Great Call Award

This is a good time to recognize my husband, Keith, for the excellent work he does for the largest bank in the world as a Financial Advisor.  He recently received a Certificate of Excellence in recognition of an exemplary call servicing customers.  With it came an inter-office communication of High Importance from a Quality Analyst to upper management with the details.  In the eleven years Keith has worked for this bank, he does not recall anyone in any of the departments he worked in ever getting such a high award.  Good job, Keith!  I am so proud of you!

The End of an ERA - RCA Out; LG IN

Our beloved 28-year-old RCA Stereo TV console has been replaced.  It is the end of an era and the beginning of something new…again!

1986 was the year we moved into our present home.  We had brought with us a 12" black and white TV with rabbit ear antenna that was our only TV for the previous seven years on our rural 50 acres and got two channels.  Shortly after we moved into our new home in town, we entered a contest to win a new TV console that was being given away to celebrate that Springfield Channel 10 was going "stereo" in their broadcast and this TV was the first to have the capabilities to use this new technology.  The deal was to count how many times the weatherman said "weather" on his nightly broadcast for a couple weeks.  So the family was all together at this dinner hour broadcast and we all counted and the entrees were sent in great numbers frequently.  The winner would be the closest number of days counted correctly.  We were so happy when Keith's name was announced as the winner!

Our neighbor, Clifford, worked at the local Chapman's Furniture store downtown and he got to deliver the console to our home after it was arranged by the TV station.  This was the biggest thing Keith had ever won and it sure got us up to date with our viewing!  Soon after, videos became available to rent and then we got a VCR.  We upgraded our outside TV antenna with a booster and was able to get six channels for free which was plenty for us along with the VCR; a big improvement from what we had on the farm!  That satisfied us well until our children were old enough to have developed good study habits and as a reward, we added another TV downstairs that included a Nintendo for gaming.  This was well after all their friends had one and not until they proved they could put their studies first.  This lasted all through the 1990's and when cable and satellite became available in our area, we declined as we had better ways to spend our money and enough entertainment which included mostly outdoor activities especially as the whole family got involved in scouting.  The children left home 1999 and 2000.  I began to travel much more especially with my job and Keith started a new career after getting a college degree.  TV was not so important and what we had was good enough for no more than we used it during the 2000's.

The only changes for the next decade was an increase in channels available for free especially when government changes mandated that all broadcasts were to be digital.  We got our two free converter boxes like everyone else in the country that hadn't updated their TVs.  We now had nine channels and new programming available; all free with our outside antenna and booster.  As of January 2014, we have 11 channels available and understand that there can be more in the future.  We had purchased a couple new small Smart LG TVs since 2011 and have been streaming movies through Netflix and Amazon for a few years now using the Internet and Wii.  The Wii system Keith had got free from saving points at his work; what a winner!  Finally, we have replaced the RCA console with a large Smart LG TV for Valentine's Day this year.  It is time.

Keith moves out our old family friend for 28 years - goodbye RCA!  

Not quite 'kicked to the curb' but out in the cold until the city picks it up during spring clean-up.  Not a bad run for being free!   Thanks for the memories, RCA, you had your day!

Environmental Issues for Appraisers

Winter 2014 is a good opportunity to complete Continuing Education (CE) requirements because as a General Certified Appraiser, I need 28 hours to keep my license which is renewed every two years by June 30th.  I understand that I have the option of going inactive since I retired and am not seeking employment.  The only benefit to the inactive status is that I could save $250 on the license fee which is normally $300 to be active.  I could also skip the 28 hours CE for one cycle but recently found out that I would have to take ALL skipped CE if and when I should decide to work in the appraisal field again.  If I went more than one cycle, the State of Missouri would void my license and I would have to have extensive additional education according to requirements for new applicants and apply all over again.  Not worth going inactive status until I am absolutely sure I don't want to work anymore.  I worked very hard to get where I am and as long as I am interested in the subject, I will keep it going.  I also have to keep my files available for 5-7 years so I will re-visit the option of going to inactive status no sooner than 2016-2017, the next cycle.

I have chosen McKissock as my online source for education as I had good experience the last cycle when I needed 8 hours of Uniform Standards of Appraisal Practice (USPAP). I had gotten 20 hours while I was still employed by the state at the state's expense.  I will be taking the updated version of this required class soon.  I like that McKissock offers interesting subjects and an option to pay $499.99 for an unlimited all-access pass that will not only have choices for minimum hours required, but allows the appraiser to go over the required CE hours at no extra cost.  So far I have chosen four CE courses that total 23 hours.  I will wait until I have completed those and then see what else interests me before the final completion date of June 30, 2014.  I have completed two CE courses to date and will blog about some things I found interesting enough to share.  They are Environmental Issues for Appraisers and Essential Elements of Disclosures and Disclaimers.

The first chapter is all about Radon, Mold, and Lead.  In the Appraiser's Certification statement, Item 14, speaks to the limitations of the appraiser's ability to identify environmental hazards.  It is wise to advise the client to have suspected hazards tested.  The appraiser should always disclose what they see or suspect.  Research is done through comparable market sales if an environmental hazard or suspected hazard has an affect on the value of the property.  The market measures value by comparing a non-affected property with a similar property of known or suspected hazard.  Testing can be done to determine the dollar amount to correct the hazard problem or show that suspected hazard is nonexistent.

Radon - The Environmental Protection Agency recommends getting house tested when buying or selling; some lenders require it as well as some local health agencies.  There is no uniform state or national legislation dealing with the radon issue.  Beginning in 2004, HUD required release agreement for all FHA insured mortgages.  Reducing radon levels of at least $5000 cost can be financed through a 203(k) mortgage.

Radon is the second leading cause of cancer.  Nearly one in every 15 homes in the US is estimated to have an elevated radon level in the dangerous level.  All 50 states in the US have some presence of radon.  There may be heavy concentrations in one property and none next door.

The course goes into much detail about radon testing for professionals as well as the do-it-yourselfers.  Radon mitigation can lower radon levels for $800-$2500 (average cost $1200).  There are some simple steps that can be done such as stopping radon seeping in by fixing cracks, exposed soil, and around sump pumps.  Also providing better outdoor air ventilation with exhaust fans or mechanical air exchangers.  A pro-active fix would be trapping and detouring the radon before it even gets into the house by sub-slab suction which is basically drilling a hole in the basement floor, install 4" plastic pipe that runs through a wall or closet and up and out.  Cost to run a fan and any heat loss would be $100-$150/year.   In new construction, cost to install passive radon-resistant features run as low as $100 but typically range $350-$500.  Only about 1% of radon in the air comes from drinking water such as when showering and the particles become airborne.  Stomach cancer is rare from direct drinking unfiltered water with radon.

Mold - Most homeowner insurance policies specifically exclude mold as it is a natural occurring organism that helps sustain animal/plant life as well as parasitic relationships and consume their host.  Some can be toxic to some humans.  Symptoms range from itching eyes and runny noses to triggering asthma attacks and flu-like symptoms.  Most serious can cause neurological disorders, cancer, and death.  The key to controlling mold is to control moisture.  It also needs a food source of organic material and favorable temperature (40-100 degrees).  If any of these three ingredients were removed, the mold colony can simply become dormant up to 10 years.  Add back the missing ingredient, mold comes back to life.

Water-damaged areas must be dried within 24-48 hours to prevent mold growth.  Hard surfaces can be washed with detergent and water and dried completely.  Absorbent materials such as ceilings and carpet may have to be replaced.  All mold materials can be taken to a dump without special permit.  Construction practices since the 1970's led to tightly sealed buildings with inadequate ventilation.

Molds can be readily observed and usually smells.  Wherever there is likelihood of finding moisture, look for mold.

Lead - In it's natural state, lead is not a problem.  Once it has been processed there is no known way to dispose of it or render it harmless.  Lead is toxic and can accumulate in bones and soft tissues over time; many documented detrimental health issues especially in children. The older the home, the likelihood it has lead-based paint.   1978 is when lead-based paint was banned in the US.  In good condition, lead paint is not a hazard but the potential is there if it is disturbed such as in remodeling. Since EPA started Lead Awareness Program, lead blood levels in children have dropped to 310,000 in 2002 from beginning 13.5 million in 1978.  It works!  In 1992, Congress passed Title X, Sec 1018 which extensively regulates ratification of contracts for housing sale/lease by sellers and landlords to disclose lead, not test or repair any lead-based problems.  Appraisers know what to look for and will disclose all observations for potential lead-based issues.  EPA estimates about 64 million homes contain lead-based paint.

The second chapter goes into great detail about Asbestos, Underground Storage Tanks (USTs) and Above-Ground Storage Tanks (ASTs), Water Issues and Hydraulic Fracking, Superfunds and Brownfields, Indoor Air Quality, and Home Design & Building Techniques That Reduce Waste.

Asbestos - Most products today do not contain asbestos which is a natural occurring, fibrous silicate mineral mined for useful properties such as thermal insulation, chemical/thermal stability, and high tensile strength.  Microscopic fibers may become airborne when damaged or disturbed, inhaled into lungs and can cause significant health problems similar to radon lung problems.  Like radon, it may take 20-30 years after exposure for symptoms and is greater risk to smokers.  Until the 1970's many types of building products and insulation materials used in homes contained asbestos.  Houses built between 1930-1950 may have asbestos as insulation; textured paint and patching compounds were banned in 1977.  There is more information available on the EPA website to identify common products that may have contained asbestos in the past and guides about handling, testing, and legal aspects.   The best advice is to LEAVE IT ALONE.  If material break down or crumbles easily it is called "friable" and requires action.  Leave it to professionals using two separate firms:  testing/assessment and correction to avoid conflict of interest.   

Two types of correction include repair and removal.  Repair involves sealing or covering and is cheaper than removal but may make later removal more difficult, if necessary.  Removal is most expensive method and should be considered last option if it is required by state or local regulations.  Call the professionals if removal job is bigger than your hand.  Keep material wet to reduce likely airborne fibers.  Appraisers should always err on side of caution calling for additional inspections when suspect or may risk legal problems in future.

Underground Storage Tanks (USTs) - defined by EPA as having at least 10% of their combined volume underground.  Estimates are that about 25% of all USTs are leaking; commercial and home fuel oil.  Prior to mid-1980's, all USTs were made of bare steel which corrodes.  Tank removal must be under supervision of proper authorities, cleaned and disposed properly; very expensive.  Contaminated soil must be placed in drums and shipped to hazardous waste disposal site.  Some recent technology allows treatment with bacteria that eats up oil.  Permanent closure of site and record keeping for at least three years of actions taken after determination of contamination was positive is required by EPA.  Because of enormity of the problem, EPA delegated regulatory authority to approved state programs.  Only 29 states with approved UST programs submitted since 1988.  As of 9/30/2006 over 460,000 confirmed releases had been reported and more than 350,000 have been cleaned up.  There's about 113,000 UST sites remaining to be cleaned up.  Above-Ground Storage Tanks (ASTs) are also subject to both Federal and State/local regulations.

Water Issues and Hydraulic Fracturing ("Fracking") - this section breaks down how important water sources are and connects them to public and private use.  The definition and importance of wetlands is defined by the Clean Water Act Section 404.  The US loses about 60,000 acres of wetlands each year.  Wetlands are among the most productive ecosystems in the world similar to rain forests or coral reefs.  They help to moderate climate conditions by storing carbon instead of releasing carbon monoxide; also plants generate oxygen.  Often they are situated between upland and downstream outlets so serve as a settlement for contaminants.  See how Wetlands Work for Us at: Earthgauge

"Fracking" is used in the development of shale gas and coal bed methane.  Water used in process may be impaired and can be treated on-site and reused.  Excess return water may be piped/trucked to nearby municipal water treatment plants and can largely impact local treatment centers.  May impact water quality in rural areas more.  Public concerns range from welcoming the energy industry recognizing the energy need to NIMBY (not in my backyard) concerns of those citizens with limited exposure to oil, gas, or coal operations.

 The black circle with the toxic skull areas show "Fraccidents" or areas where fracking caused problems.  The brown areas show active and potential natural gas drilling and fracking.

Groundwater is protected by the EPA's Groundwater Rule since November 8, 2006 which provides increased protection against microbial pathogens in public water systems that use groundwater sources; especially fecal contamination.  Storm water, lakes, rivers, streams, oceans, coasts, estuaries, beaches and water rights are discussed in depth on their direct and indirect influence on property values.  Regulations have increased since the 1970's with a most recent presidential Executive Order 13547 that establishes the Nation's first comprehensive National Policy for stewardship of the ocean, our coasts, and the Great Lakes.  EPA is now in process of working with Federal, State, and tribal partners to coordinate efforts in implementing goals outlined in EO 13547.  

Appraisers should use the National Wetlands Inventory maps in the appraisal exhibits just like one would use a Flood Map.  Market-driven conclusion of value demands evidence on either side of the asset.  Highest and Best Use must be analyzed as well as potential mitigation.

Superfunds and Brownfields - EPA definition is any land in the US that has been contaminated by hazardous waste and identified by EPA as a candidate for cleanup because it poses a risk to human health and/or the environment.  Identification and prioritization are at the core of the Superfund program.  As of November 29, 2010, there are 1280 sites on the National Priorities List (NPL) and are in every state.  Extensive information is available about the process of identification and prioritization  through the EPA website.  Brownfields are sites that have suffered previous contamination.  The EPA estimates about 500,000 Brownfields nationwide; most common contaminant is petroleum. 

Indoor Air Quality - The air-tight construction of buildings since the oil/gas crisis in 1973 has produced buildings that couldn't "breathe" very well and trap moisture and/or irritants or hazards and become concentrated.  Many buildings were built with no windows or windows that don't open in climate controlled environments.  Some of the pollution sources found indoors include carbon monoxide, tobacco smoke, organic gases from household products, pesticides, volatile organic compounds (VOCs) such as formaldehyde which has many sources (new carpet, plywood, paneling, cabinets, draperies, etc).  That "new car smell" is formaldehyde.  Ventilation is important to dissipate.

Home Design & Building Techniques -  This section has mainly EPA suggestions for advanced and efficient framing techniques for new homes or additions that can be found on their website.  It includes designs for new homes that consider deconstruction/renovation using fewer materials to realize design for salvage materials and using fewer adhesives/sealants.  Basically, to maximize the value of a building's material while reducing environmental impacts; easier to rearrange, recover, and reuse.  I have previously completed a CE course on Green Buildings which you can see from this blog by using the "Search This Blog" tool on the right side of the main page or click on the Real Estate Issues Label and see more related issues.

The final chapter of this course goes into more appraisal specific issues mainly on environmental reporting.  This is the technical area relating to USPAP and government reporting forms for VA, FHA, Fannie Mae.  Sources for additional information are given.  The best and most useful website for specific environmental hazard locations using Geographic Information Systems (GIS) can be found at the EPA EnviroMapper. 

The second CE course I took was Essential Elements of Disclosure and Disclaimers.

Most of this I already knew as it is part of USPAP.  Here we get into exactly how the appraiser must comply and real world examples of reporting.  The best site to understand this importance is the Liability Insurance Administrators.  This is one big reason why it is not in my best interest to continue working in the appraisal field as an independent.  Although I have been a Limited Liability Company (LLC) since January 2003, the cost of the E&O insurance would be something I had never had to incur in the 30 years I had worked as a salaried  employee for the state.  They had me covered.  The level of liability has greatly increased in recent years as the regulations for lenders increased and the reporting requirements are practically insatiable for the appraiser.  Yet the price per appraisal has not increased much since the 1990's; $250 then to about $350 per residential appraisal now.  Also, I am seeing and hearing from peers that appraisers are expected to pay additional fees to lenders to be on their lists for work.  It is not worth it to me as a retired appraiser who worked during the best of times before a few bad appraisers and lenders messed it up for everyone with their dishonest practices that brought down the Savings & Loan Institutions in the 1980's and distorted the economy in the 1990's.  It all finally fell as corrections needed to be made by 2008; BAM!  We now need more regulation than ever to protect the consumer so it doesn't happen again and continuing education to keep up with all the changes.  

My primary experience has been as a Commercial Appraiser which includes all real estate that is not residential or agricultural although I have to know how to value all uses in order to break out the specific commercial use in mixed-use properties. I have done all uses in my 30-year career and was responsible for all property values in 114 counties and the City of St. Louis as manager.  It was a golden time to be an appraiser during 1981-2011 especially working for the State of Missouri where I was in a position of monitoring the assessment offices as a retrospective appraiser and then implementing changes as Ratio Manager.  I have never worked in the private sector.  Legally, the private sector looks a little scary to me to be an independent appraiser/consultant in this time of high reporting regulations and lawsuit potentials.  According to my peers, collecting your fee from clients and constant legal challenges take all the fun out of the profession in current times.  Good luck to all those young appraisers starting their careers who never knew the profession in a time of honest disclosure and trust.  Intuitive Value was respected.