Buying a House? Test for Radon!

Continuous radon monitor test in-progress.

Over the past few years, particularly since a section was added to our Seller's Property Disclosure Statement, radon has been a hot button issue in real estate.  To quickly recap, radon is an odorless, invisible gas that is caused by the half-life breakdown of uranium in soil.  It's in every house and is the 2nd leading cause of lung cancer behind smoking, according to the Environmental Protection Agency (EPA).  Radon levels are measured in picocuries per liter (pCi/L), and the EPA states that any level above 4.0 pCi/L is deemed to be "unsafe".

Radon testing is involved in nearly EVERY home transaction these days.  Testing occurs during the buyer's home inspection contingency period, and typically costs about $150.  Testing is typically done using a continuous monitoring system and is performed in the lowest level space that will be lived in (my home inspection usually performs them in a lower level bedroom).  The minimum amount of time for testing is 48 hours and the results are ordinarily available immediately.

I strongly encourage buyers to test for radon during their inspection contingency period.  If the results come back below 4.0 pCi/L, excellent!  You can rest assured that your home has a safe level of radon without installing a radon mitigation system.  If it comes back above 4.0 pCi/L, it's usually an item that it easily negotiated with the sellers.  The most common solution is for the seller(s) to hire a professional contractor to install a radon mitigation system.  Radon mitigation systems vary in price depending on the home size and setup, but a typicaly system costs somewhere in the $1,200 - $1,800 range.  Below is a very basic graphic example of how a radon mitigation system looks.

Example of a radon mitigation system.

If the seller is unwilling to install a system prior to closing, the alternative solution is usually for the seller to offer a price reduction or closing cost credit to cover the cost of the system.  Sellers have a strong incentive to resolve a high-radon issue, because they would then be required to disclose that (1) a test was performed and it came back high, and (2) that a radon mitigation system has not been installed.

Radon is a complicated issue that effects nearly every single transaction these days, so if you have additional questions on radon or radon mitigation systems, contact me!  I'd be happy to help.

Make Sure Your REALTOR Understands the Paperwork!

(PREFACE:  Now that the busy season is drawing to an end, expect more blog posts this fall and winter!  I realize it's been several months since I last posted here.)

I almost feel stupid writing this blog post because of how obvious this topic should be, but all too often (and particularly as of late) I've seen my fellow REALTORs show a complete lack of understanding about the paperwork we use in transactions.  At the end of the day, these REALTORs are ultimately doing a strong disservice to their clients, who rely and trust on them to navigate through the paperwork.  No buyer or seller should be expected to know more about the paperwork than their REALTOR.

I think part of why this is popping up (and subsequently why I felt compelled to write this) is that the Minnesota Association of REALTORs recently made changes to many of our forms.  This is pretty standard - about once a year, the Association with make minor tweaks to the forms.  Usually they are minimal - a couple word changes here, and small new section there.

However, this year the Association made some rather sweeping changes - in particular, they made very significant changes to the Inspection Addendum, which is a form used in almost every single transaction.  More specifically, the way that the number of days are calculated for completing inspections and negotiating any repairs or price reductions changed.  These timelines have significant importance to the transaction, and making a mistake could end up costing the buyer the house, or causing the buyer to assume a bunch of sub-par items on the home inspection.

At the end of the day, real estate isn't rocket science.  But there are huge amounts of money on the line for buyers AND sellers, and even the smallest mistakes can have significant repercussions.  REALTORs should know the paperwork inside and out, be diligent and detailed, and if they can't explain the paperwork or how specific aspects of the transactions work it should be an immediate red-flag.

I'm Selling My House - What Items Do I Have to Leave?

So you've decided to put your house on the market for prospective buyers.  You've painted, made some repairs, completely de-cluttered, signed your paperwork, and you're ready for the buyers to start rolling in.  However, there is something that is oftentimes not discussed in length with your REALTOR - what items in your home are "included" and what items are you supposed to take with you?

The short answer is a boring one, but it's absolutely true - EVERYTHING IN REAL ESTATE IS NEGOTIABLE.  From the price to the closing date to the earnest money to the inspection timeline and on and on - the items that are "included" in the sale are absolutely negotiable, and should be negotiated with the buyer upfront to prevent any future confusion or problems.

However, although every item is technically negotiable, our Purchase Agreement does provide some guidance to buyers and sellers as to what is included.  Below is a screenshot from page 1 of our Purchase Agreement, which addresses generic items that are generally expected to stay for the new buyer(s). 

Screen shot from page 1 of our Purchase Agreement, which outlines many items that are generally included.

As you can see, this list covers a lot of ground and generally includes items that are attached or affixed to the property.  Many of these items would be intrusive to remove, and thus are included.

You'll notice that certain common items are NOT included on this list - for example, no sign of washers or dryers on the list.  To cover these types of items, we typically use a form called a "Personal Property Agreement."  This form covers items not included in the above list that sellers and buyers have agreed will be a part of the sale. 

My general advice to sellers is the following - if there are items that are on the above list that they do NOT want to be part of the transaction, simply remove the items from the home prior to letting a single buyer through.  Those living room drapes that you want to take with to your next property?  Take them down before the listing goes live on MLS.  Want to take your refrigerator because it's new and you REALLY want it?  Either remove the refrigerator, or do something to very clearly articulate that that item is not included.

I could probably write another 6 paragraphs on this topic, but this seems like a decent start.  Have a specific question?  Feel free to call or email me!

Why You Should Meet With Your REALTOR Before House Hunting

It happens ALL the time:  I get a call from a new buyer client, and they've found a house online and they want to go see it immediately.  I completely understand why - they've found something exciting, and it's piqued their interest enough to start house hunting seriously.  However, I always try to get my clients to pump the brakes and hold off on house hunting until I have a chance to sit down with them. 

In my opinion, particularly if it's your first home purchase ever, it is absolutely critical to meet with me so we can discuss the process, some of the issues we might encounter, and set some ground rules/expectations for the home buying process.  Buying a home is a huge investment, and it's crucial to know what you are walking into instead of just "winging it".  As a REALTOR, it is very hard to guide the process and educate my clients when we are out looking at houses - it just never seems to work out like it should.

Most of my initial appointments are 75-90 minutes, and we cover a lot of ground.  We talk about the reasons buying a home is a good investment, what the current status of the housing market is, what the step-by-stop process is that you'll encounter, a little bit about mortgages, a timeline of when you will be expected to spend your money during the process, and a bit about my experience/real estate background.  Many loan officers do something similar to this - in the homebuying process, knowledge is power!

Quick T.R.I.D. Update

A few months ago, major changes took place in the lending world.  These changes, referred to as T.R.I.D. (TILA-RESPA Integrated Disclosure, for those curious), ignited a lot of fear and uncertainty in the real estate environment.  How would lenders react and adapt to the changes?  Would closings go smoothly after changing the forms that had been in place for 20-something years?  What would the new rules mean for REALTORs and their clients?  A lot of questions were raised, and nobody really knew what to expect.

Well, we are a few months into T.R.I.D and we have (at least a little bit) of clarity.  I obviously don't get to see the behind-the-scenes at mortgage companies, but my impression thus far is that most companies were well prepared for the changes and the transition has been mostly smooth!  Of the closings I've had since T.R.I.D. took effect (using multiple mortgage companies) there have been no noticeable issues and each file has closed on time!  And some mortgage companies have backed-off of their requests for REALTORs to write purchase agreements with 60 day closings.  I've had multiple transactions that closed in 45 days, which was (kind of) the standard prior to T.R.I.D. taking effect.  I think it's safe to say at this point that the fears about T.R.I.D. were just a tad overblown.

Something to ponder for the future, however - with major changes, there are inevitably going to be minor tweaks and changes that take place over time.  I have not heard of anything specific at this point, but it would not surprise me to see things change and improve over time.  It is hard to say how any of these changes might effect things going forward.

If you have specific T.R.I.D. or mortgage-related questions, reach out to me and I'll put you in touch with a loan officer!