I am quite behind in blogging.  I had intended to write a lot in my days off, but they were spent trying to find work for my employees while we had no power, not internet, and no significant business as everyone trys to figure out their personal losses.  I have several articals in my head and I hope to get them out here on the web in the next couple of days.

As we all get online lets hear your storm stories in our sphere of construction and real estate.  Good or bad feel free to comment on this post and share your experiences.

I was consulting with a builder on a house today and ran into a problem I frequently see with stucco installations at windows in the Houston area.  Often builders here install house wrap during construction and then later install felt underlayment and consider the felt as the primary moisture barrier.Unfortunately they improperly flash the windows to the house wrap with their sill flashing tape leaving no way to flash the felt underlayment of the final stucco installation at the window sills because the sill tape is already stuck to the house wrap.  Because the initial house wrap is exposed during construction it often receives significant damage and cannot reasonably be expected to perform properly.  This becomes a serious issue where windows are improperly installed at locations such as over roof flashings or at second floor windows where water entry at the sill is more likely to find an entry path down the wall.

Some great resources for learning flashing at windows are:

Journal of Light Construction August 2008

Journal of Light Construction June 2005

These resources are not expensive and worth the read.

Cosmetic - Related only to appearance or aesthetics, and not related to structural performance, operability, or water penetration

A definition should be concise.

Cosmetic - Related only to appearance or aesthetics, and not related to structural performance, operability, or water penetration

The current definition causes improper interpretations to be made.

“not related to structural performance” means:

1. All cracks in concrete are not cosmetic.

2. All drywall compression and cracks, regardless of size are not cosmetic.

3. All shrinkage cracks in wood are not cosmetic

Operability is not cosmetic but it is not required in the definition. Webster’s does not define terms with inverse exemplars.

Water penetration - the definition commingles cause and effect and causes confusion.

Water penetration is broken down into cause and effect.

Cause - a roof leak

Effect

1. A stain on the drywall ceiling

2. A stain on the carpet

3. Warped wood floors

4. Stained vinyl floor

5. Decayed wood paneling

6. Stained wood paneling.

7. Stained drapes

Which of the above are cosmetic? They all relate to water penetration therefore they are all not cosmetic.

The definition causes problems with other conditions that have cause and effect considerations. For example smoke stains. A smoke stain is cosmetic, but more importantly, what was the cause of the smoke stain? Here are some examples:

1. A family of heavy smokers lived in the home. The interior is stained with smoke.

2. The home had a gas oven and over 40 years the walls yellowed from combustion by-products.

3. A fireplace has a soot stains above the firebox.

4. An oven has soot and heat stains above the oven door.

5. A plug in transformer has stained the wall above.

6. The home had an attic fire.

Are the above cosmetic? According to the proposed standards they are all cosmetic.

This is one example of poor editorial work in the proposed standards. It is obvious the Inspector Committee has little technical writing experience and that is not expected. The Inspector Committee serves in an advisory role. It is their job to provide advice to TREC and it is TREC that has the editorial responsibility for the Standards. TREC has many lawyers who are masters of the written word but I do not see their efforts in this document. Interestingly, a rule with circular references and ambiguity can actually serve a legal enforcement department better. Perhaps the authoring errors are being intentionally ignored!

When the final SoP is passed it will not be the work of the Inspector Committee but rather the work of TREC staff with an endorsement by the Commissioners. This poorly written document belongs to the Commissioners and the problems it causes will a part of their legacy.

www.PrismRCA.com will address SoP problems.

John Cahill (not a technical writer)

But don’t worry, we’re not going to put you through that in this article.

Instead, we’ll put all politics aside and share with you two extremely important provisions of this landmark legislation that everyone looking to buy or sell a home in the next year needs to know about: 1) the elimination of seller-funded down payment assistance programs, and 2) the new $7,500 tax credit for first-time home buyers. Unlike the other measures of the bill, these two provisions actually create some great opportunities for informed home buyers and sellers who act now.

First, let’s discuss the bill’s provision to ban seller-funded down payment assistance programs or DPAs beginning in October. Why does it matter? And why should you care?

The Elimination of DPAs
For most home buyers today, especially first-time buyers, saving up enough money for a down payment can be challenging to say the least. DPAs solve this problem by allowing a seller to contribute money to a down payment assistance company, a third party which then provides a legal grant to the home buyer. For FHA mortgages, which required as little as 3% down, this program has been very popular in the past - an estimated two-thirds of all FHA loans utilized these programs. Since 2000, that’s nearly 900,000 families! Without this program, many buyers qualified to buy a home today will not be able to qualify without the required down payment for FHA loans (which is increasing to 3.5% under the new law.)

This is not just bad news for buyers. Sellers also benefit from DPAs. Not only do DPAs create a larger pool of potential qualified home buyers, they also create attractive financing options for the seller that do not require lowering the price of the home again, which is extremely valuable in today’s real estate market.

With this in mind, if you or anyone you know is looking to utilize down payment assistance as a tool to buy or sell a home, now is the time to act. Even though the elimination of DPAs doesn’t go into effect until October 1st, many lenders have already stopped or will no longer offer these programs prior to the October deadline, so don’t wait. You may have heard that a new bill was already introduced in the House to overturn this provision, but don’t count on that happening. With today’s combination of low prices and low interest rates, now is the time to take advantage of this program before it goes away for good.

New Tax Credit for First-Time Buyers
The second important provision of the new housing bill we’ll discuss in this article is the new $7,500 tax credit for first-time home buyers. And while this is one of the most talked about measures in the new bill, it is also the most misunderstood.

Basically, the government has created a monetary incentive, a tax credit for first-time home buyers, as a tool to stimulate the housing market. The tax credit will be 10% of the purchase price of a home, up to a maximum of $7,500. That means if the home costs more than $75,000, first-time home buyers (anyone who hasn’t owned a home in the last three years) will received the full $7,500 tax credit.

This is not a new idea. The government offered a similar program in the 1970s, but with one major difference: the new tax credit will have to be paid back over a period of 15 years, beginning two years after the credit is taken. In essence, the government is providing first time home buyers an interest-free loan to help them buy a home! If the home owner happens to sell the home before the 15 years is up, the remaining credit is due upon sale from the profit of the home sale. However, and here’s the best part, if there is insufficient profit, after the sale of the home, then the remaining credit due is forgiven. You really have nothing to lose.

There are, of course, income limits to qualify for this incentive, but give us call and we’ll see if you can take advantage. With this new tax credit and down payment assistance, you are finally in the driver’s seat in a buyer’s market with some of the best interest rates we’ve seen in years.

As Distributed by Steve Kyles: -

• If you intend on following your inspector, or simply looking into concerns on your own, be sure to wear appropriate clothing. Comfortable shoes and clothing you might wear when working outdoors is normally considered appropriate. Be prepared to get a little dirty if you really want to see the good stuff.
• Bring a flashlight and a writing pad to take notes. While some inspectors may provide you a written report on site, many inspectors who write more narrative and detailed reports may not issue the report until later. It is good to keep notes of items you discuss so you can consider them later and until the report is issued.
• Bring your own flashlight, tape measure, and camera. These are valuable tools to help you keep your own notes and records during the inspection.
• Don’t assume that you can just show up at the end of your inspection period and pay the inspector and get all the information you need to make an informed decision. Many inspectors book more than one inspection a day and may not be able to go back and show you everything of significance they found during your inspection. Be sure to leave sufficient time for attending the inspection so that you are available if the inspector needs to discuss observations as they are made. The amount of time an inspector spends on an inspection will vary by the inspection company and will depend upon the number of inspectors present and the methodology used to evaluate the different aspects of the building. Ask your inspector how long they will be on site so you can plan to be there.
• Be sure that your agent arranges the date, time, and duration of the inspection with the seller’s agent and the occupants or owners. Do not assume this has been done. If the time necessary for an inspection is not scheduled, you may not have access to the building.
• Be sure to arrange for access to the property being inspected. Some inspectors may be able to obtain access; however, this is not typical. Your Realtor or the seller’s agent should normally provide access and then secure the property when the inspection is finished. Many inspectors are reluctant to take the responsibility for opening and securing property, and this is typically considered the responsibility of the agents.
• If the home is vacant, be sure your agent checks to see that all the utilities are on and that the equipment in the building has been checked to ensure it is foundational and generally operating. In older buildings, this would require ensuring that the pilots for equipment have been lit and are functional. In the winter, inspecting a building may result in a loss of the winterizing normally performed on vacant property and will require this be re-performed at the expense of the seller.
• Ask occupants to make all areas of the home accessible by moving or storing items that may restrict visibility or access. Most inspections are visual, and if you cannot see it, then it will not be evaluated. Specifically, this will require access to all mechanical equipment, bathroom fixtures, electrical panel boxes, and attic accesses.
• Have a copy of the Seller’s Disclosures and any additional information of interest related to the disclosure ready for review by the inspector. This may include things such as foundation repair diagrams or recent service information for items related to the building.
• Be sure to give your inspector at least 24 hours notice if you need to cancel an inspection. Some inspection companies may charge for cancellations without such notice to cover the time which cannot be filled because you did not cancel with enough notice.

Implementing these suggestions will result in you getting the best information so you can use it effectively in making an informed decision.

Below is the TREC Commission Meeting Agenda that is to be held next Monday, August 18^th, 2008 in Austin. As you can see from the topics shown in red, there are many topics that will be discussed that can have effects on Texas Inspectors. If you would like to and are able to attend, please mark your calendar for this meeting.

AGENDA FOR TEXAS REAL ESTATE COMMISSION (TREC)

INSPECTOR ADVISORY COMMITTEE MEETING

Conference Room 235, TREC Headquarters Office

1101 Camino La Costa, Austin, Texas

Monday, August 18, 2008, at 9:00 a.m.

Attend the Texas Real Estate Commission meeting, including possible discussion of:

a. 22 TAC §535.222 concerning Inspection Reports

b. 22 TAC §535.223 concerning Standard Inspection Report Form

c. new 22 TAC §§535.227-535.233 concerning Standards of Practice for Inspectors

d. 22 TAC §535.210 concerning Home Inspector Fees (probably license fees)

e. Discussion and possible action to adopt amendments or take other action on 22 TAC §535.208

concerning Application for a License (Certificate of Insurance for Home Inspectors)

f. Discussion regarding comments received on review of 22 TAC Chapter 535 General Provisions

(§§535.91-.403)

g. Discussion regarding revised form OP-I, Texas Real Estate Consumer Notice Concerning Hazards or

Deficiencies

h. Legislative Appropriations Request for FY 2010-2011

• Foundation- Inspection required prior to placement of concrete.
• TopOut - A framing and mechanical systems inspection before placement of insulation and drywall, also know as a pre-cover inspection.
• Final- Inspection performed when construction is considered substantially completed and prior to occupancy.

Builders and remodelers must hire qualified fee inspectors to conduct the inspections. To serve as a registered fee inspector an inspector must be one of the following:

• A professional engineer licensed by the Texas Board of Professional Engineers.
• An architect registered with the Texas Board of Architectural Examiners.
• A professional inspector licensed by the Texas Real Estate Commission
• A third party inspector registered with the Texas Residential Construction Commission.

Currently you may register online with the TRCC. The online system is intended to allow builders and remodelers to find registered inspectors. Currently, it is the responsibility of the builders to hire fee inspectors registered with the TRCC.

This new program could result in better construction quality in Texas; however, under its current requirements, I have concerns it will not significantly improve conditions. Based upon a review of the FAQ section of the TRCC County Inspection Program, the TRCC indicates there will be no auditing of inspectors to determine their qualifications or competence. Auditing may be performed on builders, and if inspectors are found to be applying code improperly, they can loose their registration with the TRCC. This is a one-sided audit because inspectors are not required to send failing reports to the TRCC, so there will be no investigation of builders who do not meet code on a regular basis as determined by code inspectors. This means there is likely to be no record the building was inspected if it does not pass inspection. Further, based upon information in the FAQ section of the TRCC web site, builders may hire inspectors to perform re-inspections. This will allow builders to “inspector shop” without any penalty to the builder until the builder finds an inspector who will issue a passing report to the TRCC. I suspect this will cut out any work for inspection contractors providing high quality inspections which require strict code compliance since they will slow construction until the builder complies. Further, there appears to be no recourse for an owner to contact the TRCC with concern in this process.

Another concern is the qualification of the inspectors. The requirements to register and perform these inspections do not include any specific requirement to be certified with the International Code Council (ICC) who publish the code the builders and remodelers are required to follow. The ICC provides certifications for inspectors performing municipal inspections, and it is normally a requirement to hold such a position since it should result in more uniform practice, although some may debate this. There is concern in the inspection and construction community that this will result in a lack of uniform inspection practices, especially when comparing municipal inspectors against county fee inspectors.

I hope that the County Inspection Program is open for improvement. I think that if the reporting requirements and retained documentation for a structure were more stringent, it would have a more significant impact; however, it would also be less palatable to builders.

Earlier in the week, the Personal Consumption Expenditure data indicated that inflation climbed 0.8% overall in June, which is the highest inflation jump in 27 years. In addition, the report indicated that inflation now sits at 2.3%-above the Fed’s desired range of 1-2%.

Although the Fed ultimately left interest rates unchanged, inflation obviously remains a concern and the recent rise may lead to an interest rate hike by the Fed in the near future.

What Does This Mean to You?
Many experts believe the housing market is nearing the bottom and may even be set to bounce back up. For now, home prices remain low, personal incomes are high, and interest rates are still very attractive.

If you’ve been weighing your options and waiting to see how things shake out, this is the ideal time to act-especially when you consider the new Housing and Economic Recovery Act benefits for home buyers:

Tax credits. First-time home buyers who purchase their primary residence between April 9, 2008 and July 1, 2009 are eligible for up to $7,500 in tax credit, as long as they haven’t owned a home in the last three years. The credit is actually a generous interest-free loan, so we’ll have to talk about some income parameters and payback terms. But if you’re a new home buyer - or know someone who is renting or in the market to buy - this is a huge benefit that we should discuss.

Lower rates for larger loans. In the past, mortgages of $417,000 or more have been considered “jumbo” loans that were more expensive to finance. Thanks to recent provisions, however, those jumbo loans were able to qualify for better financing rates in some parts of the country. Although those provisions were set to expire, they are being extended-with a minor change to the maximum amount eligible. This is great news that may save you a ton of cash, so call me to find out how this impacts our area, and if it could help you.

Down Payment Assistance…going, going, not gone yet. Another provision of the legislation eliminates some down payment assistance programs later this year…but they are still available right now, and depending on your circumstances, we may be able to take advantage of them to double your benefit as a home buyer.

Bottom line…now may be the ideal time to put together a purchase strategy based on your unique situation.

As Distributed by Steve Kyles