dotted line.

Let's reiterate: READ THE FINE PRINT.

Agency

Agency begins when one person, in this case, the Realtor, represents the interests of the other person, the buyer or seller. The responsibilities of the agent are defined by your local Realtor Code of Ethics, state law and general principles of agency law.

Buyer Representation

Buyer representation involves entering into an agreement with a Realtor who represents the buyer, exclusively. Everything they do with regards to a transaction should be to their client's benefit and not the opposing party or the seller. Buyer agent duties and responsibilities include but are not limited to:

• Represent the buyer as appropriate and required by their local laws and code of ethics in the transaction
• Evaluate the buyer's needs on an ongoing basis
• Present the offer and negotiate on behalf of the buyer
• Work with the buyer to determine the amount of house they can afford and provide them with the appropriate resources
• Accompany clients on home viewings and open houses

Seller Representation

Seller representation involves the seller entering into a contract with the Realtor to sell their home. Within this contract, between the seller and Realtor, the following information is detailed and specified:

• Home price
• Commission
• Duration of agreement
• Duties
• Rights & obligations

Cancellation of the Agreement

How To Cancel Your Realtor Agreement

This should typically be done in writing, not over the phone and not via email. If you do cancel your agreement via email, please be sure that you get confirmation and acknowledgement via email (or snail mail) of the Realtor's response and plans to terminate your contract moving forward. In some cases, your agreement is with the broker of the company your Realtor works for and you will need to make sure that the broker has agreed to cancel the agreement at your request. You will need to obtain proof of this as well.

We live in a litigious society and you need to make sure you have concrete proof of said cancellation, receipt confirmation and acknowledgements by broker and realtor that they will release you from the agreement and discussion of any potentials penalties for cancellation.

Your Rights

Read the fine print before signing any agreement as this is typically not done until something happens and the buyer or seller need to cancel the agreement. Does your agreement permit you to cancel within a certain time frame with no penalty? What about Realtor compensation upon cancellation? Legally a Realtor cannot continue to represent you once you have terminated agency; however this does not prevent them from holding you to penalties per the contract you signed.

This may include:

• Compensation fee
• Commission for the sale of the home said Realtor accompanied you on a showing or open house or a home said Realtor presented to you

Recourse Upon Difficulty Exiting The Contract

• Contact the broker
  
  • Most brokers are more than happy to discuss the situation with you and offer you another Realtor within the company or simply terminate the contract. After all, bad news spreads like wildfire and they would rather have your business or release you from the contract without issue
• Local Real Estate Board for clarification and/or complaint
  
  • If your broker (for whatever reason) refuses to release you from the contract then your next recourse may be to discuss the situation with your local real estate board for clarification on your rights and/or to make a complaint.
• Real Estate Attorney
  • When all else fails, consult with a real estate attorney

Contracts can be tricky, again read the fine print and understand each point within the contract as buying and/or selling a home is a large and important transaction. You'll want to make sure it goes as smooth as possible.

Share This

When the housing preferences of a new generation hit the real estate market, you can guarantee that it will have both a significant and lasting effect. Generation Y has now reached the age to buy their own homes.

Still think that they are too young? Current numbers show that the average age for the first time home buyer is 26. This is 3 years lower than Generation X and the Baby Boomers.

Who are these people? Generation X, born between 1965 and 1979, make up 20% of the total U.S. population. The subsequent generation, Generation Y (also known as the Millenials) is those born between 1980 and 1994. They make up 25% of the population. Combined, these people make up 45% of the U.S. independent consumer population. That means that a market is flooded with younger buyers.

What explains this demographic change? The younger generations live in the “urgency of now.” Don’t get me wrong—they are still putting off marriage and having children, but buying a home is viewed as an independent, professional investment. A good portion of them have had everything instantaneously provided for them while growing up. They demand equal treatment at work and tend to not stay long in one job before making a quick career advancement to another position. They show a pattern of wanting everything now---and that is including a home. Now, this generation is now entering the workforce in full force.

Where are they buying homes at? They are already showing signs of deviating from the Baby Boomer generation. According to the Urban Land Institute, the Millenials do not crave the suburban sprawl patterns of the Baby Boomers. They are showing signs of buying houses inside metropolitan areas. For this reason, houses that are closer to city centers are maintaining their value during the current down market and are expected to be the quickest to gain value once the market recovers (see related post).

They are still buying in the suburbs too. However, a lot are attracted to more mixed-use developments such as the Reston Town Center (Virginia). In developments like this, they were planned to resemble a sort of downtown in the suburbs that offered retail, office space, dining, transit and affordable housing all within a walking distance.

Christopher Leinberger, a fellow at the Brookings Institution, claim that Millennials are attracted to urban centers because of the high cost of gas and since they grew up on shows such as Sex in the City, Seinfeld and Friends which depicted urban life as trendy.

They are also different types of shoppers. The Millennials have spent all of their life with a computer and internet, which means they know how to research everything. They know how to look for a house, learn the closing process and keep alert to market changes. Therefore, without having real estate license, these potential buyers are already housing experts.

When listing the features of your house, make sure to mention the amenities of the community. What is the closest major highway? Is there a metro station nearby? What is a great coffee shop in the area? Are there some nice public parks nearby? What about retail within close proximity? Remember, the new generation likes mixed-use and transit oriented developments. If you don’t put this, they might think that this is just another house out in suburban sprawl, which will require lots of driving.

Pay attention to how your house looks online. Even if your house has been listed for months, take down that photo of your house in the snow and replace it with a fresh one. When online shoppers see this, they will automatically realize that it has been listed for months and think that something must be wrong with the house.

Also, you must take photos of rooms, backyard and features that will make the online virtual tour of your home look attractive. Are you photos free of clutter? Do they show depth?

Here are a few other suggestions to help with your online listing, whether you do it through and agent or a real estate blog that lists houses of For Sale By Owners (FSBO):

• Properly prepare you home for a photo shoot. Is your lawn mowed? Did you trim the bushes? Are your walls free of extra junk? Are those windows sparkling?
• The newer generation is a lot trendier than previous generations. Lots of these buyers will prefer hard wood floors since it seems metro. If you have any hardwood floors in your house, make sure you shine them up for some photos.
• Make sure furniture is placed in your photos. Potential buyers like to see how a room looks with furniture in it. Be careful not to place too much furniture since too much will make the rooms appear smaller. Try to get a friend or family member, who knows a lot about digital photography, to take some photos that will show space and emphasize depth.
• The kitchen is a huge selling point of a house. You want to capture the essence of this area. Take pictures of your kitchen appliances and cabinets. Again, try to get some good shots that emphasize depth. People love huge kitchens.
• The bathrooms are important to sellers as well. Make sure that chrome shines and the towels match the shower curtain. Make sure to include photos of the cabinets and fixtures.
• When taking photos of the bedrooms, make sure you open the closet doors and try to capture their size.
• When taking pictures of the living room, family room or den, make sure to include special features in your photos. This includes, built-in book shelves, vaulted ceilings, ceiling fans, fireplaces and bay windows.
• When taking pictures of your home’s outside, get a wide shot of the house and yard from different angles. Make sure to take photos of the garage and porches.
• Is your home part of a community? Go ahead and take those pictures of the pool, tennis courts and bike paths.

Remember to pay attention to how your house is viewed online. The new generation of buyers are doing their own homework, so if your home is not trendy enough for them, you might just lose out to a huge demographic who is ready to buy.

Related Posts:
Selling in a Down Market: First Tip, People Don’t Want a Fixer-Upper
Selling your home, what works (and what doesn’t)

Share This

I, right along with all those other Realtors, originally thought that the agreements were binding until their expiration date, until a colleague told me that was incorrect. I didn't believe him, so I asked the general counsel for the Virginia Association of Realtors, a gentleman named Lem. Here's what I wrote Lem:

Subject: Lem - true that buyer rep agreements & listing agreements can be cancelled by the client at any time???

Lem - true that buyer rep agreements & listing agreements can be cancelled by the client at any time???

Danilo mentioned this today but I had never understood this to be true.

Regards,

DROdio

And here's what Lem wrote me back:

Daniel:

Yes, an agency agreement may be terminated at any time. After all, agency is consensual, and when the agency is withdrawn, the agreement dies.

However, most of our agreements provide that termination before the term has expired is an event of default, with most agreements stating that certain damages result. That will depend on the agreement.

Regards,

Lem

I still didn't believe Lem, and thought he surely must be wrong! Maybe I asked the question incorrectly? So I wrote him back:

Subject: Re: Lem - true that buyer rep agreements & listing agreements can be cancelled by the client at any time???

Lem, this is very interesting.

I looked over the standard NVAR buyer representation agreement we use, and I don't see any provisions for damages should the buyer terminate the agreement early, other than a provision for the agent to still be compensated on any property that was shown to the buyer by the agent.

So, is it then true that if a buyer enters into a 90 day buyer representation agreement, he can cancel it on day 2 without any compensation due to the buyer agent, under the standard buyer rep agreement (excluding any properties the agent may have shown the buyer).

I believe it's popular myth among realtors that the agreement is binding for the entire 90 day term, and the buyer needs to wait for it to run out before he can contract with another realtor. Obviously NAR code of ethics bars realtors from soliciting the business, but the buyer can drop an agent he signed an agreement with?!

And the same thing goes for the listing agreement??? The broker can't do anything about it if the seller cancels the listing agreement???

buyer & seller compensation sections attached.

Buyer comp (click to enlarge):

Seller Comp (click to enlarge):

Lem wrote me back saying:

Daniel:

But it has to be, no? If the seller decides not to use you anymore, you can’t very well continue to market on his behalf, can you? Once he severs the ties, it’s done. If he tells you to stop acting on his behalf, to stop marketing, to take the property out of the MLS, you can’t very well ignore his instructions and continue to market on his behalf. His grant of agency to you is revocable whenever he wishes. But if he has entered into an agreement that provides for damages or consequences should he do that, he’s bound by those consequences.

To make it as simple as possible, if seller says, “Take it out of the MLS and stop action on my behalf,” it just can’t be the case that we’re free to ignore that and continue to market the property. He says stop, we stop. He bears any consequences he’s agreed to.

Regards,

Lem

So there you have it, straight from the mouth of the General Counsel of the Virginia Association of Realtors.

The only caveat to this discussion is that some listing or buyer representation agreements may in fact have provisions for damages if the agreement is terminated before the expiration date. For example, it may say, "If terminated before expiration date, Seller to pay Listing Agent $500", etc. So read your agreement carefully for that language.

Another caveat is that our Realtor code of ethics prevents us from soliciting the business of anyone who already has an agreement signed with a different Realtor. So if you're reading this, and you already have a signed agreement with a different Realtor, please understand that we are not soliciting your business, because we're not allowed to, and that would be a violation of our code of ethics!

Share This

Sometimes, those tests come back with unacceptable levels of radon.   The first thing is to define an "unacceptable level" which is difficult because the EPA does not exactly state what an "unacceptable" level is, except to say, " Fix your home if you have a radon level of 4 pCi/L or more".

Many buyers get very concerned when radon levels are high, and rightly so, because unchecked (or if it went unknown) it can pose a health hazard.   (Yet another reason to have a great firm like us looking out for your best interests!).

The good news is that remediating radon is not an overly expensive proposition.  Another thing to keep in mind is that since radon tends to be an "areawide" problem, it's likely that other homes in the area you're looking will also have the same problems, so if you've found a home you're happy with, you're better off venting the home than looking for another home that might have the same condition.

Below is an excellent article from the Wall Street Journal describing one reporter's experience remediating radon.  We can also recommend expert firms who can give you quotes to get the work done (and we can often get the seller to pay for it).

My $1,200 Radon Job
The Least Sexy Home Improvement Could Be a Lifesaver
April 19, 2008; Page W1
It might be the ugliest home improvement. Last month, I finally did something about my radon problem.

Two men came and drilled a five-inch-wide hole in my home's bottom floor. They attached a suction system of white pipes and a big round fan to draw air -- and radon -- from underneath the house and vent it out through a black pipe stuck in the roof. The work took six hours and cost $1,200 -- about what I paid a pro to retile my bathroom.

See the steps taken in Ms. Bounds's project.
Most homeowners have heard about the health hazards of radon, a radioactive gas that emanates from rocks, soil and water. Outside, it's relatively harmless, but inside it can collect in dangerous concentrations, seeping in through cracks in the home's foundation and other openings. Radon is the No. 1 cause of lung cancer among nonsmokers, and one in 15 homes has an elevated level prior to treatment, according to the Environmental Protection Agency. The agency estimates 750,000 to 1 million U.S. homeowners have taken radon-reduction steps over the years and says those steps, along with techniques in new construction, have helped prevent 6,000 deaths.

Despite the risks, radon until recently has ranked pretty low on many homeowners' action lists, including mine. You can't see, smell or taste it, which makes it -- unlike mold -- easy to ignore. The federal government recommends but doesn't mandate remediation for homes with elevated levels. And let's face it: In the scheme of renovations, there are sexier ways to drop 1,200 bucks than drilling a fat hole in the basement.

But as homeowners and builders rush to make dwellings healthier on all fronts -- from nontoxic paints and organic lawns to formaldehyde-free kitchen cabinets -- radon is emerging as a hot button in both new construction and resales. The National Association of Home Builders' Green Building rating program, which kicked off in February, requires installation of mitigation systems in certain radon-prone regions. Last year, the EPA launched a campaign encouraging the use of radon-resistant materials in new construction -- such as plastic sheeting under a home's slab and a built-in vent pipe where a fan can be attached. New studies are examining whether granite and other stone countertops play a role.

"As people become more interested in the green lifestyle, it encompasses radon as well," says EPA spokeswoman Kristy Miller. It has taken time to build public awareness, just as it did with smoking, she says. "We've been on that for 45 years or more. With radon, now we're seeing a culmination of all these issues."

In 2006, 10.6% of single-family detached homes were built with active radon-reduction systems in place, nearly double the percentage in 2001, according to the national home builders group. State and local building codes in nearly half the states mandate some level of radon control, and the number is on the rise, says Peter Hendrick, executive director of the not-for-profit American Association of Radon Scientists and Technologists. A number of local groups, like the Pennsylvania Builders Association, encourage members to spend a bit more up front to install radon-reduction systems. "I would encourage any builder that it's the right thing to do -- it's cheap to put in and it's in the client's best interest," says member Frank Thompson of Sweetwater Builders, near Pittsburgh.

RADON REMEDIATION

As part of Gwendolyn's renovation, a white pipe (top) was drilled through the garage floor, which shares her house's slab. The pipe then funnels up into the garage's attic (bottom) where a fan pulls the air out from underneath the home and vents it to the outside. The one downside: she can hear a whoosh whenever she parks the car.
As for resales, while no federal or state regulations mandate home radon testing, the U.S. Surgeon General issued an advisory in 2005 urging all Americans to have one done. The majority of states have some form of disclosure law requiring the home seller to inform the buyer about property defects, such as radon -- but only if the seller knows about them. Many experts believe this discourages testing and say a better model is an Illinois law that took effect this year. It requires sellers to provide information about radon risk in general, whether the home has been tested or not.

Meantime, some radon labs say they're seeing a steady rise in testing. Sales of radon test kits have jumped 40% in the past five years at Radon Testing Corp. of America, a major national testing lab in Elmsford, N.Y. "The number of prospective home buyers asking for tests has increased even though the real-estate market has dropped," says RTCA's president, Nancy Bredhoff.

There is concern, though, that the push for more testing and remediation is overkill, burdening home builders and potentially slowing sales in a tough housing market. And while most scientists agree about radon's long-term risks, some question the benefits of reduction efforts. "Only after many years would a successful radon abatement program begun today be likely to reduce the number of lung cancers, and then only by a very small percentage," according to the Web site of the Health Physics Society, a scientific and professional organization focused on radiation-safety issues.

Where I live, in a rocky New York county, the indoor radon average is slightly above the government's recommended take-action level of 4 picocuries per liter of air (pCi/L). My home was built in 1978. When I purchased it in 2003, the seller neglected to stipulate on the required disclosure form if the home had been tested for radon. (In the haste of the deal, I didn't notice.) When I tested, the levels came back between 5 and 13 pCi/L -- a level higher than the EPA standard but not off the charts, according to pros I talked with. Most suggested retesting down the road, and when I did, the levels still hovered around 5 to 6 pCi.

RADON ROADMAP

A black vent pipe is all that shows from the outside, barely noticeable to visitors.
PROFESSIONAL TESTING: The U.S. Surgeon General and EPA recommend all homes be tested and fixed if the radon level is 4 pCi/L or more.
Find links to qualified testing and mitigation professionals in your state at www.epa.gov/radonand via the National Environmental Health Association (www.neha-nrpp.org) or the National Radon Safety Board (www.nrsb.org). The latter two groups offer proficiency listing/accreditation/certification in testing and mitigation.
DO-IT-YOURSELF TESTING: Inexpensive, easy-to-use radon test kits can be purchased in stores like Home Depot and online at sources including www.radon.biz, www.radonworld.comand www.rtca.com.
HEALTH INFO: Studies about radon's health effects can be found through the nonprofit American Association of Radon Scientists and Technologists (www.aarst.org) and the World Health Organization (www.who.int).
Since my score could present a selling problem later, I decided to take action. Unfortunately I had to start from scratch, installing an "active soil depressurization system," which pulls air from underneath the home and reroutes it outside, often through the roof. These types of systems reduce radon readings below the 4 pCi action-level in 99.9% of cases, according to Bill Angell, chairman of the World Health Organization's Radon Prevention and Mitigation Working Group, which plans this year to release standards for radon resistance in new homes and reduction in old ones. "Virtually never do we find a home we can't get below the threshold for action," he says. Other tactics include sealing basement cracks and installing a special ventilator.

The soil depressurization technique I used is called a "sub-slab suction" system, and involves a fan and piping that is drilled through the floor slab and routed up through hidden areas, like closets, and then typically into an attic and then outside. An alternative is to run the pipe up the home's exterior, where it is more likely to be visible. The cost of fixing an existing home typically ranges from $800 to $2,500; the cost to builders to install similar measures in new homes ranges from $350 to $500.

After checking reputations with local real estate agents, I called several pros for bids. (Many state health departments list qualified contractors; for those that don't, the EPA offers standards to be followed.) Each one pronounced my home "very difficult" because the lower level was all living space (hard to drill a hole inconspicuously) and I had no main attic (Where to put the fan?). The man I ultimately hired, David Barber of Acceptable Environment in Newburgh, N.Y., suggested drilling in my garage, which shares the home's concrete slab, and running the pipe and fan though a small attic space in there.

The upside: It isn't an eyesore. The downside: I can hear the fan's whoosh every time I park the car.

A week after Mr. Barber mitigated, I ran a new radon test. The result: 2.8 pCi/L -- about a point below the federal limit. I'm safer on the home-sale front, but because I am in my home's lower level a lot, I may pay Mr. Barber another $150 to run a second pipe from beneath a lower-level stairwell to the garage attic fan. My goal: getting down to at most 2 pCi/L, a level that puts my lifetime risk of radon-related lung cancer as a nonsmoker at 4 in 1,000, according to the EPA. Meantime, I'm focused on finishing a happier renovation project: the kitchen, where I hope the only gas I'll think about is from my new range.

Share This

To add insult to injury, these actions are being taken even in areas where the value of properties has not declined and in some cases have even risen. Michael A. Kratzer, president of feedisclosure.com, states "the letters provide no explanation for how the lenders determined that the property values underlying the equity lines had fallen".

One of the other aspects of this (in my opinion) rash decision by lenders, is that consumers are not receiving refunds on what they were charged to put the loans in place initially. In some cases, a consumer may not have even used any of the loan but had it there for emergency situations or expected upcoming expenses.

"Credit Crunch" also now affects some student loans:

Similarly, On June 2, "The New York Times" reported that "Some of the nation's biggest banks have closed their doors to students at community colleges, for-profit universities and other less competitve institutions, even as they continue to extend federally backed loans to students at the nation's top universities."

by separating out the different types of institutions, the banks are again looking to reduce their risks. The feeling is that most graduates of four year universities are lower risk because the banks feel that the graduates of these institutions will more than likely earn more money and be able to pay back the loans.

Two familar names in the student loan world, "Sallie Mae" and "Nelnet" have confirmed that they will continue to offer student financial aid regardless of which type of institution is attended. The thing that has many people baffled about these lending institution decisions is that the government actually sets the standards for who can and cannot participate in a federal loan program. The Fed insures that colleges are "accredited" and have relatively low default rates in order to qualify for inclusion in the program. It's crazy to think that some lenders are being even more picky than the government!

Risk reduction-the new name of the game

The examples above are just two of many that are the new norm for life after the mortgage "meltdown" that seems to have left no stone unturned with it's pervasive effects on the market at large. Mortgage lending as well, is a whole new ballgame. Someone who purchased a home with an "exotic" mortgage two years ago might be hard-pressed to qualify for that same loan today. Lenders are being cautious, especially in cases where risk is perceived to be higher. For instance, if a borrower has a lower than preferred credit score, (risk one) and is putting down the minimum downpayment (risk two) and using and "interest only loan (risk 3) that borrower will now almost certainly have to pay more for a mortgage (if using a conventional mortgage) and even FHA has recently jumped on the "risk reduction" bandwagon announcing it will now have "risk based premiums".

Get your financial "ducks in a row"

I'll admit, this is scary stuff! Depending on your viewpoint this could either be the righting of a past wrong or just an overblown over reaction! Whatever your belief is, it is clear that things are changing and it would benefit us all to take inventory of our financial houses and find areas where we also can strive to reduce our "risks".

Share This

During the housing boom of 2003 – 2006, major remodeling projects were well worth it. They were sometimes leading to recoups of 80 to 90 cents on the dollar. This is when the resale value of homes improvements was at their best.

We also might remember our parents telling stories of buying a “real fixer-upper,” because they were able to get to get a home at a great price, and saw the value in putting a little money and time into general repairs and basic remodeling. The end result, they had a dream house to raise their kids and retire in.

The truth is that times have changed and we have Generation Xers and the newest generation, the Millenials, ready to buy a home. Their priorities and desires, on average, are different from previous generations. The older generations, the Baby Boomers and the War generation, have all reached the age of wanting to relax and not have to worry about spending both energy and big bucks on buying a fixer-upper to retire in.

New times are ushering in new trends in buying. Couple that with the down market, what is yielded: Buyers who tend to look for home that is in perfect or near-perfect condition.

Before, the market had more buyers than sellers. At that time, it was easier to sell a house with wall that needed a paint job, broken light fixtures, or ratty carpet. Newer generations are now looking for “turnkey” houses. What this means, is that buyers want a house that is ready to use as soon as they turn that key to enter for the first time. A house that needs a lot of work may be a bargain, but it also means time, money, and additional headaches.

Buyers want to make sure that appliances are up to date. They want to make sure they can move in, and relax on a clean living room floor. They are looking to make sure that lighting fixtures work, the garage door opener, and that there is no immediate house odor that might be hard to get rid of. Therefore, very mundane improvements can add psychological appeal to your home.

Here are some quick and very affordable ways to get your house ready to sell that avoid the time and costs remodeling:

Keep your house looking good – Remove all of the junk from your house. You can add thousands of dollars in value just by spending the weekend taking out extra things from your house. Have that overdue garage sale and get rid of all the things you can do without. The additional space will also make your house appear bigger.

• Here are some additional ways of improving the walk through appeal of your house:
• Make your bed every morning.
• Buy new matching towels and make sure that they are always folded.
• Make sure all dirty clothes are hidden.
• Keep counter tops clean.
• Remove offensive posters and other décor that might turn off a buyer with a different taste. Try to keep everything neutral.
• Keep your windows sparkling clean.
• Make sure all light bulbs are working for when walk through buyers flip the switches.
• Create a stack of “House Features” sheets that can be placed on the clean kitchen island. When buyers walk through the house, they can pick these up and look at house related numbers and amenities. This includes square footage of the garage and basement, any newly added features, nearby schools and hospitals, if the house was just painted, etc.
• Get rid of offensive odors from pets or cooking.
• Keep waste baskets empty.
• Clean the oven and remove mildew from the inside of the dishwasher.

Getting that curb appeal – How does your house look from the street? Does the yard need to be cleaned up? Does your house need paint around the edges or whole coat? Are there oil stains on the driveway? Are there lots of cars in the driveway?

Clutter and mess is unappealing to people driving by and those who want to be able to visualize themselves in your home. Two many cars in the driveway and on the road in front will can both hide your for sale sign and make your yard appear small. If you used your garage for only storage, rearrange it and start parking your cars inside. If you park in the street, park further off to the side to open up the space in front of your house.

Some other simple and cheap ways to improve your exterior look or “curb appeal” are:

• Keep the landscaping neatly trimmed.
• Pick up animal feces in the yard.
• Put a fresh coat of paint on your front door.
• Fix any loose shingles.
• Make sure your gutters are repaired and painted.

The penny wise make over of the bathroom – In real estate, the look of bathrooms and kitchens usually bring the best return on investment than any other part of the house. This can be expensive; however, anything that you can do will make a difference.

Here are some cheap ways to improve your bathroom:

• Buy some simple framed art from a craft or retail store. Make sure they match the shower curtain and towels.
• As mentioned above, buy new sets of matching towels.
• Change the sink and tub faucets. Replace the door knobs on both the entrance door and on the cabinets.
• Get a brand new shower curtain. If you have a shower door, then make sure the chrome is shining or invest in a new door.
• Rip out that old fashioned medicine cabinet and replace it with a modern mirror.

…and what about that kitchen? – Updating your kitchen will probably cost the most. However, if you replace appliances, you can sell the old ones at the garage sale you were going to have or take them with you to your new home.

Here are some cheap ways to improve your kitchen:

• Install a nice modern kitchen faucet.
• If your cabinets are over thirty years old, you might want to consider replacing them. If not, semi-gloss paints for kitchen cabinets will eliminate that ancient look. If you don’t like either of these ideas, then consider resurfacing your cabinets.
• Replace cabinet door handles.
• Update lighting fixtures with brighter, more energy-efficient ones.
• Make sure those entire appliances match in color. This can be a little expensive, but a cohesive-looking kitchen can be a real grabber. If you buy new appliances, make sure you put them on that “House Features” sheet. People love to know that they have a brand new microwave or oven.

It is not necessarily hard to keep your house clean and looking good. Remember, you never know when an agent might bring someone by unexpectedly. Make sure your house is ready for a quick sale.

Read Related Posts:

How does the home inspection work?

Is it really cost effective to remodel my home in order to sell it?

Selling your home, what works (and what doesn't)

Share This