More Buyers are Testing for Radon

 During the buyer’s inspection period, many buyers are paying for Radon Gas testing in the house. The last inspector we used charged $150 for the test, in addition to $400 for the home inspection. The highest level of radon I have seen was over 5 times the EPA’s (Environmental Protection Agency) recommended action level.

 Radon is the second leading cause of lung cancer after smoking. It is a heavy radioactive gas formed by the disintegration of uranium and radium in the ground. It seeps into your home through holes and cracks in the foundation. The average radon level in Minnesota is 3.8pCi/L which is like smoking 10 cigarettes a day. The EPA estimates 21,000 lung cancer deaths per year attributed to radon. Past and present smokers are at a greater risk than non-smokers.

The seller I was representing had a radon level of 19.5 pCi/L. The buyer requested a radon mitigation system be installed prior to closing at the seller’s expense. Had the seller not agreed, the buyer would have cancelled the purchase agreement.

 The EPA recommends radon mitigation when radon test results are 4.0 pCi/L or greater. The concentration of radon in the home is measured in picocuries per liter of air (pCi/L). Radon levels less than 4.0 pCi/L still pose some risk and in many cases may be reduced. If the radon level in the home is between 2.0 and 4.0 pCi/L, the EPA still recommends that you consider fixing the home. The average indoor radon level is estimated to be about 1.3 pCi/L; roughly 0.4 pCi/L of radon is normally found in the outside air. The higher the home radon level, the greater the health risk. Even homes with very high radon levels can be reduced to below 4.0 pCi/l and many homes can be reduced to 2.0 pCi/lLor less.

 To mitigate radon, most homes need a sub slab depressurization system and sealing of any openings in the basement floor. My client had a fan and a 3” pipe installed to draw air from below the basement floor up through the roof.  This cost my client about $1200 and the contractor guaranteed the radon would stay below 4.0pCi/I, as long as it remained in use.

 In the 550XX zip codes north of I-94, it is estimated that 23% of homes have radon levels above 4.0 pCi/L.

 If you are buying a home, it is a good idea to have it tested for radon, as the seller will most likely pay for the mitigation. If you haven’t had your home tested, it is a good idea to do so, to ensure you are living in a healthy home. An experienced real estate agent can give you advice on how to have your home tested.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Now is the Best Time to Buy a Home

   Even though inventory is down there are over 200 homes for sale in Chisago County. About half of those have recent price reductions. The median list price is currently $242,500 and the median marketing time is 86 days. The median selling price for December, reported so far, is $200,000.

  This week I received a call from a seller who had her home listed with another broker. She asked me to tell her why her home wasn’t selling. After reviewing the listing, I saw that she had unnecessarily done 5 price reductions over the past several weeks. In addition to this being a slower time of year in real estate, the photos showed the worst of the property and the remarks made the property sound like it had been destroyed by renters. The house has some great features, and the needed repairs had been made but the listing hadn’t been updated. This is a 4 bedroom 2 bath home for less than $145,000, which is a good deal!

  Buyers have been conditioned to look for new listings and avoid “stale” listings. They depend heavily on photos and remarks. My advice is to look at the aged inventory as there are amazing values there, especially in January before the market heats up. There have been many times when I have showed a “stale” listing and found an additional bedroom or bathroom that wasn’t listed on the MLS, or there was a den that could be converted to a bedroom for less than $3,000. I have also found the mechanicals had been updated along with a new roof, and none of that was mentioned on the MLS. Sellers are also much more likely to negotiate a lower price right now, as they are anxious to move on.

  Now that interest rates have started to rise, waiting to buy will cost you money. For example, if you want your monthly principle and interest payment to be about $1,000, you can afford to buy a home for $209,400 at 4.1% interest. If the interest rates go to 5.1% your purchase price will be reduced to $186,200. Rising rates, can greatly impact the buying power of first time home buyers and new construction.

  For my clients that don’t have to sell, I recommend removing the listings from the market in December rather than doing price reductions and increasing the market time, when less people are looking. There are currently 20 homes in Chisago County that are temporarily not available for showings. Most of these will be coming back on the market soon.

  An experienced real estate agent can help you find hidden values and can recommend a lender to provide actual monthly payments based on your finances.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Insurance Claim Was a Problem

Insurance Claim Was a Problem

 One of my clients filed an insurance claim for hail damage, at the recommendation of a contractor, and it turned out to be a big problem when they decided to sell their home. The claim was filed, the contractor disappeared, and the owners forgot about the claim. A month later my clients received a check from their insurance company for $10,000, which they didn’t cash.

 A few months later they called me to sell their home. The sellers completed the Seller’s Property Disclosure Statement, which asks if any insurance claims have been filed, if there has been compensation for a claim, and if the repairs were made. They answered appropriately.

 A few days later the sellers accepted a purchase agreement and the buyer’s inspector estimated the hail damage repairs to be under $1000. The buyer got a second opinion from a contractor who estimated the repairs to be $1700. The sellers agreed to pass the $10,000, that they received from the insurance company, to the buyer in the form of price reduction and the buyer would make the repairs after closing.

 The buyer applied for homeowner’s insurance, and his agent told him that the roof claim was on record and the buyer would not be able to file any future hail damage claims until the roof was replaced. This concerned the buyer and he asked the sellers to have the roof replaced.

 The sellers contacted their insurance company and found out they didn’t have replacement coverage, but rather actual cash value coverage, because the roof was over 10 years old. The sellers requested a copy of the insurance company’s estimate, and it showed the replacement cost was $23,000 and after depreciation, and the deductible, the payout was $10,000.

 Replacing the roof wasn’t an option for the sellers as they didn’t have $13,000 to add to the $10,000 they received. The buyer and seller agreed to split the difference in the form a price reduction and the buyer accepted the roof as is. Filing this claim without understanding their policy cost the sellers more money than if they never filed the claim in the first place.

 Actual cash value for roofs over 10 years old is now common practice with many insurance companies. It is important to understand your homeowner’s insurance policy before you file a claim, and work with an experienced Real Estate Agent to ensure a successful closing, even when problems arise.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Equity is Part of Financial Plan

Last week I received a call from a homeowner “Tom”, after he met with his financial planner. The financial planner asked Tom about his home equity. Tom didn’t understand what his house had to do with financial planning; after all he had a 401k, and a savings account.

The financial planner explained that the difference between what Tom owed on the house and what he could sell it for, minus selling expenses, is the equity; which is like money in the bank, and for most homeowners it is a substantial part of their retirement plan. 

Tom got excited about the prospect of finding “hidden money” in his home and thought he would like to borrow against it. He bought the house in 2007 for $330,000 and made wonderful improvements. He contacted his bank, and hired an appraiser to find out the current value. He was shocked to see the house appraised for $330,000 which was the same price he paid for it 9 years earlier. 

Tom was referred to me, by a mutual friend and wanted my advice. He showed me the new swimming pool, landscaping, fence ($50,000) the new kitchen ($45,000) the new wood floors, paint and new ceilings ($20,000). The improvements were beautiful and they loved their pool.

This was the oldest house on the block with a 1 car garage, gravel driveway, old siding, windows, and mechanicals, near a busy road. 

I reviewed the appraisal with them and explained that the appraiser selected 6 comparable properties within a one mile radius that sold recently, and he added and subtracted values from the sales prices for individual features; i.e. one home sold for $350,000 but he deducted $20,000 for its lake view. Another one sold for $340,000 and he deducted $10,000 for a 2nd stall garage. There was added value of $10,000 for Tom’s kitchen remodel and $10,000 for the pool. After all the adjustments, the appraiser determined Tom’s current value at $330,000.

Tom said, he watches home improvement and flipping TV shows, and he had the impression he would make money if he improved the house. I explained the cost vs. value of the different types of improvement projects, and the importance of getting a market analysis before improving a home. In this case Tom spent $115,000 and was given $20,000 in value for those improvements. Tom purchased the home 1 year before the market crash of 2008, and he bought the most expensive house on the block.

If your home is part of your financial plan, contact an experienced real estate agent for a market analysis before remodeling to estimate the current value and post remodeling valuation.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Radon Level Was 5 Times the Average

 Buyers are frequently having homes tested for radon after entering into a purchase agreement, but this was the first time I have seen a reading over 5 times the EPA’s (Environmental Protection Agency) recommended action level.

 Radon is the second leading cause of lung cancer after smoking. It is a heavy radioactive gas formed by the disintegration of uranium and radium in the ground. It seeps into your home through holes and cracks in the foundation. The average radon level in Minnesota is 3.8pCi/L which is like smoking 10 cigarettes a day. The EPA estimates 21,000 lung cancer deaths per year attributed to radon. Past and present smokers are at a greater risk than non-smokers.

The seller I was representing had a radon level of 19.5 pCi/L. The buyer requested a radon mitigation system be installed prior to closing at the seller’s expense.

 The EPA recommends radon mitigation when radon test results are 4.0 pCi/L or greater. The concentration of radon in the home is measured in picocuries per liter of air (pCi/L). Radon levels less than 4.0 pCi/L still pose some risk and in many cases may be reduced. If the radon level in the home is between 2.0 and 4.0 pCi/L, the EPA still recommends that you consider fixing the home. The average indoor radon level is estimated to be about 1.3 pCi/L; roughly 0.4 pCi/L of radon is normally found in the outside air. The higher the home radon level, the greater the health risk. Even homes with very high radon levels can be reduced to below 4.0 pCi/l and many homes can be reduced to 2.0 pCi/lLor less.

 To mitigate radon, most homes need a sub slab depressurization system and sealing of any openings in the basement floor. My client had a fan and a 3” pipe installed to draw air from below the basement floor up through the roof.  This cost my client about $1200 and the contractor guaranteed the radon would stay below 4.0pCi/I, as long as it remained in use.

 In the 550XX zip codes north of I-94, it is estimated that 23% of homes have radon levels above 4.0 pCi/L.

 If you are buying a home, it is a good idea to have it tested for radon, as the seller will most likely pay for the mitigation. If you haven’t had your home tested, it is a good idea to do so, to ensure you are living in a healthy home. An experienced real estate agent can give you advice on how to have your home tested.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Out-House Loses Grand-Fathered Status at Time of Sale

Out-House Loses Grand-Fathered Status at Time of Sale

   This week I met with some homeowners that have a seasonal cabin on Green Lake with a grand-fathered out-house. Like many homeowners they thought they could sell it as a cabin with an out-house, but that isn’t the case. When they sell, they lose their grand-fathered status and they must meet the Chisago County Sewage Treatment System Standards.

 This particular lot is not deep enough for a septic system with a drain field, so their option is a tank, which may need to be pumped frequently, depending on their usage. They can keep the out-house and put a septic tank under it and connect the well water to the out-house, but then they would need to install a second tank for the house if they want water going to the kitchen. The other option is to not have water going to the house and pump water from the well and carry it into the house.

 This cabin is in excellent condition so it doesn’t make sense to tear it down, and in my opinion, the best option would be to eliminate the out-house and convert the cabin to a year-round home with a bath and full kitchen with one septic system. Either way it will be expensive, but the future value will be better as a year-round home.

 I have another client purchasing a home on Rush Lake where the 20-year-old septic system failed the compliance inspection and the seller has opted for a septic box instead of a septic mound because the box takes up less space and it is less expensive. The treated cedar box will sit in the front yard and will be approximately 5’ high x 12’ wide x 28’ long. Luckily this is a wide lot so it won’t be directly in front of the house. This system will cost the seller about $13,500.

The Chisago County Sanitarian is extremely helpful and knowledgeable regarding sewage treatment systems. One of my clients was lucky enough to receive grant money earlier this year for a mound replacement.

 If you are thinking about selling in the near future, get your septic system inspection scheduled the next time you have your tanks pumped and keep your compliance certificate. Septic systems are not normally inspected in the winter as the ground needs to be thawed, spring road restrictions cause delays, and contractors are extremely busy trying to catch up in late spring and early summer.

 An experienced real estate agent can answer questions about required inspections, and can help you plan your next move.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.