Health Risks in Older Homes

When purchasing an older home, whether you intend to renovate with the plan to live in it or “flip it”, there are some risks you should familiarize yourself with before you begin.

Lead- Lead is often found in the paint, plumbing and the settled dust of an older home. Specifically, homes built prior to 1978 all carry the risk of lead based paint. If you want more information I wrote a blog article on the risks associated with this: https://www.tncresappraisals.com/blog/2022/10/14/lead-based-paint-cant-be-that-bad-or-can-it The best way to deal with lead issues is to consult with a certified lead professional before renovating.

Asbestos- Prior to 1980, asbestos was used in insulation, flooring, roof sheathing and even on textured ceilings. The EPA issued a ban on most products containing asbestos in 1989. When the asbestos fibers are damaged or disturbed, the become airborne which is when it poses the greatest hazard as you breathe these fibers into your lungs. This exposure can show up years later in the form of lung cancer and mesothelioma. When you suspect a material contains asbestos, never sand, scrape or drill holes through it. It is best to use an asbestos abatement professional to determine if something contains asbestos and for any type of repair or removal.

Mold- This can be one of the most insidious of the problems as it is a living organism that, when not treated thoroughly, can reoccur continuously. It also can hide and not appear as an issue until it is an overwhelming problem. It is most likely to occur in areas where there is plumbing or water infiltration like a roof leak or poorly sealed window frame. Those with pre-existing health issues such as allergies or lung problems can be overly sensitive to mold spores. In areas where there is more than 100 square feet of affected area, it is strongly recommended that you use a professional to remediate this issue.

While all three of these health hazards can be scary to think about, each of them are treatable with the right kind of professional. Know the risk and evaluate their impact within your decision process.

Neighborhood vs Market Area

One of the foundations that determines the value of a property is the well known mantra- location, location, location. But what does that really mean? Simply put, the value of a property is in direct relation to where it is located- both its neighborhood and the market area it is located within. An appraiser should be able to define the neighborhood along with the market area in order to research and accurately report those factors that affect the value of a property.

What defines a subject’s neighborhood? A neighborhood is a group of complementary land uses, a congruous grouping of inhabitants, buildings or business enterprises. It focuses on four sets of considerations that influence value: social, economic, governmental and environmental factors. Sometimes, a neighborhood is well defined- consider some housing plans and subdivisions or even small towns. In more rural areas, the neighborhood is less easily defined and could encompass an entire municipality.

So then, how is the neighborhood different from the market area? A market area is the geographic or locational delineation of the market for a specific category of real estate. It is an area in which alternative similar properties effectively compete with the subject in the minds of potential purchasers, often referred to as the buyer pool. A market area is often much larger than a neighborhood. A property located in a subdivision could have a market area that includes additional alternative subdivisions that would have a similar appeal based on the location, school district, access to local amenities, median price range, etc.

Within any given market analysis is a term referred to as market segmentation. This is the process by which submarkets within a larger market are defined. Specifically, it is taking a look at the market data and determining segmented portions such as retirement communities, condominiums, investment properties, etc.

One example would be a sub-market for condominiums in Murrysville. Condominiums in this market area make up less than 10% of the overall real estate but there is a well defined buyer pool for these types of properties. In order to analyze the impact of value on a condominium in Murrysville, you would need to first analyze the plan it is located in (the neighborhood), then analyze Murrysville as a whole (the market area) and then further extract that data to analyze other similar condominiums in Murrysville (segmented market area).

As you can see, the location of any given property can be directly influenced by its direct neighborhood, the larger market area and the segment of the market that it is classified as.

In the near future, I’d like to take a very real but hypothetical look at an example property and how knowing both your neighborhood and market area has a direct impact on the data needed to be analyzed and the comparables chosen.

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

Some Lighthearted Humor- At My Own Expense

In real estate, we often have some funny circumstances happen to us. After speaking with one of my administrative assistants about a particular incident that happened today, she suggested that I should someday write these things down. Over the years, my staff have been quite entertained by a few of these stories. This gave me the bright idea to have a subset of articles written about my own calamities and the funny circumstances we find ourselves in as appraisers.

This particular morning, I was running a little ahead of schedule which is not typical for me as most who know me will verify that I am not a morning person. It takes a bit of caffeine to get my brain in gear. Upon pulling in the driveway of my first appointment, knowing I was early, I turned off the car and unrolled the window. The breeze and temperature was especially enjoyable this morning and with the price of gas, I figured I would take advantage of the sunny cool morning, not waste my gas and maybe go through some emails. After a few minutes, since no one had yet showed up to open the house, I decided to get out and grab my cleaning supplies so that I could wipe down the inch of dust that had collected on my dash board. It wasn’t much long after accomplishing this that I was able to get into the house.

After completing what I was there to do, I returned to my car only to find that my door was locked. I was a little puzzled and confused as to why it was locked. I didn’t remember locking it. Since it was a quick in and out, I had left the keys in the car which should have prevented it from locking. But then I realized the window was still down. This should be easy- I’ll just unlock it from the interior of the door. I reached in, pushed the unlock button.…. nothing. At this point, I tried the other 3 doors to find they were also locked. I could see the keys in the cup holder and figured I could just reach in and grab them hoping I would be able to unlock the doors with the key fob. However, I’ve been accused of having Tyrannosaurus Rex arms. Add that to my 5’ 1” height and it is apparent this will not work. Unless I was to wedge myself through the window up to about my waist, I was never going to reach them. That was not going to be ideal so I figured there had to be another way.

Now what is one to do when they need to get in the car and the only access is the open window? The thought went through my head to try a “Dukes of Hazard Style” climb through the door. As I stood there and contemplated the feat (I even tried to lift my leg to get it up over the bottom of the window frame), it was clear this would never work. First, the bottom of the window door frame is well above my hip and just the thought of trying to swing my leg up over the edge to straddle the door and climb in sent nightmarish images of me either falling flat on my back or somehow getting wedged stuck halfway hanging out the car and halfway inside the car.

It then occurred to me that the hatch might still work since I had previously stepped out of the car to obtain and return my cleaning supplies. I hastily said a quick prayer that it would open. Going through the window would have been my only other resort and it wasn’t going to be pretty. As it was, the hatch opened and crawling through the car over the seats wasn’t very pretty either, but I am still in one piece and made it to my next appointment on time.

Lesson learned- never leave your keys in the car.

Price per Square Foot Is not an Indicator of Value

There are examples throughout the country where the value of a property is referenced by price per square foot. Human beings often want a simple concept that is easy to convey and understand. This simple unit of measure takes the sale price of the house and divides it by the square footage of the house to derive at a simple unit measure of assumed value. Even if this was a trusted metric, unfortunately, the square footage might not even be right as there is no universal standard that determines this to make it reliable. Many trusted real estate websites and even real estate professionals refer to this metric when selling or attempting to use a valuation model to determine estimated value or list price. Let me tell you why this is not a good unit of measure to value your property.

First you need to understand that in order for this to make sense, all factors for marketability must be equal across the board. Its like saying that the value of a car is equal to the price per horse power regardless of the brand, style, age and condition. That makes about as much sense as determining value as a cost per square foot. Just like there are multiple factors that make up a car besides the horsepower, there are many factors that make up the value of a property that can include the quality of construction, condition, how many bedrooms and bathrooms or even the size of the lot. When you break down a sale price or assumed value based only on the gross living area of a property, you eliminate the other factors that all contribute to the value of the property.

Let’s look at a hypothetical example which happens quite often in Westmoreland County and use a 2,000 sf 2 story home built in the early 2000’s using average quality components and workmanship. These homes have 4 bedrooms and 2 1/2 bathrooms above grade with a finished family room and full bathroom in the basement.

Example 1- Located in Murrysville and is located in an established residential plan with a lot size of approximately 1/2 acre. The home has been well maintained and has a fully remodeled kitchen and bathrooms. This home also has a 2 car integral garage.

Example 1- sold for $350,000 which calculates to $175.00 per square foot.

Example 2- Located in Washington Township which is just north of Murrysville but is serviced by a different school district. This house is located in a more residential rural area and sits on 5 acres of property. This home is exactly the same as example one except this home did not have any remodeling and it has a 3 car detached garage that was built 5 years ago. Its been well maintained but most items have not been replaced.

 Example 2- sold for $400,000 which calculates for $200.00 per square foot.

So which one is right- $175.00 or $200.00? Actually, neither. As you can see by these examples, while the houses may be the same in square footage, there are many determining factors that contribute to the value of a property. The higher price per square foot for the second example can be attributed to the lot size and newly built 3 car garage but these are factors that have nothing to do with the square footage of the house.

Our job as an appraiser is to determine those factors that contribute to the marketability of a property. These can include location, quality, condition, utility, lot size and additional amenities such as pools, outbuildings, etc. We use multiple methods to determine how these impact the determinations of both buyers and sellers and apply them accordingly. I can emphatically say that we never calculate value using the price per square foot “method” because we don’t have such a method. The only way price per square foot should be applied is when determining the cost to build a structure.

Do you know the size of your home?

Fannie Mae started requiring appraisers starting on April 1, 2022 to measure all single family homes and condominiums using the ANSI Z765-2021 standards. According to FNME, this policy was instituted in order to standardize the method used to measure, calculate and report the GLA (gross living area) and non-GLA areas within the appraisal. It should be noted that this standard only applies to those homes being appraised for loans being underwritten by FNME and only for those properties that are considered single family or condominiums. Other forms of property types and appraisals for private purposes, in house lending and those insured by FHA, USDA and VA have not yet adopted these standards.

In order to create less confusion and advertise the correct square footage, prior to listing your home, have an expert measure your home. There has never been a greater need for accurate reporting of the gross living area than today. Many other market areas in other locations around the country tend to sell properties and make offers based on the price per square foot. Unfortunately, we live in an area where most owners and agents don’t know the size of a home. This should soon be changing as measuring standards apply to all locations.

While appraisers are now required to use these standards, there are other real estate sectors in which there is no reporting standard. This includes real estate agents, county assessors, MLS systems, online public records and other sites that are often relied upon by the public for a resource of property information such as Zillow. In fact, our local MLS system doesn’t even require the GLA field to be filled by the agent. When they do opt to include a number for GLA, they can site 3 different sources for obtaining that GLA and these sources do not have to be verified for accuracy.

Since these standards have been instituted, there is going to be a period of time needed for adjustment. Why? Because when you look at your appraisal, you will find that the GLA reported might be considerably different from what you thought, from what you were told by your agent, from the assessment records or even possibly prior appraisals performed on that same property prior to the standard. Many times the assessment record is wrong and most real estate agents in our area have not been instructed on how to accurately measure a home for the purpose of calculating the GLA.

We have trained professionals here in the office that would be able to assist you so that you can accurately advertise the size of your home.  We offer two services, Basic Home Measurements and Detailed Floor Plans, that will allow you to know the accurate gross living area of your home which could help sell your home.

Once you have these tools in hand, it will give you the edge to help expedite the sale of your home and give your potential buyers an accurate measurement and/or floor plan of your home.

Experience Matters

When making a decision to contract just about anyone to perform a service, one of the most important qualifiers for most is the experience one brings to the table. You really don’t want someone building your deck who has never built one before or replacing your transmission if they have never worked on cars. It works the same with performing real estate appraisals.

I’ve gone back through my files and found that since starting my business in 2009, I have performed over 6,200 valuations for all kinds of clients: lenders, lawyers, accountants, home owners, estates, real estate agents, etc. Add to that the reports I completed during my training process and then as a certified appraiser in a different office for over 8 years.

So if you need an appraisal performed on a piece of residential real estate, what should you look for that will help you to know that the appraiser has the experience necessary to produce a credible assignment result giving you a valuation that is something that can be deemed reliable?

1. How long have they been appraising?

While it is true that newly certified appraisers do have experience performing appraisals because the profession still is constructed as an apprenticeship program, it takes a good 3 - 5 years to feel fully confident in your ability to perform appraisals on all types of properties. The more unique the property, the more experience necessary to produce a credible report.

2. How many assignments have they performed in your market area?

Time appraising is one factor. Experience in your market is a whole different ball game. I have been performing appraisals in the southwest Pennsylvania areas of Westmoreland, Armstrong, Indiana, Butler, Allegheny and Cambria Counties for years. However, I have never performed an appraisal in Greene County. My experience as an appraiser in some areas does not make me an expert in others.

3. Does the appraiser have experience appraising the type of property you need appraised?

Standard “cookie cutter” properties are those properties that are homogenous to the market area. Think about an established residential plan that has over 200 homes in which there is a steady sales activity. These are typically easy to appraise and does not take a significant amount of additional research or analysis. What about a home that was built on a slab in an area where 99% of the homes have a basement? Or a condo in a plan that is the only condominium plan in the entire county and you are lucky if one sells per year such as in Armstrong County? How about a 1 bedroom home where less than 2% of the homes in the county are 1 bedroom homes? These more unique properties take additional effort, time and expertise to be able to know how to extract what factors have the highest marketable indicators and contributory value in the market. Additionally, the report writing takes longer in order to make sure that your intended user understands the analysis and conclusions contained in your report.

When you are in need of a residential real estate appraisal, it is important to know that you can confidently rely on the conclusions. It doesn’t mean you will always agree with the value, but if you choose wisely, you can be sure to rely on the report as a good representation of that properties estimated market value. At Town & Country Residential Appraisals, we can give you that type of confidence for all types of residential properties in the counties we cover. We have the experience that matters!

Murrysville 2022 Quarter 1

It was bound to happen. The signs are pointing to a cooling off from the height of increases we experienced in 2021. While there is still a short supply, this supply is starting to increase. As of this writing on May 23, 2022 there were 84 sales in Murrysville since the first of the year and currently there are 24 active listings, 43 properties with contingent contracts and 17 properties under contract.

2022 Quarter 1 Sales

According to the data, the first quarter of sales in 2022 for Murrysville has shown a decrease in the predominant sale prices of 2.5% per month based on simple regression. This is different from the first quarter of 2021 which was experiencing an increase of 5.6% per month.

2021 Quarter 1 Sales

I don’t have the ability to forecast what will happen in the future and we are entering the cyclical time of year when sales typically are at their strongest. However, the start of this year is possibly showing that prices are starting to correct from the highs and increases posted by 2021 and the balance is starting to tip in favor of more of a balance.

Murrysville Year 2021 in Review

Last year, I relocated my business to Murrysville. It has been a pleasure to provide residential valuation services in an area that has so much to offer. As many have heard, read or experienced, the real estate market in the year 2021 was crazy. Houses would go up for sale and within a very short period of time, sometimes hours, multiple offers were received. Buyers were getting very aggressive with their offers, electing to forego all inspections, include escalation clauses and even include things such as free pizza dinners on Fridays for a year or Super Bowl tickets.

I decided to run the numbers on Murrysville as a whole and found that in the year 2021 there were a total of 267 recorded sales using a search of our local multiple listing service. These numbers do not include foreclosures or short sales. As an appraiser, we analyze what is going on in the market area. When doing this, we have to look at both the long term and short term activity in order to be able to recognize when there are changes happening in the market and how to best determine how this impacts value.

Murrysville Year 2021 Real Estate Sales Statistics

If you look at the general statistics of the area as a whole using simple regression, this shows that the year in review experienced a rising predominant sales price of about 1.3% per month.

Murrysville, 2021 Qtr 1

The moment you break down the sales prices into quarters, there are some very interesting results. The first quarter of the year had 59 sales which was the least number of transactions per quarter but was the only quarter that experienced an increase in predominant sales prices. Seasonally, the first and fourth quarters typically are the times of year with the least number of transactions, however, there were not the significant differences that we would typically find between the quarters. Quarter 2 had 78 sales, quarter 3 had 63 sales and the last quarter had 65 sales. More surprising is that the remaining 3 quarters experienced declines in the predominant sales prices.

Murrysville, 2021 Qtr 2

Murrysville, 2021 Qtr 3

Murrysville, 2021 Qtr 4

It is important to know that when determining the impact of what is going on in the market, statistics need to be analyzed specific to the area and specific to the time frame being impacted. Quarter 1 experienced a very significant increase in sales prices, quarter 2 was basically flat, quarter 3 had a reverse reaction by a notable decline with another decline in the 4th quarter but not as significant as the previous quarter.

The good news is that the declines of the last 2 quarters did not erase the overall trend of an increase from the beginning of the year. However, the last 2 quarters show that there could be a definite trend that is showing a cooling off and decline in the predominant sales prices.