10 Most Common Home Inspection Repairs

Home Inspections are SO important during the home buying process.  There are so many potential problems any homebuyer can avoid by simply doing a walk-through along with your home inspector to learn about a home's strengths and possible downfalls.  Professionals know things like how soon you might have to replace the water heater, or if a deck is structurally sound.  For most people, it's easy to spot eyesores and tell they need to be fixed, but do you know what the electrical wiring is supposed to look like in the attic?  Probably not.  It's important to hire a well-trusted and recommended professional to do your home inspection.  Look for some form of certification or licensure (the state of Virginia does not require a home inspector to be certified...yet!) which is a good sign of a high quality professional.

Top 10 Home Inspection Repairs
By D. Macklin, Allied Home Inspection School

Throughout your home inspection career, you’ll come across a variety of home inspection repairs ranging from minor to frightening. Here’s a compilation of repairs you’re most likely to become intimately acquainted with:

1. Defective Wiring 
From older homes with outdated wiring to remodeled homes with insufficient wiring, poor electrical systems are potentially hazardous  Today, it’s not unusual to find homes with several computers and other high-tech electronics vying for electricity, so pay special attention to even the slightest wiring problems.

2. Faulty Drainage 
Poor drainage is one of the most common problems found by home inspectors. If water is draining toward the home instead of away, your clients will need to remedy the situation right away.

3. Subtle Structural Damage 
Subtle structural damage means a home is intact and livable, but has a problem that could potentially become worse. For example, if the home is plagued by poor drainage, the foundation may fall victim to water seepage.

4. Plumbing Challenges
Just like outdated wiring is a problem in older homes, so are old plumbing pipes.  If the pipes aren’t copper, current or future problems are likely.  Another common problem is the use of incompatible piping materials.

5. Poor Ventilation
Inadequate ventilation can lead to unwanted moisture that attacks interior walls and other vulnerable structures. This is especially true in rooms with no windows, like interior bathrooms.  If untreated, the home may become mold ridden and intensify allergies.

6. Leaky Roof 
Old or damaged shingles can cause water damage.  Make sure to note on the home inspection report whether it’s an isolated problem, or if the entire roof should be replaced.

7. Old Heating Systems 
Old heating systems can pose potential health and safety hazards. Older or improperly maintained heating systems may emit harmful amounts of carbon monoxide.

8. Environmental Hazards
Common hazards include asbestos, lead-based paints, radon, formaldehyde and contaminated drinking water.  Harmful hazards are immediate red flags and a client should be advised of the situation immediately.

9. Home Negligence 
Some repairs are small, but worth reporting, like peeling paint and broken hardware.  Although these repairs aren’t as serious as those posing health risks, they still fall under a home inspector’s scope of work.

10. Unwanted Water and Air
Excessive water or air inside the home may be caused by poor caulking or weather stripping. This is a typically simple repair that will save your clients from potential water damage and help lower heating and cooling costs.

You can find the original article on National Association of Certified Home Inspectors website, nachi.org

Virginia Historic Tax Credits for Your Home Investment

There are still so many great opportunities to invest in historic properties in Downtown Richmond and it’s surrounding ‘Hills,’ including one of my favorites, Church Hill.  Many people who buy a home in hopes to renovate it, aren’t aware of the many resources available to them as an incentive to restore the city’s historic value and subsequently enhancing local employment and community activity.  Direct from Virginia’s Department of Historic Resources is this great question and answer segment of what qualifies, how to get started and other general knowledge for your next investment!

What are the rehabilitation tax credits?

     The rehabilitation tax credits are dollar-for-dollar reductions in income tax liability for taxpayers who rehabilitate historic buildings.  Credits are available from both the federal government and the State of Virginia.

     The amount of the credit is based on total rehabilitation costs.  The federal credit is 20% of eligible rehabilitation expenses.  The state credit is 25% of eligible rehabilitation expenses.  In some cases, taxpayers can qualify under both programs, allowing them to claim credits of 45% of their eligible rehabilitation expenses.

What buildings qualify for the tax credit program?

The credits described above are available only for Certified Historic Structures, which are defined as follows:

Under the federal program, a certified historic structure is one that is either:

• Individually listed on the National Register of Historic Places, or
• Certified as contributing to a district that is listed

Under the state program, a certified historic structure is one that is:

• Individually listed on the Virginia Landmarks Register, or
• Certified as eligible for listing, or
• Certified as a contributing structure in a district that is so listed.

With a few exceptions, most Virginia properties are listed on both registers.  Note, however, that national and Virginia register historic districts may be different from locally designated historic districts.  Certification that a building contributes to a listed district, or for purposes of the state credit, is eligible for individual listing, is obtained only by submitting Part 1 of the tax credit application.

How much money do I have to spend?

     Under the federal program, the project must be a “substantial rehabilitation” to qualify the Investor for the credit.  The Internal Revenue Service defines “substantial” as exceeding the owner’s adjusted basis in the building or $5,000, whichever is greater.

     The adjusted basis is generally defined as the purchase price, minus the value of the land, minus any depreciation already claimed, plus the value of any earlier capital improvements.

     The threshold requirements for the state program are different from the federal requirements.  In order to qualify for the state credit, the rehabilitation expenses must be:

• For owner-occupied structures, at least 25% of the assessed value of the buildings for local real estate tax purposes for the year before the rehabilitation work began.
• For all other eligible structures, at least 50% of the assessed value of the buildings for local real estate tax purposes for the year before rehabilitation work began.

How long do I have to complete the rehabilitation?

     The rehabilitation does not have to be completed within any particular period of time.  However, the “substantial rehabilitation” test (for the federal program) and the “material rehabilitation test (for the state program) must be met within a consecutive 24-month period that ends sometime during the year in which the credits are claimed.  Essentially, this means that for most projects the greatest expenditures must be made within a 2-year period.  For phased projects, the time limit is extended to 60 months.

When can I claim the credit?

     The credit is claimed in the year the rehabilitation is completed.  If you cannot use up the full amount of the credit in the first year, it can be carried forward.  The federal credit may be carried forward for up to 20 years, and back for one year.  The state credit may be carried forward for up to 10 years.  There is no carry back for the state credit.

Can I sell the building after I complete the rehabilitation?

     Under the federal program, if the building is disposed of, or if it loses its income producing status, within five years after the rehabilitation is completed, the taxpayer will face recapture of the credit.  The amount of recapture is reduced by 20% in each succeeding year after the year the rehabilitation is completed— in other words, if the building is sold after one year, there will be recapture of 80% of the credit, if it is sold after two years, there will be recapture of 60% of the credit, and so forth.  

How do I apply for the credit?

     Applying for the credit is a three-part process.  Part 1 requests certification that the building is historic— i.e. eligible for the program.  For properties that are individually listed, Part 1 is not necessary.  For all other properties— i.e. those seeking certification that they are contributing structures in a listed historic district of individually eligible for listing— a Part 1 is required.  Photographs showing the property in its pre-rehabilitation state must be submitted with Part 1.

     Part 2 requests certification that the proposed rehabilitation work appears to be consistent with the Secretary’s Standards.  Part 2 is the most complex part of the application.  It requires a description of each signification architectural feature of the property and how it will be treated in the rehabilitation.  Many property owners choose to complete Part 2 themselves using the department’s Sample Rehabilitation Proposal as a guide.  Others hire a professional consultant to assist them.  A list of consultants is available from the department upon request.  Additional photographs of the property are sometimes necessary to document Part 2.

     Part 3 requests certification that the complete work is consistent with the Secretary’s Standards.  Photographs showing the completed work must accompany Part 3.  For the state credit, if the eligible expenses exceed $100,000, a CPA certification is also required.

For more information on how the rehabilitation tax credits can benefit you, visit http://www.dhr.virginia.gov/.

Good Investment, Bad Investment

     Some people want to buy a house that is already perfect for them, meets all their needs and they don’t have to do anything at all to improve it besides paint a wall or two.  But for most people, the best quality in a home is potential.  They’d like to mold it into something spectacular in hopes their investment will bring them a sparkling return.  That’s making money work for you.  However, some people get side stepped into thinking any old improvement will get their money back, but it is not so. I’ve put together a few suggestions based on what will maximize return and what will not.  

Good Investment— Kitchens

     This is an area of the home that improving will always come out to your benefit.  Kitchen styles are constantly changing, appliances are always improving.  Compromising between your personal design aesthetic and what will appeal to buyers may give you a guideline when making fixture, appliance, cabinet and countertop decisions.  This type of remodel can span a small to large budget. Just remember that the crazier you go, the less likely you’ll get all of your money back.  If you do decide to go all the way, make it exactly how you want it, because it’s just for you.

Bad Investment— Playrooms. 

      This is a lifestyle decision.  If you have school age children and know you will be staying put for a while, adding a climbing wall or a princess castle will bring hours of entertainment and ignite your child’s imagination.  However, there is no telling if a potential buyer will feel similarly even if they have children, too.  Some might see the space as an office, a home theatre, a place to watch the Super Bowl.  This kind of improvement will most likely have to be undone when you want to sell.  Keeping that in mind can help you decide how permanent you'd like to make that transformation.

Good Investment— Additions. 

     Adding more space to live comfortably and entertain is always a great idea for your home both functionally and for your investment.  It increases square footage and potential in the eyes of a future buyer.  It can tend to be a large expense because of demolition costs, new foundation and additional roofing, so make sure you do it right.

Bad Investment— Small additions. 

     DO NOT just add a few square feet to your home to nudge out a little more space for a bathroom, or to bump out a bedroom.  You will not get your money back, and you will accumulate similar costs as a full-size addition.  You’ll still have to break down walls and lay additional foundation for space that will unlikely recover the cost.

Good Investment— Curb appeal.

      The outside of your home is one of the only ways to attract potential buyers initially.  The exterior is the first thing buyers see when shopping around.  It’s affordable and when done correctly could help you save money on heating a cooling.  Working with what you already have is a good jumping off point, like trimming hedges, mulching, etc.  Or, if your landscaping is already pristine, a fresh coat of paint for your entryway, shutters, or siding, can seriously give your home a facelift.

Bad Investment— Removing features.

     If thinking of investments solely, do not remove features that may prove valuable to potential buyers.  Even if you know you will never use the fireplace, another buyer might see it as a main attraction.

     Other high return renovations to think about are master suites and bathroom updates.  Other poor return investments, but lifestyle improvements are things that cater to your personal interests.  Pools or wine rooms come to mind.

     By all means, make upgrades on your home that will enhance quality of life rather than just focusing on the money, especially if you have growing children and plan on staying there for a while. Just bear in mind that some of those changes may have to be undone when it comes time to put your house on the market competitively. 

8 Expensive Home Repairs and How to Avoid Them

    The most popular rule of thumb to save for home maintenance is 1% of the total cost of your house, annually.  That means if your home is worth $350,000, you’ll likely spend on average $3,500 a year on upkeep.  Obviously certain years you’ll spend more than others, for instance, the year you install new roofing.  Other years you’ll spend substantially less.  You can invest in a home warranty that will cover some repairs, but likely not all of them.   Some of the more expensive repairs can be avoided by simple maintenance.  Here are some of the best ways to avoid giant home repair bills and get the most out of homeownership.

1. Foundation Repairs

   Just a few hours of clearing your gutters could potentially save you thousands of dollars on foundation repairs.  Managing water flow around your household is essential to avoiding basement leaks, foundation breaks and driveway cracks.  Make sure your gutters are clear and water is being directed away from the foundation with no standing water.  Creating a gradual slope away from your house with soil is one way to achieve this.  A simple investment in gutter extensions could also do the trick.

2. Roofing

     Water damage including rotting and leaking can affect your home’s roof as well.  Regular maintenance can help you avoid costly repairs.  For just a few hundred dollars, shingles and spotty areas are easy enough to fix right away rather than letting the damages amount to a few thousand dollars.  Check the condition of your roof every fall and spring when you’re cleaning the gutters.  Check the Flashing, the seal around exhaust vents and chimneys to make sure they are still watertight.  Check the roof of your attic for signs of water damage or discoloration. 

3. Water/Sewer Pipe Replacement     

     Replacing water or sewer pipes won’t necessarily cost you an arm or a leg, but the flooding and excavation of your yard (or worse, the driveway!) will cost you a pretty penny.  If you live in an older property, it might be wise to invest in water and sewer line insurance.  Check with your utility company if you plan on digging for any landscaping or home improvement projects.  You can also have your lines inspected annually for leaks or cracks.

4. HVAC

     Not only are the units themselves expensive, professional installation can potentially double the price.  The best way to prevent your furnace or air conditioner dying on you is to schedule maintenance every 6 months or so.  Similar to having a regular car tune up, having a professional run through a maintenance checklist will extend the life of your unit.  You can also replace the air filter every 90 days to improve air quality and function.  

5. Wooden Deck Replacement

     In this case, it’s absolutely true that an ounce of prevention is worth a pound of cure.  Instead of letting your deck fall prey to rot or severe weathering, use one weekend a year to give it a good scrubbing and re-stain.  Check for soft spots in the wood, particularly around the supports and joists below.  If a screwdriver can penetrate the wood more than 1/4 of an inch, that’s a good indicator you have rot.

6. Driveway Repair

     Your driveway endures a lot.  The weight of your car, water, snow, and ice.  If left unprotected it can easily crumble away.  Getting a brand new driveway can be a hefty bill, but so is the removal of the old one.  This is why it’s important to seal your driveway against the elements.  In hot dry weather, washing your driveway with warm water and a mild detergent will do the trick.  Next apply a sealant specifically meant for driveways.  Follow the directions for whichever sealant you purchase from your local home store.

7. Fire or Smoke Damage

     Maintaining your fireplace and chimney will prevent any fires caused by clogged systems.  Have a chimney sweep inspect your beloved winter heat source.  When you open the flue, you should be able to see daylight.  If not, the particles clogging your fireplace are highly flammable and could potentially turn into a chimney fire.

8. Fallen Trees

     Any giant trees close to your house could cause potential damage if their structure is weakened by disease or broken limbs.  Have a professional tree service inspect that giant oak to prune any limbs that could potentially fall in strong winds or heavy snows.  Trees can do a lot of damage to your house or car that you don’t want to pay out of pocket for.

With regular upkeep, you can prevent daunting repair surprises.  Avoiding them means more control over what you spend and save for such repairs.  Knowing you’ll have to make a major repair in a couple years gives you time to plan, save and shop around.