Sewer Inspections More Common

Yes, another inspection has made its way onto the “common” list for home sales, the sewer. Costing $180-200, a plumber or sewer company inserts a flexible probe with a camera and light at the end, and records a video of the sewer interior from the main drain pipe, or stack, dropping under the basement slab out to the main trunk line, typically under the street. This can be anywhere from 30 feet to 100 feet or more of sewer on the property that is owned and maintained by the homeowner. The operator voices over the video being made, noting what he sees – pipe composition of cast iron, clay, or PVC; location of clean out; tree roots, and cracks or breaks in the line. He also will record whether he believes repairs are needed, any maintenance to be performed, approximate area under house or in the yard where the issue is, or that all appears to be normal. Sometimes tree roots block the camera, and need to be cleared out before the inspection can be finished. The video will last several minutes, and is sent by link in an email, along with printed comments. The first time you view one of these can make you a bit queasy, I still am! Surprisingly, though, they are relatively clean as they run a lot of water thru before running the camera in.

Here is the main problem arising from these inspections: Cracked lines that are not posing a problem (I am told cracks in clay pipe are not a defect, while cracks in cast iron are), and bows or dips in the line that are not causing a problem. The buyer views these as a potential, if not imminent issue, while the seller sees it as a condition that may last many years before becoming a “real” problem, if ever. Besides, the lateral sewer insurance programs that most municipalities and Counties offer will not kick in until there is a backup. So the seller reasons that (1) a cracked line will not obstruct the flow – no insurance claim – I have to pay for it myself, which can cost several thousand dollars to dig up the area and repair the section, which is not currently causing a problem, and may never. (2) If it gets to the point of obstruction and backing up, (and it is not just tree roots) let the insurance cover the repair at that point. On the other hand, the buyer reasons that (1) they don’t want to deal with a backup with their stuff in the basement, or having the basement or yard torn up, plus having to pay the deductible (usually $500); and (2) problems under the house itself are not covered by the insurance programs, only sections from the foundation out to the trunk line.

Who is right? When this began a few years ago, the seller won this debate most of the time, and possibly paid a credit to the buyer for any future repairs. Nowadays, if the issue is under the house itself, the buyer is getting the repair paid by seller more often, and if out in the yard not so much, although partial seller credits are still fairly common either way. It comes down to how much the buyer wants the house, and if the seller thinks they can sell it to the next buyer while disclosing the issue and not having to do it for them, plus all the other stuff that goes with terminating a contract and dealing with other repairs on the list. Note that condo buyers are not getting this inspection done, as the general rule is once the drain goes into the wall or under the floor, it is an Association responsibility. On villas, check the Association documents to see who is responsible for the sewer line. Also, newer homes are less likely to have this performed as sewer pipes are designed to last many years.

Here’s to clean pipes!

Do Mortgage Rates Interest You?

With over 60% of the public owning their own home, and a high percentage of the rest stating a desire to, the interest rates on mortgages should keep your interest. With the holidays, cold weather, Super Bowl and stock market plunge, it was easy to miss the upward creep of mortgage rates the last 4 weeks. Pretty much everyone has been warning of rising rates for many years now, as they have remained historically low since 2008 or so. That’s 10 years of ultra low rates. 10 years of homeowners locking in low rates. Will this be the year they truly rise? No one knows for certain, but when they do, lots of people will kick themselves for not buying or refinancing sooner.

Whether a first time buyer, a move-up buyer, relocation buyer, downsizing buyer, sideways buyer for different area; or those refinancing from a rising adjustable rate to a fixed, getting rid of Private Mortgage Insurance, have better credit now, consolidating loans, or just haven’t gotten around to it in 10 years. All of these situations may call for a new home loan, and the interest rate can affect your decision of when and how much, especially when buying. In addition, most every year, the fastest home price appreciation happens from March to June, when the highest number of buyers are writing offers, and I expect this year to be the same. Lately, it has averaged a half to one percent price rise per month for those 4 months. If rates stay the same or drop back, you don’t lose as much, but if they go up, you may lose twice. **One instance where it may pay to wait 3 or 4 months – if you need a high appraisal to hit that 20% equity number on a refinance to eliminate PMI, it will help to have the higher spring sale prices closed for the appraiser to use.

Today, a fixed 30 year mortgage is running around 4.25% with no points. A month ago they were 3.87%. You can lower that rate with a shorter term loan of 20, 15 or even 10 years by a half percent or more to lock in the 3s. This makes a lot of sense when refinancing a loan that has less than 20 years left on it, as your payment should be similar if not less, you still pay off at the same time (not go back to a 30 year schedule), and you can get a lower rate on the shorter term loan. Pay it down faster and build your equity!

This is The Home Equity Coach talking — it is early February, buy in the next 6 weeks and ride the price wave. If you have a home to sell, put it on the market after you buy or even move and get the best of both worlds! Plus locking in a still-low interest rate? Practically money in the bank. If you cannot do this financially, I will walk you thru your still-good options. Now contact me and let’s get to work!