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Click on an article below from past newsletters.
Fair
Market Value Defined
Comparative
Market Analysis Defined
Overpricing
your Property will ultimately Stall a Deal
Sellers
Should Know the Market
Renew
Your Tenant's Lease Agreement?
Determining
Value: Factors that Affect Value in Today's Market
1031
Tax Deferred Exchange: Exchange Your Way to Profit!
Seller
Financing: A Primer
Aluminum
Electrical Wiring
Molds
Become a Significant Real Estate Matter
When
Mold Attacks
Need
Help Finding Home Owner's Insurance Coverage: Check out these
Resources
You hear the expression all the time. But what is "fair
market value" and how is this number determined? The term "fair
market value" generally means the price at which a seller will freely
sell and a buyer will freely buy.
The dollar amount represented by fair market value becomes
important in many cases. For example:
·
when a home is priced for sale;
·
when an offer is made to buy property; and
·
when a home is taxed by local tax assessors.
Many factors can play into creating a valuation including
property location, age, lot size, local market demand, condition, financing,
and related factors.
Where can you find information to help measure fair market
values? Your best choices are local brokers who are familiar with your
area. Brokers can provide a "competitive market analysis" (CMA) that
compares your property with recent sales as well as like-properties
currently on the market. Different brokers may produce differing valuations
- falling within a range of values.
Market values are important during a sale because if a
property value is set too high it's likely to languish on the market. If
the value is set too low then owners won't receive full value. The same
problems also impact buyers: If the property is over-valued you'll pay too
much, if it's undervalued it will be sold very quickly.
To evaluate your property for a COMPARATIVE MARKET ANALYSIS
we will use many of the tools that a professional appraiser utilizes:
comparable sales, competitive listings in escrow, square footage,
location, amenities, and the general condition of the property.
The data will be researched from the reliable information
currently available from the local Association of Realtors, local real
estate firms, and title companies. It will not reflect every
property of comparable value for sale at the time, but will represent a
good cross section of the competitive real estate inventory and recent
sales.
Please note that while none of the properties will be
exactly like yours, they will provide a good reference source in a
competitive market analysis.
The estimated value we will give for your property does not
mean that the sale of the property could not occur at a higher price.
The price you ultimately receive, of course, will depend on your
motivation, the motivation of the buyer, and market conditions at the time
offers are received.
Once we have tested the market at this price, we will make
periodic reviews to ensure we remain competitive.
Reasonable asking price is key to efficient
sale!
Sellers often wonder why buyers don't make
offers. Some sellers find it hard to believe that the source of the
problem is that their list price is too high. Buyers can make lower
offers, right? They can, but in most cases serious buyers don't make
offers on homes that are priced too high for the market.
It's easy to understand why buyers don't offer
on overpriced listings when the market is glutted with inventory. With
plenty of homes to choose from, why would a buyer waste time making an offer
on a property that's listed above the competition?
In low-inventory markets, however, the reasons
why overpriced listings don't sell is more complex. Buying and selling
homes is an emotional experience. Psychological factors come to play.
Some buyers shy away from making a low offer on
a listing because they don't want to offend the seller. This is
particularly so if the buyers have a serious interest in the property.
In this case, they often prefer to wait for a price reduction before making
an offer.
Sellers often think that if buyers love their
home enough, they'll pay more for it. But a few buyers, if any, are
willing to pay more than the fair market price. A home is worth what
the market will bear. It's not necessarily worth what the sellers
want.
Buyers usually know market value better than
sellers do. Buyers may look at as many as 50 or more homes by the time
they decide to make an offer on one. So it's difficult, if not
impossible to convince today's cost-conscious, consumer-savvy buyers to pay
more than market value on a home.
Sellers who put an unrealistic price on their
home send a message to real estate agents and prospective buyers:
here's an unrealistic seller who may be difficult to work with. Most
homebuyers today are busy and don't have time to waste with unreasonable
sellers. This is why buyers would rather wait for a price reduction
before starting to negotiate.
Austin American Statesman
Of the three parties to the real estate
transaction, who is the least informed?
Realtors always know what is happening because
they are in the market every day. Buyers also know the market because they
are looking at various duplexes presently for sale.
It is the seller who is usually the least
informed person because the seller is typically not out looking at other
properties until their current one is sold. They do get a glimpse at
the market when their Realtor originally lists their property.
As a part of the listing process, the Realtor
provides information about competing property for sale as well as past
sales. As time goes by and market conditions change, sellers often
don't keep up-to-date.
The consequences of this situation can be
troublesome for the seller. He or she, as an example, may set an
original asking price that is unrealistically too high. Buyers who
compare this overpriced property with competing properties may decide to
avoid seeing this duplex and consider others instead.
Another harmful consequence could be the
inability of the seller to reduce the asking price in a timely manner before
the property becomes market weary. It's not unusual for a seller to
want to try an above-market asking price for a while to see if there are any
takers. Once that tactic has failed, however, the price must be
reduced so that the property has a fair chance to attract those serious
buyers who are aware of today's values.
Advice: If you have your property for sale
now or contemplating selling your property in the future, remember that it
is vital to know how your duplex really compares with competing properties.
The best way to do that is to listen to the facts as presented by your
Realtor.
Consider the fact that if you keep one or more
of your tenant's lease agreements Month-to-Month you allow a first-time
homeowner the option to buy your duplex with a very low down cash
investment. F.H.A. rules compel the owner occupant buyer to move in to
the duplex within 60 days from closing the sale. By allowing the
option of an Owner-Occupant sale on your duplex you will ensure "Highest and
Best Use" for your property.
Determining Value: Factors that Affect Value in Today's Market
PRICE
Pricing your home properly from the beginning is an important factor in
determining the length of time it will take to sell your home.
Reviewing this home marketing plan will assist you in determining the best
possible asking price .
LOCATION
Location is the single most important factor in determining the value of
your home.
COMPETITION
Prospective buyers compare your property against competing properties.
Buyers will perceive value based upon properties that have sold or are
available in the area.
TIMING
Property values are affected by the current real estate market.
As the real estate market cannot be manipulated, a flexible marketing plan
should be developed which analyzes the current marketing conditions and
individual features of the property.
CONDITION
The condition of the property affects the price and speed of the sale.
As prospective buyers often make purchases based on emotion, first
impressions are important.
Optimizing the physical appearance of your home will maximize the buyer’s
perception of value.
-
What is a 1031 Tax Deferred Exchange?
The 1031 exchange is one of
the country's longest standing tax laws. Section 1031 allows owners of
investment or business real estate to legally defer state and federal
capital gain taxes on the disposition of their property.
How can a 1031 Tax
Exchange benefit you?
The 1031 exchange process
provides a means for owners of business and/or investment property to
potentially increase their cash flow and net worth by taking advantage of
deferred taxes. An investor does not have to exchange one property for
another single property. Owners have the option to exchange one property
for two, or two properties for one. A 1031 exchange also may offer
advantages in terms of depreciation recapture and/or state withholding
taxes.
What Properties Qualify
for a 1031 Tax Exchange?
With the exception of a
primary residence, an investor may exchange all types of real property.
"Like-Kind" property is considered to be real property that is held for
trade, investment or business purposes. Examples are:
·
All categories
of commercial real estate;
·
Non-owner
occupied single family residences;
·
Bare land;
·
Ranches;
and/or Multi-Family
buildings.
Vesta Strategies
1031 Tax Deferred Exchange:
Exchange your way to profits!
If you are not familiar with Section 1031 of the
code you should be. Section 1031 offers a rare opportunity.
A true win-win situation for the seller and buyer. An
opportunity for a seller to, in some instances, completely defer all tax due
on the gain from the sale and an opportunity for the buyer to purchase
property which might not otherwise be on the market.
For example, John owns an eight unit apartment
building which he purchased in 1987 for $100,000. In the past five
years he has taken $15,000 in depreciation expenses, leaving him with a tax
basis of $85,000 ($100,000—$15,000 ). He has a mortgage balance of $75,000.
John now has the opportunity to sell the unit for $200,000. He is interested
in reinvesting the proceeds of the sale in other real estate.
Depending on John’s overall status and assuming
sales expenses of 10%, he can expect to pay over $30,000 in taxes from the
sale of his apartment building, netting approximately $75,000 to reinvest
after paying his mortgage.
By exchanging property and complying with
Section 1031, John may be able to completely defer payment of tax on the
gain leaving $105,000 for reinvestment. Because the mechanics of
deferred exchanges are now so easy, exchanges present a very viable
marketing opportunity.
If John can defer paying $30,000 in taxes he has
$105,000 to reinvest rather than $75,000. Assuming a loan to value ratio of
75%, John can purchase a $420,000 replacement property rather than a $30,000
property. John’s investment horizon is raised by $120,000.
The real beauty of the simplified exchange is
that all parties (with the exception of the Internal Revenue Service) win.
There is no increased cost or hassle to the buyer and the seller defers his
tax. That kind of opportunity is rare. Under the right circumstances, an
exchange can allow you credit to obtain an interest free loan from the
government by deferring taxes on the disposition of real estate creating
a win-win situation.
Don Hancock and John Mcgill,
Attorneys at Law
The Sales Contract
It is important for sellers to realize that when
they sign a contract to sell a property and agree to provide seller
financing, they are, in effect, signing two contracts: one to sell real
estate and one to provide financing. Any terms a seller wants to include in
the seller financing documents must be specified in the sales contract. For
instance, if the seller wants a late payment penalty, a “due on sale”
provision (a due on sale provision gives a note holder the right to call the
loan due if the collateral is sold without the consent of the note holder)
or an escrow account for taxes and insurance, they have to be contracted in
the sales contract. If they are not, the seller has no right to insist upon
their inclusion in the final loan documents. The TREC addendum for seller
financing provides for a late fee of five percent of the amount past due for
more than 10 days and has options for requiring a “due on sale” provision as
well as escrows for taxes and insurance. If an owner’s title insurance
policy is provided, the TREC contract also requires the buyer to provide the
seller with a mortgagee’s title insurance policy insuring the validity and
priority of the mortgage securing the note received by the seller.
Is the Loan ‘Safe’?
The most common question asked by
sellers is whether a loan to a buyer of their property is “safe.” That is
difficult to answer. What seems safe to me might not seem so safe to you.
Perhaps the best way to address the issue is to say that hundreds of very
conservative banks and other commercial lenders make thousands of real
estate loans every day. If the loan is properly documented, the risks to any
lender, including a seller, are very manageable. To make the loan as safe as
possible, sellers need to understand the risks and how to minimize those
risks.
Minimizing
Risk for the Seller
To properly document a loan, a
seller will need to have a promissory note and a deed of trust (a mortgage)
prepared to create a lien against the property being sold. The property sold
will be the collateral for the loan and, upon default by the buyer, the
property is subject to foreclosure by the seller. As long as a seller
retains a lien against the property sold as collateral and the value of the
collateral is equal to or greater than the unpaid balance of the seller’s
note, the risk to the seller is minimal. If the seller loses his lien
against the property or if there is a decease in the value of the property,
the risk that the seller will suffer a major loss from the loan increases
dramatically. Loss of a lien or a decrease in collateral value does not mean
that a seller will suffer loss; only that the chance of loss is
substantially higher. Even without a lien, the debt of the buyer to the
seller is still there. But with no collateral, to collect the debt, a seller
will have to sue the buyer, recover a judgment and locate property which can
be taken from the buyer to satisfy the judgment. As long as the seller’s
lien is in place and the value of the collateral is greater than the note
balance, the seller can foreclose his liens, regain title to the collateral
and resell the property.
Ad Valorem Taxes
If the seller’s note is secured
by a valid first lien against the property, the primary way the seller can
lose his lien is to allow ad valorem taxes to go unpaid resulting in a tax
sale of the property. A tax sale, even if taxes accrued after the date of a
seller’s loan, can terminate the lien securing the seller’s note.
Consequently, it is very important for a seller who provides financing to
monitor ad valorem taxes to make certain they are paid. The TREC Seller
Financing Addendum has two options concerning ad valorem taxes. The seller
can require the buyer to provide annual evidence that taxes have been paid
or the seller can require that the buyer make monthly deposits with the
seller to allow the seller to accumulate funds to pay the taxes when they
are due.
Protecting Against Loss of Economic Value
Loss of value of the collateral
can also increase the risk to the seller providing financing. There are two
primary ways to lose collateral value: a loss of economic value due to
market conditions, such as we
experienced in
the mid 1980s, or an uninsured casualty. A seller’s primary defense against
falling property values is to keep the loan to value ratio conservative. If
a seller loans only 80 percent of the value of the property, the seller will
not suffer increased risk of loss unless the value of the collateral
deceases by more than 20 percent. With a loan of 100 percent of the purchase
price, any drop in value increases the risk of loss to the seller. A major
casualty with no insurance coverage can result in substantial loss of
collateral value and greatly increase a seller’s risk. Therefore, it is
extremely important for a seller to monitor insurance on the collateral
property to make certain that the seller is listed as a mortgagee and that
insurance coverage is not allowed to lapse. If a seller is listed as a
mortgagee on an insurance policy, the insurance company is required to give
the seller notice before terminating a policy. The loan documents will give
the seller the right to secure insurance on the property and charge the cost
back to the buyer. If a seller agrees to provide secondary financing and
accept a note from the seller secured by a second lien, the risk to the
seller is greater than when a seller provides financing secured by a first
lien. The increased risk results from the fact that there is a primary first
lender whose lien is superior to the second lien retained by the seller.
Consequently, in addition to risks associated with a first lien, the seller
assumes the risk that the note secured by a superior lien will be paid. If
it is not and the first lender forecloses, the seller will lose the
collateral and be left with an unsecured note. To summarize, the risks of
providing financing secured by a first lien are very manageable. The risks
can be greatly reduced, but never completely eliminated, by keeping the loan
to value ratio conservative, making sure ad valorem taxes are paid prior to
delinquency and monitoring insurance to make sure there is no lapse of
coverage. If second lien financing is provided, the risks are greater to a
seller because of the potential loss of collateral if the note secured by a
superior lien is not paid when due.
By Don R. Hancock and Hancock & McGill, Attorneys at Law
Austin Realtor,
September 2003
Aluminum Electrical Wiring:
About Aluminum
Electrical Wiring
Between 1965 and 1973, aluminum wiring was used to
install electrical branch circuits in about 1.5 million homes in the United
States. Subsequent fires in some of these homes were attributed to
faulty aluminum wire connections. During this period,
studies conducted by the National Fire Protection Association, in
conjunction with the U.S. Consumer Products Safety Commission,
revealed that homes using aluminum wires manufactured before 1972 are 55
times more likely to have one or more electrical connections reach “fire
hazard” condition than homes wired with copper. Aluminum wiring in itself
is not dangerous. Aluminum wiring, when properly installed, can be just as
safe as copper. But if it has not been installed properly, the
connections—where the wires join to the outlets and switches—can
present a fire hazard. This article provides information on the steps you
can take to ensure the safety of the electrical connections in your home.
How to Tell
The wiring that is of concern involves the circuit wiring to
your outlets, light switches and to appliances that use 115 volt current,
such as the furnace and washing machine. It is a single-strand, solid
aluminum wire, silver in color as opposed to the characteristic copper
wiring color. Most homes of any vintage employ some aluminum wiring. Often
service entrance cables from the street that run to the distribution panel
and major appliance circuits (220 v) are aluminum. The safety concerns are
not with these cables, but rather with branch circuit connections involving
the lighting and other 115 volt circuits.
The Problem
Most problems arise with solid aluminum wire sizes #10 and
#12 gauge. These problems concern the ends, or terminations,
of the aluminum wire, where they connect under bonding screws. If the
connections are improperly installed, there is a potential for intermittent,
“hot” connections where the wires join to the outlets and switches. Again,
the problem is with the connections, and not with the wiring
itself. The main difficulty with connections using aluminum wiring is a
phenomenon known as “cold creep.” Aluminum ’s coefficient of expansion (how
much it expands when electrical current passes through it) is higher than
copper’s. Simply put, when aluminum wiring warms up, it expands more than
copper does, and when it cools down, it contracts more than copper does.
This expansion and contraction, over time, will allow for loosening at the
connections. Also, aluminum wire needs to be larger than copper to carry the
same amount of electricity. Because the wires are thicker, you cannot get
the same tightness at the connections. Therefore, they may loosen more
quickly. To make the problem worse, all metals oxidize or corrode in an
oxygen environment. Copper oxidation forms as a conductor, while aluminum
develops as a resistor. This resistance causes heat. Oxidation accelerates
when two unlike metals are in contact with each other. This may be part of
the source of increased resistance when aluminum wire joins to outlets or
switches intended for copper. Eventually the wire may start getting very
hot, melt the insulation or fixture its attached to, and possibly even cause
a fire.
Evaluation of Your
Electrical
System
As mentioned above, aluminum wiring can be just as safe as
copper when properly installed. Denver’s Building Department has always
maintained—including during the years 1965 to 1977, when aluminum wiring was
being installed nationwide—a force of electrical inspectors who themselves
are licensed electricians and have worked diligently to ensure that all
installations comply with local and national standards. Many of the
incidents publicized from other parts of the country simply don’t occur
here. Still, any potential electrical problem is a potentially serious
problem. There are several warning signs to look for that would suggest the
possibility of connection problems.
They are:
� Sparks emanating from outlets;
� Warm-to-touch cover plates on outlets and switches;
� Smoke coming from outlets, junction boxes or switches;
� Lights that flicker for no apparent reason;
� Melted insulation (plastic) at the connections;
� Smell of burning plastic at outlets;
� Light bulbs that burn out quickly or shine unusually
bright;
� Blown fuses or tripped breakers for no apparent reason;
and/or
�The
size of your television picture shrinks.
Making Sure It’s Safe
1.
Outlets and switches
directly attached to aluminum wiring shall be listed for that purpose. The
device will be stamped with “AL/CU” or “CO/ALR.” The latter supersedes the
former, but both are safe. These fixtures are somewhat more expensive than
the ordinary ones.
2.
Wires should be properly
connected (wrapped at least ¾ way around the screw in a clockwise
direction). Connections should be tight. While repeated tightening of the
screws can make the problem worse, during the inspection it would pay off to
have the electrician “snug up” each connection.
3.
“Push-in” terminals
(terminals where the connecting wire is pushed into a slot rather than wound
around a screw) are an extreme hazard with aluminum wire. Any connections
using push-in terminals should be redone with the proper screw connections
immediately.
4.
There should be no signs of overheating -- darkened connections, melted
insulation, or “baked” outlets or switches. Any such damage should be
repaired.
5.
Connections between aluminum and copper wire need to be handled
specially. The current Denver City Ordinance requires that the
connectors used must be specially marked for connecting aluminum to copper.
The National Electrical Code requires that the wire be connected
together using special crimp devices with an antioxidant grease (see “
Repair Options” below).
6. National Electrical Code, Sections 110-114 and 310-14 address
electrical conductors of dissimilar metals and prohibits the use of unlisted
twist-on connectors for connection of copper and aluminum wiring
Repair Options
It is very unlikely that the aluminum wiring in your home
needs to be removed. While total rewiring would remove all risk and concern—
—but at great expense—there are other options available. They include:
� The preferred method for handling a connection between
aluminum and copper wire, as recommended by the National Fire Protection
Association, Underwriters’ Laboratories and the U.S. Consumer
Products Safety Commission, is to make a pigtail connection using the “Copalum
crimp method” developed by Amp, Inc. In this repair, the aluminum
wiring is “crimped” with copper, using special connectors and an antioxidant
compound. The connection is then covered with heat-shrunk insulation. The
crimping creates a molecular bond between the added piece of copper wire and
the aluminum; the short piece of copper wire connects the aluminum with the
connection device. Do not confuse this with ordinary “pigtailing.” There
is a substantial difference. While this will potentially solve any aluminum
/copper wire problem, it is somewhat expensive ($12-$16 per connection).
� Replacing all outlets and switches with devices marked
AL/CU or CO/ALR also will make the system safe. These special outlets and
switches are made with a metal that is compatible with both copper and
aluminum. It will cost approximately $7 to $9 per device to switch over.
The Denver Fire and Building Departments recommend this approach in
most cases.
� You may also choose to have an electrician apply
antioxidant to and simply tighten all connections. This makes the wiring
safe — however, all connections must be retightened every two years.
Therefore, in most cases we would not recommend this approach.
� Have your electrician check all connections. Replace any
that use “push-in” terminals with the standard type. If any connections are
loosening, they should be tightened and any oxidation should be cleaned
away. Choose the method most comfortable for you. All will render the
wiring safe when property done. However, please keep in mind that working
with electricity is potentially very dangerous. Working with aluminum
wiring is more difficult than working with copper, as it is more brittle and
therefore breaks easily.
Correct
Method
A Final Caution
Any time you suspect unusual heat or smoke generated from the
electrical system in your house, do not hesitate to call the Denver Fire
Department via 911. The Fire Department will respond, investigate and
evaluate conditions. There is never a charge for this service. The safety
of your family and your property is our primary concern. The United States
Fire Administration reports that annually, of the nearly 800,000 residential
fires nationwide, approximately 75,000 began in the home’s electrical
distribution system -- that is, in the circuit wiring, receptacles,
switches, cords and plugs. When a part of this network fails or is misused,
a fire may result. Many of these fires were attributed to “old technology”
aluminum branch circuit wiring. Of the fires involving “old technology”
aluminum branch circuit wiring, 75 percent of the incidents involved
receptacles, 12 percent involved panel equipment terminals, and 10 percent
involved twist-on connections. Fire investigators, including those of the
Denver Fire Department’s Fire Prevention and Investigation Division,
determined that “old technology” aluminum -wired receptacles and twist-on
connectors, when used with aluminum wire, were failure prone, even when
installed carefully in accordance with the manufacturer’s instructions.
Leave aluminum wiring safety improvements to licensed electrical
contractors. Work done under City permit will be inspected by your the
building department electrical inspectors.
Fire
Prevention and Investigation Division
Denver Fire Department
Who
ever heard of a home not selling because of mold? Or of a "mold
contingency?" Five years ago, no one ever heard of such a thing. But
mold is getting more attention and home inspectors need to look for mold on
a regular basis, if they are not doing so already.
Most
of us laugh at the idea of mold entering into a real estate transaction.
But here is the problem: mold litigation is on the rise. More
and more lawyers are handling cases relating to mold exposure. And
some judgments have been awarded in these cases, suggesting that they may
have legal punch. Mold
exists everywhere, all of the time. It usually does not bother anyone.
But there are some times that mold can be a problem.
Problem #1: It can be a problem for people who are
unusually sensitive to mold. Some people experience respiratory
problems when they are exposed and they can become very ill.
Problem #2: Black mold. Some molds, for example
the "black mold" that has been around forever but people are now talking
about, seems to make people ill. Again, some people seem to be more
sensitive than others, but this black mold appears to have a greater
propensity to cause problems.
Mold exists everywhere, but it really likes dark, moist areas, such as dirty
heating ducts. And a leaking roof
that has slow leaked for a long time can create moisture and encourage mold
growth. Combine that, with a particularly sensitive person, and you
may have a lawsuit. As a result, realtors and inspectors need to
understand the mold issue. Maybe, mold will have to be disclosed by
sellers. Especially if a homeowner knows there is an ongoing mold
problem that may not be apparent from a basic inspection. When to
disclose is a fact specific legal issue, but I believe that mold disclosure
will not be uncommon in the near future.
For
some reason, schools all over the country are reporting mold issues.
And schools are being closed due to mold issues. That makes for a nice
community selling point, "we were the first grammar school in the state to
be closed due to mold." Recently, a North Jersey school district
relocated five kindergarten classes because mold was detected in the
schools. They attributed the mold to a crawl space underneath the
classrooms that has a dirt floor, and mold. The school district
reported that this was not considered to be a general health concern, but a
response for the benefit of children with allergies or asthma. In
May 2000, a Houston school reported that it had been addressing "potential
mold problems" for over a year. Leaky windows were sealed, the heating
system had been repaired, some carpeting had been replaced, and
dehumidifiers had been installed. Landlords also need to be vigilant about the mold issue. A chronic
leaking roof, leaking water pipes, bathroom moisture, or a poorly maintained
ventilation system can be an invitation to a lawsuit. As science
establishes a causal relationship between the presence of mold and
human
illness, legal exposure will rise.
Landlords must ensure that reasonable means have been taken to avoid harmful
mold growth. Indoor air quality experts are available to provide
assistance. And if mold repairs are needed, be sure to contract with a
company that has had experience. There are protocols that should be
followed, and you will want to ensure that you can prove that the job was
done correctly.
Stuart Lieberman
When Mold Attacks:
Some tips for keeping your home mold-free!
1.
Raise the temperature of cold surfaces where moisture condenses, such as
windows, by using insulation or storm windows.
2.
Use dehumidifiers and air conditioners to keep indoor humidity between 30
percent and 60 percent, but be sure the appliances themselves don't become
sources of biological pollutants.
3.
Turn off humidifiers or kerosene heaters if you notice moistrue on windows
or other surfaces.
4.
Ventilate crawl spaces well and cover the soil with plastic to lower
humidity.
5.
Dry water damaged areas and items within 24 - 48 hours.
6.
Use exhaust fans in bathrooms and kitchens to remove moisture. Vent
humid air from exhaust fams and clothes dryers to the outside, not to the
attic or other areas of the house.
7.
Clean mold off hard surfaces with water and detergent, and dry completely.
Absorbent materials such as ceiling tiles or drywall that are infected with
mold must be replaced.
8.
Do not install carpeting near areas of perpetual moisture such as showers or
kitchen sinks.
9.
Consider installing rain gutters or landscaping so that the soil slopes away
from the exterior walls to prevent water from flowing toward the house.
Prevention, quick response are key to battling fungi!
There's something growing in Belinda Hare's bedroom. Fuzzy, green and
gold, about the size of a pancake, it's a telltale sign that the latest
homeowner's nightmare has descended on an otherwise inviting home she shares
with Beth Engelking in Northeast Austin. Hare
is trying valiantly to keep her sense of humor about the whole thing.
Or maybe she's not kidding when she says, "I don't thing we're going to go
out with a bang in the universe; it's going to be the mold that gets us."
Mold
has rarely had a higher profile. Complaints about indoor mold have
increased for all types of housing.
In both old and new structures.
Insurance companies say the number of claims for mold-related damage has
skyrocketed. In the first quarter of 2000, when the Texas Department
of Insurance began keeping statistics, it counted 833 claims. For the
same period this year, there were 3,413 claims. The
mold issue has become a headache for homeowners and insurance companies are
seeking to reduce coverage for damage caused by water leaks or increase
premiums. A
recent ruling by Texas Insurance Commissioner Jose Montemayor protects
coverage for primary damage, but could mean that homeowners will have to
shoulder the cost for more elaborate cleanup and testing. But
because of rising complaints about indoor mold, the U.S. Environmental
Protection Agency's indoor air quality team believes we're not seeing more
mold, just noticing it more due to heightened awareness, said regional
spokesperson Davis Barry.
Whatever the answer, many homeowners and renters are wishing they knew more
about how to prevent mold and how to deal with it once it shows up. An
organism that thrives on dampness and humidity, mold is found outdoors as
well as indoors, said Quade Stahl, director of indoor air quality for the
Texas Department of Health.
"You're inhaling mold spores right now," Stahl said. "You're not
inhaling enough that your body can't handle it." But
too much mold can cause health problems -- allergic reactions, asthma and
other respiratory complaints based on the type of mold and the person's
susceptibility. The majority of mold problems in homes are due to
leaks from the roof or plumbing or air conditioning," Stahl said. The
homeowner's first line of defense, Stahl said is to immediately address any
visible mold growth or investigate musty or putrid odors -- mold can
smell like animal urine or sweaty socks. In Hare's case, that has
meant hiring workers to remove moldy ceiling tiles and repair a leaky roof.
Neither she nor her housemate has been sick, and they hope the problem is
contained in the upper reaches of the room. But for other homeowners,
the answers can be as
fuzzy as that colorful, moist mass crawling up your bathroom wallpaper.
For more tips about prevention and dealing with mold, read on.
Prevention
First, it's important for busy homeowners to truly take care of where they
live, performing the routine maintenance that helps ensure problems don't go
unnoticed. And
the single most important preventative measure? "Fix leaks
immediately," Stahl said.
"Leaks often go undetected or ignored," he said, creating an ideal
environment for mold to grow on wood, paper, carpet, drywall and many other
surfaces.
Sandra Ray of
the Southwestern Insurance Information Service, an industry
trade group, also stressed the importance of dealing with leaks.
"What we advise if a person finds a water leak is to clean it up
immediately. Call a plumber and then call your insurance agent.
Whether that leak is big or small, if you want to limit problems from mold
as a result of a water leak, you need to act quickly. Don't ignore the
problem. A small leak is just as bad as a big one."
Additionally, Ray said, "If a person has a large leak and there's soaked
carpeting or damaged furniture, they might want to take pictures of those
items and dry them or get them out of the
house. They should also run
their air conditioning and fans.
"Their insurance company should send an adjuster out to look at the problem
and address it accordingly."
Another must is hiring a competent home inspector before buying any
property. An inspector can point out potential trouble spots and check
for existing water problems. Jerry Miller, sales manager of Texas Power Vacuum, which does mold remediation
for home and businesses and cleaned up a Texas Department of Health building
with mold problems, said he sees the same trouble spots repeatedly.
Miller advised being wary of multiple-level roofs, which may be more prone
to leaks, and of air conditioning systems located in an attic. If the
system clogs or leaks, water inevitably winds up in the walls where mold can
grow.
Remediation
If
you find mold, locate and fix the source of the problem and take care of the
visible signs.
If
the mold is less than a square foot, washing things down with a detergent or
bleach solution and drying completely may be enough to quell the problem,
Stahl said. If you do that and the mold returns, however, the source of
the problem still needs to be addressed.
Do-it-yourself types "may feel quite comfortable doing a larger area," said
Kay Soper, also of the Department of Health, but they need to take
precautions -- both to protect their health and to ensure mold doesn't
spread to other areas of the house.
The
Health Department's Web site provides links to detailed instructions on mold
removal, and indoor air specialists there can also give guidance as to
whether a job is too big for you to handle.
Essentially, gloves and dusk masks are necessary even for small jobs, Soper
said. Respirators, sold in home supply stores, are recommended for
bigger jobs.
Hiring somebody to do the work for you requires other precautions -- the
boom in this business has meant that folks who may not be qualified to test
air quality or do mold removal are on the job anyway, said Miller of Texas
Power
Vacuum. The
Better Business Bureau and reference checks will help weed out poor
performers, Stahl said. The Health Department Web page contains a list
of consultants but doesn't make recommendations.
Stahl also advised doing your homework, then letting the air testing or
remediation experts tell you how they'll approach the job. If some of
the answers don't sound right, don't hire them, he said.
Miller agreed. "A person who quickly tells you what the problem is
without full knowledge of the situation is someone you have to be careful
of," he said.
Also, ask how they'll protect themselves -- and the rest of the house --
while they work on a particular area. When
dealing with insurance companies, "It's the homeowner's right to pick who
they want to do remediation," Miller said. "Not based on price, but
based on confidence in the contractor."
Cost, as in any home repair job, depends on the scope of the problem.
"Every job is different." Miller said. "I could do the same size
room in two mirror-image houses, and it might cost $1,500 or $5,000.
Rental Property is no Exception
Renters and property owners also are dealing with mold. "The
main responsibility of management or owners is to quickly respond to (any
complaints), so it doesn't cause a huge problem," said Tami Martin,
president of the Austin Apartment Association.
Martin said members of the association are encouraged to treat any water
damage or reports of mold, which indicate some kind of problem with
excessive moisture, as an emergency. "The
best thing is to get over there and inspect it as soon as you find out about
it," she said. For
their part, tenants need to be vigilant about reporting any problems.
Besides making a call to their landlord or building manager, it's best to
put any complaints in writing, said Sam Persley of the Austin Apartment
Association. If the owner is reluctant to address the problem, the
association might recommend that tenants use a mail-order lab that tests
mold picked up by a piece of tape.
On the Web
For
advice about information about mold in your home, call the Texas Department
of Health's indoor air quality branch at (800) 572-5548 or e-mail them at
iaq@tdh.state.tx.us. Their Web site is
www. tdh.state.tx.us.
The
U.S. Environmental Protection Agency provides information and links about
mold cleanup at
www.epa.gov/iaq.
Julie Bonnin
Need Help Finding Home Owner's
Insurance:
Check out the resources below to
find home owner's insurance coverage in Texas
Helpinsure.com
Texas
Department of Insurance
(Complaints can be filed here)
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