How long before your home is obsolete?

How long can your home remain livable? According to a study by the National Association of Home Builders / Bank of America Home Equity titled Study of Life Expectancy of Home Components (February 2007), “The life expectancies of the components of a home depend on the quality of installation, the level of maintenance, weather and climate conditions, and the intensity of use. Some components may remain functional but become obsolete due to changing styles and preferences or improvements in newer products while others may have a short life expectancy due to intensive use…The average life expectancy for some components has increased during the past 35 years because of new products and the introduction of new technologies, while the average life of others has declined…” (nahb.org).

Throughout a home’s lifespan, a home may be considered obsolete in a number of ways. A home is often considered functionally obsolete when it is deficient of items that are considered to be required in the present marketplace, and/or no longer conforms to modern building standards. Because building standards change over time, it is not uncommon for older homes to be considered functionally obsolete because it lacks up-to-date and/or enough amenities. Even modern homes can become functionally obsolete if maintenance issues deteriorated the home’s systems (such as during a fire, or severe hoarding cases).

The decrease in maintenance spending during the Great Recession has many wondering about today’s housing stock’s functional obsolescence. A February 2013 article by Kermit Baker for the Harvard Joint Center of Housing Studies entitled “The Return of Substandard Housing” highlighted the relative considerable reduction in maintenance spending by home owners (housingperspectives.blogspot.com). He stated that “improvement spending” decreased 28% between 2007 and 2011, and concluded that this “crisis” requires attention. He stated; “The longer-term fate of the current slightly larger number of inadequate homes [functionally obsolete] is unknown. Many of these homes likely will be renovated to provide affordable housing opportunities. However, many may not recover without extra help. Given the extraordinary circumstances that many homes have gone through in recent years, particularly foreclosed homes that often were vacant and undermaintained for extended periods of time as they worked their way through the foreclosure process, they may be more at risk than their inadequate predecessors…”

Economic or external obsolescence is often considered when influences, other than the structure, impact a home’s value. For example, the value of a well maintained home can be impacted when many community homes are vacant: due to foreclosure; or when there is a major relocation, such as when a small town’s manufacturing plant closes. Environmental issues can also be considered a factor in external obsolescence; you can bet that the homes around the Chernobyl nuclear plant were affected immediately following the 1986 disaster.

Although the remediation of external obsolescence is often complicated, the good news is that many functionally obsolete homes can be repaired extending their life; renovations are common, upgrading the homes to meet modern building codes and with modern amenities. However, a restoration is sometimes completed to return a home to its original condition – but with modern conveniences; these homes typically have historic significance.

And of course, functionally obsolete homes are sometimes sold as a “tear down”; with the intention to replace the structure with a modern home that not only meets current building standards, but meets consumer trends in home design, size, and function.

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By Dan Krell
Copyright © 2014

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

February 14, 2014December 13, 2022

The magic of 4 to sell a home

For a successful home sale, you need to focus on four areas…

Spring is rapidly approaching – are you one of the many home owners listing your home for sale this year? Sure, last year may have seemed like a breakthrough, but the still recovering housing market is just as quirky as The Doctor’s TARDIS. And unless you consider condition, preparation, pricing, and marketing; your home sale could fall flat.

A home’s condition can affect a home’s sale price (sometimes significantly), and is often overlooked by home sellers and listing agents. It is not uncommon for owners to put off home maintenance, especially after the financial crisis of 2008; housing experts estimate that home improvement spending decreased about 28% between 2007 and 2011. Deferred maintenance can deter some home buyers, while motivating others to make a low offer. You can get an idea of potential cosmetic, mechanical, and structural issues by having a pre-listing home inspection.

Whether or not you choose to address deferred maintenance and repairs prior to listing, preparation is required to get ready for home buyer viewings. One of the most important things to do to prepare your home is to declutter. Decluttering is often overwhelming because sellers expect to make the home immaculate; but really, the purpose to decluttering is to give rooms a neat and spacious feel. Decluttering will make you decide which items to keep, what to throw out, give away, or put in storage.

Home staging is a way to create a “vision” for home buyers. Home staging can get pricey if you hire a staging professional and rent furniture. But it doesn’t have to be expensive; “do it yourself stagers” can often transform a home with little or no money. If your home is vacant, inexpensive rentals can be used as room “place holders,” to help convey a room’s size and use to buyers.

Pricing your home correctly can mean the difference between a successful sale and languishing on the market. A common mistake that occurs in a recovering market is the eagerness to price high; but buyer push back can be an abrupt awakening to the realities of the housing market – making you wonder why your home is not selling. Be careful of the listing agent who intentionally over-prices your home, this is an old technique to persuade you to sign a listing agreement; the flip side is listing with an agent who intentionally prices the home too low, promising a “quick” sale (which only makes the sale easy for the agent).

Marketing a home sale has changed significantly in the last five years. Gone are the days of “set it and forget it.” Creative agents are constantly seeking avenues to publicize and promote listings. A sales strategy can determine the correct positioning for the home; while implantation of a marketing plan can include new and imaginative methods, such as placement in specialty magazines and websites, video, and even open house “parties.”

Many don’t realize that the internet is where a majority of home buyers now congregate, viewing your MLS listing across hundreds of websites. To bolster online appeal, make certain your agent uses professional pictures, inspired home descriptions, and complete MLS information. Be wary of new marketing technology, which often has mixed results; for example: “virtual staging” is a technology than can enhance online appeal by electronically staging a home, but can flop when buyers expect to see what is pictured.

by Dan Krell ©
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of February 10, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

June 13, 2013November 23, 2021

The decline of today’s housing stock

by Dan Krell © 2013
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Is the decline of today’s housing stock a concern or an opportunity?

While taking part in a recent home inspection, the home inspector unexpectedly began to talk about the concern for today’s housing stock. After listening intently for a short time, I realized that his dissertation about the quality of existing homes was not just his opinion or home inspectors as a group, but rather a consensus of growing concern among housing experts of the condition of many older homes.

The issue that the home inspector pointed out is that much of the existing housing stock is aging without significant necessary maintenance or repair. Because the lifespan of many of home systems (including roofs and HVAC) range from 15 years to 30 years, as well as structural materials can have an average lifespan of 40 years; he surmised that homes that exceed thirty years of age are at significant risk.

As a home inspector, this gentleman has a unique perspective about how people take care of their homes; and unfortunately, many home owners have put off important and necessary maintenance and/or system replacements such that the home’s condition is considerably affected. And although he didn’t attribute the deteriorating housing stock with the recent recession, it is assumed that the recession contributed to the housing stock’s declining quality – if not accelerated it.

A February 2013 article by Kermit Baker for the Harvard Joint Center of Housing Studies entitled “The Return of Substandard Housing” highlighted the relative considerable reduction in maintenance spending by home owners during the Great Recession. He stated that “improvement spending” decreased 28% between 2007 and 2011, which essentially “erased” such spending during the housing boom (housingperspectives.blogspot.com).

Mr. Baker concluded that this crisis needs attention, stating; “The longer-term fate of the current slightly larger number of inadequate homes is unknown. Many of these homes likely will be renovated to provide affordable housing opportunities. However, many may not recover without extra help. Given the extraordinary circumstances that many homes have gone through in recent years, particularly foreclosed homes that often were vacant and undermaintained for extended periods of time as they worked their way through the foreclosure process, they may be more at risk than their inadequate predecessors…

Considering the number of re-sale contracts that are falling out because of home inspections, this all makes sense. New home sales aside, many home buyers want “turn-key” homes that are updated with relatively new systems. It seems as if that home buyers don’t want to be burdened with major maintenance costs for the first five years of ownership. Some of the costly considerations that can put off home buyers are replacing a roof, windows, siding, and/or HVAC. Additionally, hazardous materials that can be commonly found in older homes (such as asbestos and lead paint) are becoming an increasing concern with first time home buyers.

The reason is uncertain, but during the “go-go” market of 2004-2006, a home’s condition didn’t seem to be as much of a concern for home buyers as it is today. However, one reason may be that during that period home equity loans were relatively easier to obtain to finance renovation projects.

The result of the deteriorating quality of the existing home stock may be that we may see declining values in homes requiring the most attention; such homes may either be renovated by home buyers, or might be razed to make way for a new home.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of June 10, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

March 14, 2012November 7, 2019

Severe hoarding affects more than families and communities

Thanks to reality TV to bring about awareness to the nationwide hoarding problem; however, experts agree that chronic hoarding is still under-recognized. The Montgomery County Task Force on Hoarding Behavior Report (Prepared by Department of Health and Human Services February 2011) anticipates that the number of reported hoarding incidents will increase as awareness increases and the population ages. Awareness and recognition is paramount as there is a consensus that hoarding exists in most communities and has the potential to negatively affect the health and safety of those in the community as well as the environment.

Hoarding is often defined as the inability to discard large collections of possessions that appear to have little or no value/use. Additionally, clutter obstructs the use of the home or spaces within; and can pose a significant health or safety risk, as well as risk the maintenance of the home. Hoarders can accumulate things, trash, and even animals. Animal hoarding is a type of hoarding that is difficult to intervene for various reasons that include personal property issues.

In-home risks for hoarders and their families include: tripping, injury (or death) from falling objects, health issues that arise from pests and mold, delayed emergency care. As a result, utilities are often inoperable and the home can become condemned. Although neglect and abuse issues come to mind when you think about hoarders; however, Cristina Sorrentino Schmalisch, PhD, LICSW of the International OCD Foundation (ocfoundation.org) claims that hoarding is also a public health and fire safety issue “that can put the home at risk for condemnation.”

Of course, according to Dr. Schmalisch, the consequences of hoarding are not limited to the hoarder; the effects of hoarding often spill over on surrounding homes and the neighborhood, especially if the hoarder lives in a multi-family building (such as a condo or apartment). Pest infestation, structural problems, flooding, and electrical fires are just a few of the potential problems that have the potential for property damage and possibly lower the property value. In fact, long term effects of hoarding can also shorten the operational life of systems within the home as well as threaten the structure itself.

The national hoarding problem is very much a local problem as well. Because local incidents of hoarding have been increasing, the Montgomery County Task Force on Hoarding Behavior was established in 2009 by the Department of Health and Human Services to address the complex issues associated with the disorder. The mission of the TFHB was to “coordinate all County actions related to severe hoarding cases in Montgomery County and develop comprehensive long term, proactive strategies to prevent and remediate hoarding situations.”

If you’re unsure how to tell if someone has a sever hoarding problem, common signs include (but not limited to): clutter that blocks windows and doors; clutter that makes it difficult or impossible to use the kitchen, bathroom, or bedroom for their intended purposes; repairs are not made to the home to avoid having visitors; clutter/trash related pest infestations; clutter is unsafely stored close to heating and cooking areas.

Hoarding intervention is commonly approached through both mental health services and building code enforcement. Although it is often difficult to force a hoarder to receive mental health services, the home condition can be addressed through code enforcement citations. For more information or seek help contact the Montgomery County Department of Health and Human Services.

Original published at https://dankrell.com/blog/2012/03/14/severe-hoarding-affects-more-than-families-and-communities-homes-and-real-estate-at-risk/

By Dan Krell

June 15, 2011July 27, 2019

Negotiating home repairs

During the housing boom last decade, it seemed as if problems that killed real estate deals were rare. Appraisals almost never came in low, and if it did the buyer gladly paid cash for the difference between the sales price and the appraised value. Loan denials were also rare, because mortgages were easier to obtain. And of course, the home condition almost never seemed a problem because many people forwent home inspections.

Today, however, buying and selling a home feels different than it did in those halcyon days. Although the process remains the same, the rules have somewhat changed. Buyers are more apt to ask the seller to address issues that arise along the way, including problems with the home’s condition. Both the buyer and seller need to be aware of property condition issues that may arise as well as being prepared when encountered.

Home buyers are looking for their perfect home, while sellers already view their home as such. Because of this subjective view, it seems as if home buyers are “walking away” more often these days because they cannot come to terms with the seller on property condition repair items.

Home sellers generally have progressed over the last few years such that they are more open to a buyer’s request to address reasonable and necessary repairs. However, it is not uncommon for repair negotiations to end in a “take it or leave it” scenario when the buyer’s request is deemed excessive by the seller.

The termite inspection can also create tension between buyers and sellers, even though sellers usually treat infestations and/or repair resulting damage. Many buyers and sellers do not realize that the termite inspection is somewhat of a misnomer because the inspection not only checks for termites, but searches for evidence of any wood destroying insects (such as: termites, carpenter ants, and powder post beetles) as well as reporting damage. Infestation of termites and other wood destroying insects can occur anytime in the life of a home; if left untreated, an infestation can feast on a home leaving behind costly damage and in cases left untreated for many years- possibly an uninhabitable home.

Another source of a property condition inspection, that most buyers and sellers are unaware of, originates from the buyer’s lender. Mortgage lenders require the home to meet minimum condition standards, which is reported on the appraisal; the appraiser will “inspect” the home for the lender. For conventional mortgages, the appraiser will rate the overall condition as well as possibly noting condition flaws (such as structural deficits and utility connections). A poor rating will typically raise a red flag for the underwriter to require repairs prior to closing.

FHA and VA appraisers not only rate the home’s condition, they will also list all deficiencies that do not meet minimum underwriting condition requirements to be addressed prior to closing. The list of deficiencies is provided to the buyer, who in turn typically addresses with the seller. The seller can agree or refuse to make repairs; however, the contract is sometimes voided when neither the buyer nor seller agrees to make the repairs.

When it comes to property condition repairs, buyers and sellers should be prepared for extra rounds of negotiations. However, surprises and further negotiation can be minimized if both sides are prepared and understand the scope of the required property condition repairs.

By Dan Krell
Copyright © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

For a successful home sale, you need to focus on four areas…

by Dan Krell © 2013 Google+ DanKrell.com

Is the decline of today’s housing stock a concern or an opportunity?

by Dan Krell © 2013
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DanKrell.com