Decoding Knob and Tube Wiring: How It Impacts Your Home's Value

If you own or are looking to purchase an older home, there might be lurking in your home something that could affect its value – knob and tube wiring. Due to the age of many homes in Westmoreland County, I still see plenty of homes with some functioning knob and tube wiring. This old-school electrical setup was once a popular way to install electricity in a home. But now, it's like the outdated ancestor of today's electrical systems, and it comes with some problems.

What Is Knob and Tube Wiring?

Back in the late 1800s to the early 1900s, knob and tube wiring was the go-to for electrifying homes. It used ceramic knobs and tubes to keep wires in place. Fast forward to today, and it's not holding up so well.

Example of Knob and Tube Wiring

The Hidden Dangers

The materials used in knob and tube wiring, like rubber or cloth insulation, have probably seen better days. That means a higher risk of fires. Plus, there's no grounding conductor, which makes the chance of getting a shock higher and incompatible with three prong plugs. Insurance companies see these homes as risky, making it harder and more expensive to get coverage.

How It Affects Your Home's Value

Now, let's get to the point – how does knob and tube wiring impact your home's value?

Safety Worries

People worry about safety when they hear about knob and tube wiring. The fear of fires or electrical problems can make buyers think twice, lowering your home's value due to the smaller buyer pool. This can also have a negative impact on the insurability of the home due to the safety concerns. Many insurance companies will not cover a home with known functioning knob and tube wiring due to the known safety concerns.

Cost To Upgrade

Upgrading from knob and tube to a modern electrical system is a big job and can be costly. Buyers might consider this cost when deciding on a home, potentially lowering its value.

Appraisers Take Notice

When appraisers are on site to look at the property, they're likely to consider the knob and tube wiring in the overall quality and condition rating of the home. Homes that are not updated from systems installed almost 100 years ago have a lower quality and condition rating which, when compared to a home that is updated with newer systems, have a lower value.

If there are safety concerns when it is inaccurately spliced into a more traditional wiring system (I’ve seen this many times), frayed insulation on the wires, or being wired to newer 3 prong outlets, an appraiser might call these out to be repaired as a part of the loan process.

What Can You Do?

If you find yourself dealing with knob and tube wiring, it's not the end of the world. Get a qualified professional to check it out and fix any problems. Upgrading your electrical system can make your home safer and more attractive to buyers.

Will A House With K&T Wiring Qualify For A Mortgage?

The underwriting guidelines for all the major mortgage agencies (Fannie Mae, Freddie Mac, FHA, VA, and USDA) all allow for knob-and-tube wiring as long as the system is deemed to be safe, functional, and typical for the area. Just understand that while many loans will allow for this type of wiring, the house still might not qualify to be insured or there might be safety concerns that need to be repaired in order to qualify.

 In the world of home values, knob and tube wiring is like an old family secret – it can affect things more than you realize. Knowing the risks and doing something about them can make your home safer and keep its value strong. So, whether you're a homeowner or looking to buy, understanding this hidden issue is key to making smart decisions about your home.

Demystifying Square Footage Discrepancies in Real Estate: What You Need to Know

Confidence in the size of your home is a fundamental aspect of real estate, but have you ever wondered why the reported square footage can differ from one source to another? In this article, we will delve into the reasons behind these discrepancies and underscore the significance of precise measurements in the real estate world.

When you bought your house, someone, whether it was a real estate agent, a builder, or a published source, provided you with an estimate of its size. However, this estimate may not always be consistent or entirely accurate. Let's explore the factors that contribute to these variations.

Every source of square footage data follows different standards and regulations when measuring and reporting. Online real estate platforms like Realtor.com, Zillow, and Redfin rely on an IDX system, which aggregates information from regional MLS systems. The square footage displayed on these platforms is typically entered by the listing agent. Unless that agent has been trained in specific measuring standards, the data may originate from sources like tax records or the homeowner.

In Pennsylvania, for instance, assessors are not required to adhere to professional measuring standards like ANSI, leading to square footage estimates based on rounded or estimated measurements. Furthermore, many agents include areas like finished basements or unheated enclosed porches in the square footage, even if they are not considered above-grade space. This is done to represent the property in the best possible light and attract the right buyer.

So, why do appraisals often reveal differences in square footage? Appraisers must adhere to precise standards that dictate what can be counted as above-grade square footage. Using the ANSI Z765-2021 measuring standards, as enacted by Fannie Mae in 2022, appraisers must measure with precision down to the nearest inch or tenth of an inch. (Let’s not debate that these are two slightly different measurements- I didn’t write the standard.) There are also areas of a structure that cannot be included in above-grade square footage, such as spaces with a ceiling height of less than 7 feet. If any part of a level is not entirely above ground level, it cannot be included in the square footage calculation. Additionally, in homes with two-story ceiling heights, like large open foyers or great rooms, the open area is counted only once for the main level.

If you receive an appraisal report that indicates a different square footage than what you believed your house to be, it's essential to investigate further. Compare the source of your initial knowledge to the sketch in your appraisal report to understand the discrepancies.

In the world of real estate, understanding square footage variations is crucial. It can impact the value of your property, as well as your buying or selling decisions. Being aware of the different standards used by various sources can help you make informed choices and ensure that your home's size is accurately represented.

Dollars and Sense: The Significance of Knowing Your Home's Worth

You would have to be living under a rock or in an area that is completely off grid to not be somewhat aware that real estate prices have been fluctuating and increasing significantly in many areas over the past couple of years. If you have not purchased or refinanced recently, your homes value might have changed from where you thought it was just 12 -18 months ago. Knowing the value of your home can be important for many reasons of which, here are a few:

Financial Planning

The value of your home is a significant component of your overall net worth. Your home is likely one of your most significant assets. Knowing its value allows you to calculate your net worth accurately. Understanding its value helps you make informed decisions about your financial planning, such as determining your assets, calculating your equity, or evaluating your borrowing capacity.

Selling or Renting

If you're considering selling or renting out your property, knowing its value is crucial. It allows you to set a competitive price that aligns with the market, ensuring you don't undervalue or overprice your home.

Refinancing or Home Equity Loans

When refinancing your mortgage or applying for a home equity loan, the value of your home plays a vital role in determining the amount you can borrow. Lenders assess the loan-to-value ratio, which compares the loan amount to the home's appraised value, to determine eligibility and interest rates.

Property Taxes

The value of your home often influences property tax assessments. Local tax authorities use property values to calculate the amount of tax you owe. Knowing your home's value helps you ensure that you're being taxed fairly and can plan for potential increases.

Insurance Coverage

Understanding the value of your home is essential for obtaining the appropriate insurance coverage. If your home is underinsured, you may not receive sufficient compensation in the event of damage or loss. Conversely, overinsuring your home means paying more in premiums than necessary.

Investment Decisions

If you're considering real estate as an investment, knowing the value of your home can help you assess its potential return on investment, evaluate rental income potential, or make informed decisions about buying additional properties.

It is important to note that home values can fluctuate over time due to various factors such as market conditions, location, renovations, or changes in the neighborhood. Therefore, regularly monitoring and assessing your home's value is important for staying informed. If you would like to check out more information regarding the importance of knowing your homes value, check out the following articles:

https://www.homes.com/blog/2017/03/benefits-of-knowing-your-homes-value-whether-you-are-staying-or-selling/

https://www.homelight.com/blog/check-house-value/

Gratitude and Triumph: Celebrating Two Consecutive Gold Badge Wins in the Best of Westmoreland Contest!

At Town & Country Residential Appraisals, we are overflowing with appreciation as we extend our sincerest thanks to those who have supported us throughout our journey. It is with immense pride and joy that we accept the honor of being awarded the Gold Badge for the second time in a row in the highly regarded Best of Westmoreland contest.

Our success wouldn't have been possible without the support of our nominators and voters, the trust given to us by our valued clients, and the faith placed in our services by the community we serve. Your confidence in our expertise drives us to continuously raise the bar in providing exceptional residential appraisal solutions.

While this is only the 2nd year for the contest, it grew exponentially for 2023 and we faced formidable competition from six other distinguished appraisal offices. However, we secured our position as the reigning champions for both years.

Such a momentous achievement is truly a cause for celebration, and we couldn't be prouder to share this milestone with you all. It is a testament to our unwavering commitment to delivering accurate and reliable appraisals and a reminder of the exceptional team behind Town & Country Residential Appraisals.

Thank you for joining us on this incredible journey. Your continuous support and trust inspire us to reach even greater heights, and we look forward to serving you with the same passion and dedication for years to come.

We can’t say thank you enough.

Our goal is to continue providing the best in real estate appraisal services

throughout the entire County of Westmoreland.

Our services include appraisals for divorces, expert witness testimony, bankruptcy, estates, pre-listing, consulting for subdividing large parcels, pre-construction, renovations and lender work.

Choose the two-time Gold Badge Winner in the Best of Westmoreland contest for your residential appraisal needs, and discover the difference that sets us apart, where excellence meets recognition, results exceed expectations and as we say here “Where Values Matter!”

Clean and Green- From the appraiser's point of view

Clean and Green is a preferential tax assessment program enacted in 1974 under the stated goal of “protecting the Commonwealth's valuable farmland, forestland, and open spaces.” It bases property taxes on use values rather than fair market values. This ordinarily results in a tax savings for landowners..

https://www.agriculture.pa.gov/plants_land_water/farmland/clean/pages/default.aspxPA Clean & Green Program

Once enrolled, the general rule is that the landowner is obligated to continue using the land in a qualified use indefinitely or face the penalty of roll-back taxes for the most recent seven years, PLUS 6% of that difference per year. If a landowner sells a property enrolled in Clean & Green, the buyer will be obligated to continue using the land in a qualified use or pay roll-back taxes and interest.

Clean & Green also has limitations as to subdividing the property. No more than 2 acres can be split off (3 acres where municipalities require a 3 acre minimum lot size) per year for the purpose of building a residence. The total of these types of subdivisions can never exceed a total of 10 acres. These split offs would be subject to the roll back tax but only for the portion that is being split off.

A subdivision can can be made dividing the property into parcels that are more than 10 acres minimum. As long as they remain the same use, it would then not be subject to the roll back taxes.

While enrolling in the Clean and Green program may be free and save thousands in taxes in the short run by reducing the annual tax rate, make sure you are aware of how this impacts your land value. It will limit the use of the property unless you take the steps necessary to remove the enrollment and pay the mandatory differences in the taxes plus a 6% interest rate. If you are thinking of selling the property, it could also limit the size of your interested buyer pool.

Where do you want 3rd degree burns?

Water heaters come from the factory set to 140 degrees, which is hot enough to produce 1st degree burns after 3 seconds of exposure. However, pressure relief valves aren’t set to trigger until 150psi, or when the water temperature reaches 210 degrees. That’s hot enough to instantly produce 3rd degree burns. Prior to tanks being designed with a pressure relief valve, when the water pressure would get too high, the tank would explode.

Many hot water tanks are installed in areas like laundry rooms where the chances of the pressure relief valve releasing this damaging steam is likely to happen when someone is nearby. In some models, the pressure relief valve is located on top of the tank… at face level. Many others are located on the side… at chest or hip level. Some models are at ankle height, but all of them allow for a pipe to be installed to direct the water/steam directly and harmlessly at the floor.

“The discharge piping serving a pressure relief valve, temperature relief valve or combination thereof shall Not terminate more than 6 inches above the floor or waste receptor. (504.6 Requirements for discharge piping)”

— International Association of Certified Home Inspectors

For some reason, water heaters do not ship with an extension pipe for the pressure relief valve to direct this boiling steam away from homeowners. PLEASE, spend the $15 it takes to install an extension pipe on your pressure relief valve to protect yourself and family. It might even help prevent repair issues the next time your property needs appraised.

Who are reverse mortgages for?

As the Baby Boomer’s retire, an increase of advertisements offering “reverse mortgages” are hitting the airwaves, leaving homeowners (and their children) asking, “Is this a good idea for us?” Due to the ramifications of reverse mortgages, parents should never make these decisions alone without consulting the family who will have to finish the process upon their passing. Today we’ll break down what a reverse mortgage is, and who it might benefit.

“What Is a Reverse Mortgage?
In a word, a reverse mortgage is a loan.”

— Investopedia

A “reverse mortgage” s a financial agreement between the bank and the borrower in which a homeowner relinquishes equity in their home in exchange for regular payments, typically to supplement retirement income. It is in essence a mortgage but instead of receiving the full equity at one time and then paying the bank back over time, you receive the equity in small quantities over time, and pay the bank back at the end - and its that last part where homeowners need to know the dangers of a reverse mortgage.

A reverse mortgage may be a good idea for you if:

You are at least 62 years old

A homeowner must be at least 62 years old to qualify for a reverse mortgage.

You have enough money/energy to maintain your home throughout the remainder of yur natural life

As the homeowner, you will be expected to keep the home in good order over the course of the reverse mortgage. If you fail to keep the home and property up to local codes and the lenders standards, the lender will have the right to foreclose on the property and remove you from the home.

If you can’t afford to have someone else maintain your home, this means that you’ll need to do it yourself until the borrowers date of death.

You have enough money to pay the taxes on your home without the extra money.

Again, as the homeowner, the lender will expect you to pay the taxes associated with the property. If you do not, the lender again retains the right to foreclose on the property and remove you from the home.

You don’t have any heirs.

At the end of the term of the loan, the lender looks to the estate to fulfill the mortgage. Typically this means that the home is sold and the assets used to pay the debt. In the case of jumbo reverse mortgages, the estate may be liable for any shortfall in the debt.

You plan on being healthy and never leave the home until your date of death

Many reverse mortgages have a clause that allows the bank to foreclose if the homeowner is no longer residing at the home for a span of time - regardless of the reason - such as illness.

Sadly, we’ve seen more reverse mortgage foreclosures than we wish, and the story is always tragic. The family is left holding difficult decisions at the same time as the death or extended illness of a loved one. Be careful, there are many ways for a reverse mortgage to end poorly, and only one way for them to suceed - with the help of the whole family.

For more information:

https://www.wtae.com/article/investigation-finds-reverse-mortgages-can-be-risky/30029369

https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224/

https://www.usatoday.com/in-depth/news/investigations/2019/12/18/reverse-mortgages-leave-families-battling-property-after-death/2597369001/

Does a manufactured home that has been moved more than once qualify for a loan?

If you plan on purchasing a property that is a manufactured home using financing, find out if the unit has been placed there from the manufacturer/dealer or if it was moved after previously being located at another location. In order to qualify for most lender financing, a manufactured home can only be moved ONE time- from the factory or dealer to its original location and permanently attached to an approved foundation system. If a manufactured home is moved a 2nd time, it is ineligible for ANY type of financing other than owner carry or a VA loan. Even then, it would require a special approval from the VA in order to do the loan.

Fannie Mae guidelines state that the unit must not have been previously installed or occupied at any other site or location, except from the manufacturer or the dealer's lot as a new unit. Moving it would mean it wasn't attached to a permanent foundation and therefore, is viewed more as personal property and not real property. Additionally, the manufactured home must be a one-unit dwelling that is legally classified as real property and cannot include an accessory dwelling unit.

This becomes important from a value standpoint because a buyer’s purchasing power affects the value of a property in a market where the predominance of financing a property is through a lending institution. When a property disqualifies a buyer from obtaining mortgage financing, it requires the buyer to purchase using cash. In short, relocating a manufactured home can reduce the value of the property simply for the reason that it would limit the buyer pool to those who have cash.

What Makes a Room a Bedroom?

This question is one of the most common questions I get and there is much confusion as to what qualifies a room as a bedroom. While there is no official definition, there is only one requirement a room needs in order to legally qualify it as a bedroom- a window of adequate size so as to allow for ingress/egress.

Most think a bedroom requires a closet which is a misnomer. There are plenty of older homes I have been in where the bedrooms don’t have closets. Think about it… there was a day when most people only owned a few articles of clothing. During these times, when there weren’t closets, many owned an armoire which doubled as a closet and dresser.

So lets put to rest that a bedroom NEEDS a closet.

With that in mind, in todays markets, most expect closets so that they have a place to store their clothing, shoes, bags and whatever else people put in their closets. Here are some other things to consider when classifying a room as a bedroom:

1. Is it of adequate size? A bedroom should be large enough to accommodate a bed and provide some space for movement around the bed, room for dressers, et.. The minimum size for a bedroom may vary depending on local building codes or regulations.

2. Is there a door? A bedroom should have a door that can be closed to provide privacy. A door can also be an added safety feature. It is best to sleep with your door closed in the event of a fire.

3. Where is the room in proximity to a bathroom? A bedroom should be located within close proximity to a bathroom. If all your bedrooms are on the 2nd level of the home and the only bathroom is on the first level, this could be viewed as a functional obsolescence. No one wants to get up in the middle of the night to stumble in the dark through the rest of the house.

These are the basic features that make a room a bedroom. The only feature that is a requirement is a window. However, depending on local building codes, there may be other requirements that a room must meet to be legally considered a bedroom and typically, the market might be expecting more.

Appraisal Racial Bias (part 3)

I’ve been discussing the topic of real estate appraisals and the allegations of racial bias that has the possibility of creating issues for some homeowners or potential homeowners. There have been a few cases that have had the spotlight shown on them and the scenarios are all relatively similar.

It starts with an appraisal that is completed on a home where the occupant is of a minority race- whether the appraiser meets the occupant in person or there are pictures and other personal contents that elude to the persons race within the home. When the appraisal is completed it is perceived to be “low”. A subsequent appraisal is completed in which the home has now been “whitewashed”. If you haven’t heard of the term, it refers to the process of removing all indications of minority race within the home and even having a white person stand in as the fake homeowner. Some of the current cases out there are real life examples and others are experiments in which the entities conducting these are doing it for the sole purpose of trying to prove that the appraisal process is inevitably biased.

In either case, these are serious allegations.

I’d like to ask a few provoking questions that don’t have easy answers.

Does a value that comes in lower than what someone was expecting or desiring automatically mean the value is wrong?

When a homeowner or occupant is of a minority race, if the appraisal value is lower than what someone feels it should be, does that mean racial bias came into play?

Is it possible that the lower value was accurate and that the higher value was a case of reverse bias?

There is one case in particular that took place for a black couple out of northern California where the homeowners make this statement to CNN- “What that appraisal did is what we were actually asking the appraisers to do, to not consider race, to not consider neighborhoods and or the lines that have been drawn and perpetuated by redlining.” Based on this statement, if an appraiser stays within the neighborhood and the neighborhood happens to be primarily occupied by a minority group, does this indicate racial bias was a factor in completing the appraisal?

In the future, I’d like to discuss more the idea of neighborhoods and market areas. For now, I hope these questions have been thought provoking and at least given some pause to consider different angles.

Appraisal Racial Bias.... Pardon our Interruption

Part 2 has been written and was ready to drop today except for the necessity to provide you important information regarding fast approaching upcoming hearings. Earlier this year, the CFPB’s (Consumer Financial Protection Bureau) Fair Lending Director, Patrice Alexander Ficklin, stated that they were going to prioritize resources to focus on the role of racial bias in home appraisals

The CFPB has announced that they will be holding a hearing with the ASC (Appraisal Subcommittee) specifically to discuss this issue. This hearing is open to the public but it requires an RSVP.

For information regarding this hearing and to RSVP, visit the CFPB’s website or click on the image below to follow the link:

How to Remove PMI

What is PMI? PMI, private mortgage insurance, is required to be used when a homebuyer uses a conventional loan and the down payment is less than 20%. There are different rules for FHA and VA loans, so we will only be addressing mortgage insurance for conventional loans in this article.

The amount for PMI can range from $30 to $70 monthly for every $100,000 borrowed. This rate varies based on the borrowers credit score. The PMI is also recalculated every year based on the current loan balance so the premium decreases from year to year as the principle amount decreases. Since mortgages are amortized, monthly payments do not significantly impact the principle in the beginning of the repayment cycle. Therefore, the amount of PMI paid on a $250,000 loan can be estimated to cost at least $12,000 over the time period that PMI will be applied to the cost of the loan.

The purpose for PMI is to protect the lender from the elevated risk based on a higher principle due to the lower down payment made by the borrower at the time of the loan. Once there is a sufficient cushion of equity, the PMI can be removed.

So, how can you get rid of the PMI? First you need to check with your lender to find out their process to eliminate the PMI payment. PMI is often cancelled automatically once you’ve reached around 20% or 22% equity based on the original amortized payment schedule and original loan calculations. The other option is to provide a certified appraisal that shows the loan balance is no more than 80% of the homes value.

Recently, I have been going through the process to remove my PMI from my personal home that I bought 2 years ago. A lot has happened to both my home and the market I am located in that makes me confident that I meet the threshold for removing my PMI. Not only have I made significant improvements to my home in the past 2 years which include all new windows and doors, a new furnace and a new CAC unit, but the predominant price in my plan has increased by about 30% over the past 2 years.

As of this article, I have been paying around $60 per month totaling around $1,560 in PMI payments that I have made thus far. If I were to continue paying these insurance payments until the insurance was automatically dropped based on the original terms of the loan, the total would be over $5,600. The cost for the appraisal I am having completed to remove my PMI is $550. That would amount to about a $3,200 to $3,400 savings in insurance premiums.

If you bought your house within the past few years, it might be financially feasible for you to revisit your loan terms and look into removing your PMI payments. Many market areas went through substantial increases in the predominant sale prices that could have had a significant impact on the value of your home. These increases along with any significant improvements you have made to your home may have impacted the value of your home increasing your chances of having sufficient equity to meet the 20% threshold. Contact your lender and find out their procedures for eliminating your PMI earlier than the automatic removal. If your lender allows you to pick your own appraiser for this purpose, please consider the professionals at Town & Country Residential Appraisals.

Rear View Mirror or Crystal Ball?

Appraisals are a report that indicates an opinion of market value for a property. It is a reflection of what has been happening up until a certain point (our effective date) and not what is going to happen or might be continuing to happen.

What has happened could be different from what is going to happen. There is a place in real estate valuation for forecasting, but when completing appraisals for mortgage lending, divorce, estates, bankruptcy and listing work, we look at the sales and trends leading up to our effective date. Most often, our effective date is the day we look at the house, but there are times when our effective date is a retrospective look at a prior date such as a date of separation for marital dissolution purposes or date of death for estate purposes.

In any of these cases, the effective date that reflects the estimated market value is a culmination of the data analysis in the market leading up to that date. In other words, we are always looking in the rear view mirror to determine our opinion of value.

Over the past year, appraisers ran into situations where our rear view mirror was not equaling the rapidly changing markets. Houses were being listed and within less than 24 hours, sellers had multiple offers to choose from. Some of those offers included a percentage above the list price that seemed ludicrous, but buyers were desperate to get into a house and were getting discouraged by running into rejection after rejection so they were making very attractive offers. Inventory was low and this created the perfect storm. If you had cash and didn’t care about value, no problem. But if you needed a mortgage, the appraisal needed to reflect that it was worth what the buyer was willing to pay for it. In many instances, the history of sales did not make this possible. It either forced the buyer to bring the cash to the table to make up the difference or go back at the drawing board and start searching again.

Market value looks at how these actions between buyers and sellers have affected the climate in the market and use the sales that have closed as indicators of value for the property being appraised. It isn’t until you have an accumulation of data points that indicate buyers and sellers are reacting in concert that you have the ability to point to a changing market. In rapidly changing markets, it is challenging to correctly interpret the data and accurately reflect those changes. Those changes being reflected are not to be understood as an indicator that they will continue to happen, only that they have happened.

Lead Based Paint Can't Be THAT Bad... or Can It?

Homes built prior to 1978 have the potential to have lead based paint contained in it. In many of the areas I appraise such as Greensburg, Delmont, Export, Derry, Irwin, etc., that is a lot of homes. Probably 80% or more of the homes in these areas were built prior to 1978.

When lead based paint peels and cracks, it creates paint chips and dust. You can tell a deteriorated paint surface possibly contains lead when there is a pattern to the cracking termed “ alligatoring”. It creates a pattern that looks a little like scales or a grid. Another sign is if it creates a chalky residue when it rubs off. Also, any surface covered with lead-based paint where the paint may wear by rubbing or friction is likely to cause lead dust including windows, doors, floors, porches, stairways, and cabinets.

When performing appraisals for loans that are for FHA/USDA or VA financing, one of the issues that we as appraisers need to pay specific attention to is what is termed “defective paint surfaces” in houses that were built prior to 1978. Any paint that is found to be peeling, bubbled, flaked or chipped needs to be called out as a necessary repair to be professionally addressed due to the risks associated with lead based paint. To some it sounds like overkill. In fact, I used to think years ago, how can it be that bad?

So, why is this so concerning?

Is this something you should even be concerned about?

The very short answer is yes.

If you don’t read anything further in my article, please click on this link to read what the Cleveland Clinic has to say about lead poisoning. If you are like I was, this information might change your mind about the seriousness associated with lead poisoning.

https://health.clevelandclinic.org/lead-paint-dangers/

When lead is absorbed into the body, it can cause damage to the brain and other vital organs like the kidneys, nerves, and blood. Lead may also cause behavioral problems, learning disabilities, seizures, and in extreme cases, death. While it is harmful to all ages, lead presents the most danger to children. Infants and young children are more likely to be exposed to lead than are older children. They might chew paint that flakes off walls and woodwork, and their hands can be contaminated with lead dust. Young children also absorb lead more easily, and it's more harmful for them than it is for adults and older children.

According to The Cleveland Clinic “For a child, even the smallest amount of lead can cause developmental problems.” If there is one thing that is most important to understand about the risk of lead poisoning, it is this… The effects of lead poisoning CANNOT be reversed. The best way to avoid the danger is to minimize the exposure to the risk.

How do you limit your risk to lead poisoning when it pertains to real estate? You can avoid it almost entirely by choosing to purchase or rent a home that was built after 1978. If that isn’t possible, then you can either have all the lead based paint removed or treat existing lead based paint by using an encapsulent. Encapsulants are materials that are applied over lead-based paint to seal the paint to a surface and prevent the release of paint chips or dust. The material may be either a liquid or an adhesive. Encapsulation provides a barrier between the paint and the environment. Conventional paint is NOT an encapsulant. There are specific types of paint that are classified as an encapsulant.

In short, know the risks and be informed. Living in a home built prior to 1978 has the possibility of having lead based paint. You can limit your risk for the potential of having lead poisoning by having a good maintenance program addressing any known existing lead based paint, having it removed and/or having it encapsulated.

We are expanding again!

What do most real estate appraisal offices do when they are slowing down and scrambling to obtain more orders just to stay afloat?

We do the opposite of most….. we expand.

As the number one voted Gold Award Best of Westmoreland home valuation appraisal office, we are still busy and looking to expand our services.

Granted, order requests have slowed a bit which can be directly related to rising mortgage rates and that seasonal time of year when we traditionally slow down a little. However, this is the best time to reevaluate how we do business and take the necessary time it requires to train new personnel. Recently, we hired Meagan Connelly as a staff appraiser and we are actively recruiting more staff appraisers.

Meagan has proven to be a great addition to our team. She comes to us with 8 years of experience in appraising which is comprised mostly from commercial and non-lender residential work. Her commercial certification allows her to appraise any type of property. We are working to get her FHA/USDA approved and familiar with lender work. Her expertise coupled with her desire to jump right in and get assignments completed has added significant value to our already top notch service.

How will increasing mortgage rates affect you and your investment?

You would have to be living under a rock to not know that interest rates have been steadily rising and are currently at levels we have not see in many years.

According to the latest article as of this writing dated 10/21/2022, the 30 year fixed rate mortgage remains just shy of 7%. This is having a direct impact that is negatively impacting the housing market.

https://www.cnn.com/2022/10/20/homes/mortgage-rates-october-20

Image taken from bankrate.com

In the past month, I have started to see increasing supply that will soon be balanced and in my opinion, if the current environment remains the same or rates continue to rise, we will see the balance at best or the oversupply at worst we are used to seeing.

What happens when you have decreasing demand and higher supply?

This negatively impacts sales prices. In turn, this causes values to decline.

Unfortunately, this is not good news. It is difficult to know how far this decline will go or how long it will last. According to the CNN article I referred to, home sales have been falling month over month and we are in the longest housing sales slump since October 2007. They also state that applications for home purchases are down 38% and those for refinances have fallen off of a cliff.

This might not be the case for home appraisals and the home sales in our market area, but as is historically accurate in the past, we tend to be on the back end of the national curve. If what they say is true, then we are in the very beginning of this same slump and need to be prepared for the ride.

If you are in the market to purchase a home, refinance or require a home valuation for other purposes such as estates and divorces, you need to be prepared for the value of the property to possibly show a decline from the past 2 years.

Another Electric Recall

Did you see the latest electrical recall headline? Schneider Electric™ Recalls 1.4 Million Electrical Panels Due to Thermal Burn and Fire Hazards

That is a lot of electrical panels. The long standing recall for unsafe panels dealt with Federal Pacific Stab-lok Breakers. Now the new recall involves “Square D” breakers and panels manufactured by Schneider Electric.

The hazard is described as: The load center can overheat, posing thermal burn and fire hazards. Specifically:

The issue detected is a loose neutral screw connection within the QO Plug-On Neutral Load Center.

The recall affects Square D QO Plug-on neutral load centers, commonly called breaker boxes or electrical panels, that might have been installed in homes, recreational vehicles, or commercial structures such as restaurants, manufacturing facilities, warehouses, commercial lighting, and others.

The affected products were manufactured between February 2020 and January 2022, with date codes between 200561 and 220233. Circuit breaker boxes and covers manufactured between December 2019 and March 2022 are also included in the recall.

The recall notice provides advice on how to read the date codes:

For installed outdoor load centers, the manufacturing date codes are printed on the inside of the cover or door of the unit or on the box itself when the cover or door is open.

For installed indoor load centers, a qualified electrician can locate the interior date codes that are not visible to the home owner.

If you think you have one of these panels installed in your home, call a certified electrician to not only determine if you have one of these panels, but can replace any needed faulty components with ones that do not pose a hazard to your home.

For more information click on the link below:

https://www.cpsc.gov/Recalls/2022/Schneider-ElectricTM-Recalls-1-4-Million-Electrical-Panels-Due-to-Thermal-Burn-and-Fire-Hazards

One Upon A Time.... A Housing Fairy Tale

Once upon a time, there was a rich nation which valued many things. There were many owners and “wannabe” owners. The owners wanted to be richer and the wannabes wanted to be like the owners. They all liked value. Some people even became “valuers of things.” They claimed to know value.

Value was price. It was obvious. Nothing to talk about here. Move along.

The owners needed money they didn’t have. So, they got help from loaners.

The loaners put up most of the money and became interested. The loaner-owners also wanted to be rich. They could get rich by “selling money!”. (Actually, they were only renting the money, but no one wanted to hear that.) And best of all, they were not renting their own money. They were renting other people’s money (OPM), and the other people didn’t really own the money either. It was just sort of out there, all guaranteed, completely safe.

What is important is that everyone liked value, but everyone needed to have someone say the value is fair. They were able to get others to declare the value as fair, but some valued fair as high as possible. “Uppraisers” were in demand.

A few of the dealer wheelers got together. The loaners became lender benders. They found liar buyers. And they found uppraisers.

All the owners, the wannabe owners, and the loaner-helpers liked uppraisers a lot because they helped richness for all. Everything worked well so long as “value” equaled price!

Until it didn’t.

~Reproduced with permission from George Dell, SRA, MAI, ASA, CRE - an excerpt from an article in the Appraisal Buzz, Thirteenth Edition, Fall 2022, Price vs Value, as found on page 27

Why You Should Not Rely on Your Zestimate

If only I received a dollar for every person I heard say “Zillow says my house is worth $XXX” I could possibly retire…. Well, that may be a slight exaggeration, but it doesn’t negate the fact that people trust what they deem to be reliable information. My advice to you is that you should not trust the stated Zestimate as a reliable source to determine what your house is worth. A Zillow estimate IS NOT an appraisal. I am not anti-Zillow since I do believe there is a place for them in todays big data world, however, it cannot be relied upon as a trusted source to determine the value of your home. Let me explain why.

First, the source of the information for your house might be unreliable. They use available public record, real estate industry data and user-submitted information to determine the features of your home. In my 22 years of real estate experience, I have found that these records are often inaccurate when determining the style, size, bedrooms, bathrooms, etc. In addition, these records never indicate to what degree a home has been maintained. Some people are very proactive at keeping their home well maintained and others…. well, not so much. I’ve seen it all in 22 years. Over the life of the home, there are items that affect the quality and condition of a home related to remodeling/updates and overall ongoing maintenance. Public records often don’t give a true insight into these finer details.

Second, the algorithm they use relies heavily on the zip code. Zip code does not typically relate to neighborhood or market area. The algorithm has improved due to location but using zip code can be misleading. In our area, we have a good example with the zip code 15601 which corresponds to the Greensburg City post office. All the zip code relates to is which USPS office handles and distributes the mail to that address. Within the 15601 zip code you have multiple municipalities such as Greensburg City, Hempfield Township, Salem Township, South Greensburg and Unity Township. That is 5 different areas that are serviced by 3 different school districts. As one would suspect, all of these areas are not similar and would include a higher density area with older structures in the City of Greensburg, residential rural areas with multiple acre parcels like some of Salem Township and newer suburban residential plans often found in Hempfield and Unity Townships. The algorithm used to determine the zestimate includes sales prices from all of these areas since they are all located in 15601 making the result less reliable even if it was only a portion of the factor in the algorithm.

Let me give you a real life example. I live in a homogeneous condominium community with townhome styled units built in the 1970’s. One of my neighbors just listed their townhome for $185,000. The zestimate for this property is around $248,000. It would not make sense for it to be listed for almost $65,000 less if it really was worth that much. The most likely reason for the high zestimate is the effect of living in a municipality with predominantly higher sale prices than the price point of our properties. The highest sale in the past 3 years has never exceeded $200,000 and only recently, have the sale prices been inching above $175,000 due to current increasing predominant sale prices overall.

Click here to read an article on the accuracy of online estimates

Instead of using a free but inaccurate source for information, trust an experienced professional real estate appraiser to indicate the correct estimate of market value for your home. Just think. If the algorithm was even remotely accurate, why did Spencer Rascoff, the owner of Zillow, sell his property in 2016 for 40 % less than the zestimate?