AmyBSells Team - Cincinnati Real Estate Blog

Amy March 27th, 2007

Very often when working with buyer clients, I find they want to know why they should be thinking about resale, before they have even purchased a home. In this economy of the 21st century people are buying and selling Real Estate on the average of 2-5 years (ages 23-40), and even more often if they are just climbing the corporate ladder and are in for many relocations in a shorter period of time. This being said, in many cities in the US, with a few in the Cincinnati area, there is little to no appreciation in just 2 years time, and depending on the market, there may be even less. It’s all about your investment. That down payment you choose to invest in your primary residence. Say you buy a home for $300K and you put (these days a rare) 20% down or 60K. That is your investment. Keep the house maintained and updated, modern and you may get more than 60K back when you sell.

Then, I begin to point out some of the finer details of the concept of resale, functionality. I encourage my buyers to look for things in homes that are appealing to a wide range of people. I will use a typical example of a half-bath on the first floor in the Hyde Park area for this exercise on resale. In Hyde Park, to have a half bath on the first floor may not be a priority when you begin looking in Hyde Park for a home. But, if you buy that home, without a half bath, and put one in if it is possible, you have just added value to your 60K investment. More importantly, you have made it more desirable to the next buyer who will always see the half-bath on the first floor in Hyde Park a huge perk, thus selling your home much faster than others. Resale!

Say you choose not to add that same half-bath, and you live there for 5 years. All of your neighbors and other homes in the similar area and price range have “updated” their homes with the modern convenience of the half-bath and you have not. Do you think your home on the resale market will sell faster and for more than your original 90K investment? In these sub-modern conditions compared to other homes that are updated in this price range, the answer would be no.

While I am not discouraging you from buying a home that needs a half-bath, or updated kitchen, or new garage, I prefer to use these outdated homes to allow my buyers to get a good price for their condition, and allow them to capitalize on these things and turn them around to become an opportunity to create some additional value when they themselves add these items to their home.

I prefer to educate my clients on the benefits of resale and keeping the home modern and maintained. Just as you are the buyer choosing your new home, would you expect to play less for a home with a 30 year old kitchen? Yes! But you could buy that home at a reduced rate due to the age of the kitchen, put your money saved into the upgrade, and make it new and beautiful, and when you go to sell, you have a fabulous kitchen that you have enjoyed while you have lived in the house, and your home will sell faster and hopefully for more money because you updated it! This concept is referred to as “Sweat equity” - making improvements yourself that hope to directly increase the value of your property. If you cannot make these necessary updates, you cannot expect to make more money when you sell the house if you have not invested yourself to modernize and maintain the house. It will also add months to the sale process for a home that has not been updated.

These things inside the home are important functionally. Now let’s look at socially. When you invest in Real Estate you need to understand where the demand is in your city. Where do people want to live and play? Buy a home there. If your goal is to have a great return on your home, buy in an area that others want to live, which will bring a faster sale for more money. If you buy 30 minutes from the city, know it will take quite a bit longer to sell the home and your margin of profit will be less, this is the rule of supply and demand.

Lastly, consider economic resale. This often parallels social in that the demanding areas usually have a higher Return on Investment, less days on the market, closer to asking price for the homes, and a higher percentage of appreciation annually.

For all these reasons, it is key to consider resale before your current home purchase, to protect your investment. That is, assuming that you want to make money on your largest asset, and sell it quickly, with the least disruption in your families lives!

If you are in the market to sell your home, and wish to talk to ME about getting the best Return on your Investment, give me a call anytime at 377-3637.

If you would like to know what you can do to increase the value of your investment in a few years when you will sell, call ME today and I will be happy to stop by your home and give you a few suggestions, give me a call anytime at 377-3637.

If you would like to buy a home with a strong Return on Investment, give me a call today and I will lead you in the right direction to turn your home into your largest asset and investment, call me anytime at 377-3637.

• Buyers , Improvements , Resale , Sellers , Value
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Amy March 21st, 2007

This is a question that often occurs during the time leading up to the closing, or while sitting in the closing room, signing your life away. As and ABR, I work hard to educate my clients to the importance of protecting your own investment, while the bank REQUIRES you to pay to protect their investment. I recommend buying title insurance to protect the money you have in the house the day you buy it, or your down payment, and to protect the equity you gain as you live and improve your homes over the years.

If something was found incorrect with the title while you have lived and owned your property, you could lose all of the equity you built, and only the principal you owe on your loan is protected, your cash investment is not. In Cincinnati and Northern Kentucky this story hits home more than other areas, when a now famous builder Bill Erpenbeck was creating major title issues. Many of the clients of Mr. Erpenbeck lost their homes which they paid cash for, due to his illegal title activities. If they would have purchased title insurance the day they closed on that loan, they would still own their homes and all the equity or cash they had in it.

Since I am asked by my clients about why they should spend another amount similar to their home owners insurance premium while they are signing their next 30 years away to principal and interest, I say “so that you are sure that all that principal you pay in over the next 30 years will be put back in your pocket when you sell! If the bank requires you to buy this for them, shouldn’t you protect yourself, in addition to the bank?”

My trusted legal adviser and local Attorney with Classic Title addresses these issues in a more formal way just below…

As memories of Erpenbeck slowly fade into the recesses of our mind, it is very easy to forget about the problems lurking in our titles and what we can do to protect ourselves and equally important, our clients.

As you may or may not know, very little protection is offered by the sellers’ deed of general warranty deed and lender’s who require no title insurance whatsoever. Of course, the only logical alternative is the owner’s policy of title insurance and what follows is a summary of some of the major things you should keep in mind:

• What makes title insurance different from other forms of insurance? Title insurance protects the policy holder from adverse things that occurred in the past unlike health, life, home and car insurance that insure against future events. That protection runs from the date the policy is issued and covers all matters of title not excepted in the policy back in time through the chain of title. (Keep in mind that under Ohio’s Marketable Title Act, defects in a chain of title older than 40 years are normally no longer considered defects)
• What makes a title defective? The limitations of space for this article do not permit me to list all of the defects that may render a title unmarketable. There could be a complete failure of title as when the deed to the present presumed “owner” is defective, such as where the grantor who executed the deed is under 18 years of age, incompetent, and signs the deed anyway. (Even the best title examiner will not normally be able to ascertain the age of the grantor from merely looking at the public record, nor the competency of the grantor (sometimes there will be an official declaration of incompetence in the Probate Court records but the signer may be from another county or jurisdiction) Or consider the case where the seller signs the deed without the spouse’s signature thereby creating a cloud on the title to the extent of the non-signing spouse’s “dower” interest.
• What types of title insurance policies are there? Essentially you will encounter two (2) types of policies: (a) lender’s or mortgagee policy which insures the lender up to the amount of the present principal balance of the loan (remember that most loan balances decrease due to normal amortization of principal(except the “interest only loans” that comprised about 30% of all loans made last year). It is this decreasing loan balance and coverage which causes the premium to be much less than the owner’s policies as the insurance company liability decreases with the loan balance. (b)owner’s policy which insures the policy holder up to the policy amount with no decrease in coverage and there are now enhanced owner’s policies which contain inflation riders so the coverage increases over time in pace with inflation. These policies are slightly more expensive as a result.
• What or who determines the cost of title insurance? All premiums are established by the individual title insurance companies (underwriters)who publish these rates with the Ohio Department of Insurance with the result that all the filed rates in Ohio are identical (meaning no title company can charge more or less for the premiums, but may charge more or less for the related services such as title exam, document preparation and closing)
• What is “simultaneous issue credit”? Remember in real estate to read the label and by doing so it is easy to remember that with this question, in Ohio, if you purchase an owner’s policy at closing or within thirty (30) days the cost of the owner’s policy is offset by the amount of the lender’s policy. Consequently, for a sum comparable to the homeowner’s warranty a buyer can get an owner’s policy of title insurance that is a one-time premium with all of the important protections offered.

Terrance R. Monnie @ Classic Title Agency, LLC
Email: Terry@ClassicTitle.com or 513-256-4779

• Buyers , Closing , Closing Documents , Real Estate Law , Sellers
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Amy March 10th, 2007

The HUD Statement

Whether I am working with a first time buyer or seller, I am always asked ‘What are typical closing costs for selling or buying a home?’

For buyers, a great deal depends on your down payment, and the day of the month you close the loan. There are less pre-paid costs towards the end of the month. With taxes, depending on the month of the year, you may be asked to escrow very little money for taxes, or up to 8 months.

For the seller, the costs are more predictable, except if you have agreed to pay closing costs for the buyer.

I have included a sample HUD-1 Settlement Statement, required by the government to document the costs when closing on a loan. The Department of Housing and Urban Development formulates a Settlement Statement or HUD-1. This HUD-1 Serves as your final accounting of all of the costs that are associated with your home purchase or sale. This document is required by law and should be given to your tax person the year you close on your home.This document is usually issued to you between 3 days to 1 hour prior to the closing. The law says you must have a copy 24 hours prior to closings. Depending on your lender and title company, this does not always happen. For this reason, I prefer to use the services of Guardian and Classic Title to make sure that we have the correct statements within 24 hours of the closing. They do a great job, and I always recommend their services for an uneventful and smooth closing.

Classic Title has been generous enough to prepare for you an example HUD-1 Statement (PDF) with an explanation provided by Terry Monnie one of Cincinnati’s best Real Estate Attorneys. You may find it most helpful to print out the HUD-1 and note the sections as you read through the blog article and its annotations. This is not a simple legal document to navigate on the screen.

The HUD-1 Settlement Statement Explained

• General: The federal government through its various agencies requires (pursuant to the ‘Real Estate Settlement & Procedures Act (RESPA), that all 1-4 family residential closing transactions involving a lender utilize the HUD-1 Settlement Statement (HUD-1). This document is supposed to reflect the terms of the Contract to Purchase between the parties.
• HUD 1 Explained:
  • There are two sides to the HUD 1, the left for the purchaser and the right for the seller and the second page reflects subtotals from Page 1.
  • Lines 100 and 400 reflect the purchase/sale price, and if you note, Lines 102 and 402 include “personal propertyâ€?. Most mortgage lenders are very sensitive to having items of personal property included in a loan transaction since they are limited to making loans on real property alone. (Many contracts will state that even though the sale includes a stove or refrigerator, they will not be assigned any value)
  • Line 103 lists the total of all the ‘settlement charges’ which are listed on the buyer’s side of Page 2 (total being shown at Line 1400).
  • Lines 106-108 will often show as owing by Purchaser and a credit to Seller for seller prepaid taxes or HOA fees as in this case.
  • Lines 120 and 420 reflect total sums owing by Purchaser and amounts owing to Seller. (Do you see the pattern-each side reflects the other in most instances to this point). What follows are credits to the purchaser and deductions to the seller’s side.
  • Line 201 is the earnest money paid by the Purchaser at the time of contract signing and this normally will be held by the Realtor, in this case, Amy Broghamer @RE/MAX Unlimited, in her broker’s trust account pending closing. At the time of closing, this earnest money deposit of $2,000 will be retained by the Realtor and the balance of commission will be taken from the Seller’s proceeds. (See Line 702 Seller’s side on Page 2)
  • Look at Lines 211 and 511. This is the tax proration credit section and arguably the most misunderstood portion of the HUD 1. Why? Because, in Ohio, taxes are paid in arrears and there are two tax bills every year, one half being paid as the December bill and the other half paid in June. (the time period to pay these bills will vary from county to county). Now’s the tricky part. Each tax bill, when paid, pays a tax period six months in arrears. For instance, the December tax bill 2006 pays taxes in arrears for the tax period, January 1, 2006, through and including June 30, 2006. Consequently, if the closing is 3-25-07 and the most recent tax bill has been paid (remember the December 2006 bill), taxes are only paid through June 30, 2006. Most contracts provide that the seller will give the purchaser a credit from the paid through date (6-30-06) through the date of closing (3-25-07) and that is what is reflected on Lines 211 and 511. Easy, huh? Now that this has been clarified I have to tell you that in certain areas of Ohio (Montgomery, Greene and certain parts of northern Warren County, the local practice is to use a ‘short proration’ method) If you closed in those areas, the tax proration credit to the purchaser would only be the period 1-1-07 through 3-25-07. Your Realtor will be familiar with local custom.
  • Line 303 will then reflect the total owing by purchaser less any credits or the amount the purchaser will have to bring to closing. * A word of caution here. Under Ohio’s “Good Funds Lawâ€?, closing/title companies are not allowed to accept any sum in excess of $1,000 at closing unless it is in the form of a certified or cashier’s check. You may either make the check payable to yourselves and endorse it to the title company at closing or make it payable to the title company.
  • Note that on the seller’s side, Lines 500-519 reflect all the deductions from the seller’s proceeds with Line 502 being all the deductions from Page 2. (Line 504 shows the amount of the seller’s mortgage loan payoff, and keep in mind sellers, that most all loans are paid ‘interest in arrears’ so your payoff will include the principal balance and accrued interest to the date it is normally received by your lender.
    • For instance, this seller paid their March payment, 2007, and because interest is paid in arrears, this paid the interest from 2-1-07 through 2-28-07. Accordingly, interest is still owed from 3-1-07 through the date the lender actually receives the payoff.
    • Keep in mind that title companies have to insure that adequate monies are collected for this purpose and the payoff will normally include 3-5 days of interest and your lender will refund the excess.
    • Also keep in mind that the payoff statement will not include a credit for any monies you may have in your escrow account. These monies are handled separately and will usually be sent to seller 2-4 weeks after the loan is paid in full.
    • one last thing in this regard and that is that Ohio law requires lenders to cancel their paid in full loans within 60 days of their being paid off. Few comply with the law resulting in thousands of uncanceled liens which may cause you problems in the future. Both Amy Broghamer, and Classic Title recommend that you insist that you get a copy of the cancelled liens for your permanent files.
  • Page 2 of the HUD 1 reflects the subtotal of all the purchaser’s closing costs and related charges and the same for the seller.
    • The 700 series for the seller reflects the total commissions paid to the Realtor, in this instance, Amy Broghamer at RE/MAX Unlimited. Please note that the actual check written to the Realtor in Line 703 will be the amount shown in this column less the earnest money deposit that Amy has already deposited in her broker’s trust account.
    • The 800 series will reflect the closing costs owing to the lender by purchaser and these should reflect the “good faith settlement estimateâ€? that the lender is required to give to borrowers. There are normally variances in these numbers.
    • Line 901 will reflect the interest owing by purchaser from the date of closing through the end of the closing month. Then the first payment will normally be due the following first of the next month succeeding. Translated: Purchaser’s first payment will be due May 1, 2006 (interest in arrears).
    • If purchaser has agreed to or is required to establish an escrow account the initial deposit will be reflected in Lines 1001 through 1008. Direct your attention to Line 1008 “Aggregate Adjustment Analysisâ€?, a fancy label for a mandatory test that lenders and title companies must perform to insure that the minimum amount is placed in escrow since the lenders don’t normally pay interest on escrow monies.
      • If Line 1008 indicates 0.00, this means the test was performed and the correct amounts were escrowed.
      • If Line 1008 reflects a negative number this means that the test results mandated that too much was placed in escrow and the adjustment was made to insure compliance with this regulation.
      • Lines 1100 through 1113 reflect all the closing fees, including such things as:
        • Settlement of closing fee
        • Title Exam
        • Title Insurance Binder: (this is the fee that is required for the title company to issue any title insurance policy, either for the lender or for a purchaser buying an owner’s policy. (See attached article on title insurance). In this instance, the Seller has agreed to pay $795.13 towards the cost of the Purchaser’s title insurance premium and this is reflected in Line 1108. The contract to purchase has provisions for seller to pay a portion, all or none of this important coverage.
        • The 1200 series reflects the charges imposed for the title company to deliver and record the deed and/or mortgage.
        • On the seller’s side, Line 1202 reflects the conveyance or transfer fee that is required to be paid to the County Auditor and is normally $3.00 for every $1,000 of sale price plus 50 cents for each parcel.
        • There will also normally be a $75.00 charge to the seller to the attorney who prepared the deed.
        • Home warranty payments will be reflected on Lines 1303-5 or alternatively on Line 507 on Page 1.
        • Line 1400 reflects the subtotals of all the charges for both purchaser and seller and will be carried forward to the Page 1.

I hope you enjoyed this detailed explanation of the HUD-1 Statement by Terry Monnie. As we near the closing table for your sale or purchase, I will be talking with you regarding the HUD-1 for your property. In addition, the good people at Classic Title do an excellent job explaining this in a very similar way at the closing table, or prior to that via phone conference if you have questions, or think you may need a brush up before going to the closing table. As your Realtor, I review this as well to make sure that your Earnest Money has been credited, that any Home Owner Warranties, or Closing Costs that we negotiated being paid by the other party have been noted, and any other adjustments made in the contract were completed.

I hope this gives you SELLERS an idea and a method for calculating what your closing costs can be expected to be.

If you are a BUYER, your lender should issue you a Good Faith Estimate with an idea of what these closing costs will be when you make application for your loan. This is a requirement, and you should ask for a Good Faith Estimate if your lender is not providing one for you. This is only an Estimate and may change a bit from time to time as you wait for your loan to close or to lock in your rate.

To Contact Terry:

Terrance R. Monnie, Attorney at Law
Classic Title Agency, LLC
513-984-0440 or Terry@ClassicTitle.com

• Buyers , Closing , Closing Documents , Real Estate Law , Sellers
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Sharon Natarus March 7th, 2007

There is so much more involved to getting a mortgage than getting the “Lowest Rate” Here are a few things I do for my valued clients, proving that its about the service provided and the whole package and not only about the rate…

1. I personally like to evaluate a client’s full financial picture. Maybe they should finance 100% and eliminate all of their debt or bits and pieces of it.

2. Should they do one loan at 100% or two loans such as 80/20, pay PMI (Private Mortgage Insurance) or have a higher interest rate and no PMI.

3. Each loan is custom tailored to fit the client’s individual needs today and help them achieved their financial goals.

4. Is the lender a national lender? Wells is a national lender and finances one in every 16 homes throughout the country. Wells is the only AAA rated retail mortgage lender in the country!

5. I am available to help with questions after the closing and throughout the life of the loan. I generally send marketing pieces at least four times throughout the year.

6. Ask for a good faith estimate and compare closing costs!!! Ask for clarification of costs.

7. Can the interest rate be locked and guaranteed?

8. You want to make sure there are no surprises at the closing table! Take recommendations from your Realtor! They work with lenders daily and can recognize red flags!!!

About Sharon

• Buyers , Financing , Lending
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Amy March 7th, 2007

I was recently scanning the loan programs for a client of mine looking for 100% financing. It turns out that 100% financing is the most common form of financing in the US today. After looking into some options for them, this particular “No Money Down Plus� program seemed to be a fit for my clients. Sharon Natarus of Wells Fargo has made some additional comments below on this new product:

Here are some thoughts on the 100% NO Money Down Program. Many people have chosen the 80/20 program over the last several years, but there is a nice alternative for people that one to have “one loan and one payment” Our product is the No Money Down Plus. We can offer a fixed rate for 30 years. Many times the payment is lower than 80/20 ( if a customer chooses a fixed product for the 2nd, the rate is higher and the payment is higher due to the principal and interest payment on the 2nd mortgage). It gives the customer the peace of mind that the payments are predictable. We can also finance up to 3% of the borrower’s closing costs and pre-paids. We can also offer a slightly higher rate to avoid PMI. The requirements are a minimum credit score of 680 and 2 months payment reserves. The reserves may be in a 401k or other savings program.

To summarize the “No Money Down Plus� allows borrowers to

• have a credit score of 680+
• allows them to only have 2 months of payment reserves (can be in a 401K)
• offers a fixed rate for predictable payments
• allows the borrower to finance up to 3% of the closing costs and prepaids (on a 150K home that is $4,500 which should cover those costs)
• allows you to avoid PMI which is often not Tax Deductible

Call Sharon if you have an interest in learning more about this program today at 513-587-3524 or Toll Free Phone: (800) 846-2240
http://www.sharonnatarus.com

About Sharon

• Buyers , Financing , Lending
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Mike March 6th, 2007

As I go about representing my buyers as an ABR, I find the same topics surfacing each time my clients go through a Whole House Inspection. The issue of the grounded and not grounded outlets. What does it mean, what are they used for, and what happens if they aren’t grounded. After weeks of begging for simple answers to this question, I give you my trusted Licensed Whole House Inspectors response…

Amy,
In response to your questions pertaining to receptacles commonly found in residential homes I will start with the basics of the old and the new. First, though I would like to identify that I am a licensed home inspector, however for any electrical work and advice on electrical systems I recommend my customers consult with a licensed electrician as needed.

Homes built prior to the early 1960’s were most commonly wired with a two-wire system, absent of the modern third wire being an equipment ground wire. The first requirement for grounded receptacles in residential construction dates back to 1951 when the NEC® (National Electrical Code) required laundry areas to have grounded receptacles. Devices and locations have been added to this requirement until the grounded system is a requirement throughout a modern residential home.

• Electrical devices that can be used with non grounded receptacles are: lamps, radios, power adapters, toasters, vacuum cleaners and any item that the cord does not have the round third prong.
• Electrical devices that require a grounded receptacle (equipment ground) are: high-end appliances, computers, TV’s, stereo equipment, power tools, surge protector strips and any other electrical device with the cord having the third prong.

Adapters are available that allow for a device using a three prong/ground to be utilized in a two slot receptacle. The adapters are inserted into a two-prong receptacle and then the adapter spade is secured to the receptacle with the center screw of the cover plate. For these adapters to be functional, the grounding of the receptacle body and box is required.

Homes prior to the 1960’s that have not been updated will most commonly have two slot receptacles. Most homes that were built prior to the 1960’s have gone through
some form or another of modernizing/upgrading the electrical system within the home.

A non-grounded Outlet
The most common is the replacement of the two slot receptacles with the three prong (grounded) receptacles. When the installation of the grounded receptacle is correct,
the receptacle provides an equipment ground utilizing the round hoe in the receptacle. Incorrectly installed the ground is not present commonly referred to as an open ground. This will not provide an equipment ground and high-end equipment/computers/TV’s should not be used on this receptacle with an open ground.

In the event that a high-end device such as a computer plugged into an ungrounded receptacle, the performance of the device may never be affected or problems detected. However the device can be damaged without warning at any time from static electricity that has no way of being discharged as well as another source of voltage coming in contact (lightning could be one). This can originate from various sources internal as well as external of the device. The idea of the ground is to trip the breaker preventing damage to the device or electrical shock to the user. If the device is not properly grounded, and any of a number of events occurs, the device may be damaged beyond economical repair. I have found in a few warranties stating that a device used with a non-grounded receptacle is not covered under the manufacturers warranty; this is for the same reasons as previously identified.

A surge protector used at a non-grounded receptacle is a glorified extension cord, and provides no additional protection, only a false sense of protection. Using an adapter with the metal spade secured under the faceplate screw is not a ground unless you check it for grounding and grounding is confirmed. Most sources do not suggest these adapters to be “permanently� installed as a solution to grounding. Again, these devices if not properly grounded can provide the user with a false since of grounding.

In older homes open grounds are quite commonly found, this is due to the original wiring systems not being upgraded to a three wire system or only selective areas being upgraded. The methods of grounding these receptacles vary greatly dependent on the period when they were installed or upgraded.

A grounded Outlet.When three prong receptacles with open grounds are identified and a two-wire system is present, the NEC® currently allows the following methods to be used to resolve the problem:

• Install an equipment ground. (recommended for high end equipment, see previous comments)
• Provide GFCI protection for the receptacle (either at the receptacle or upstream of the receptacle) the receptacles are to be marked “no equipment groundâ€?. This method does not provide an equipment ground.
• Replace the existing three-hole receptacle with a two-hole non-grounded receptacle.

Polarized plugs have two different sized slots, the neutral is the larger slot, this allows for a device to be plugged in, in only one manner insuring correct polarity. Reversed polarity is when the common and hot wire is reversed on the receptacle; when this occurs the large blade receptacle is now hot rather than neutral (this applies to both grounded and non grounded systems). As an example a lamp is plugged in with the polarity reversed, the exterior metal light bulb socket is “hot� at all times. In this instance when changing the bulb or touching the exterior of the socket the individual can be shocked. Reverse polarity is a safety issue and can cause problems with high-end appliances.

Reversed polarity is usually simple to repair. Quite often, if multiple receptacles check for reverse polarity it is not uncommon for only one wiring termination to be incorrect. However this can not be determined without further investigation.

Ground Fault Circuit Interrupters (GFCI’s) are intended to protect the individuals using an electrical device particularly in a wet area. GFCI’s are available as circuit breakers located within a service panel and as a receptacle. Most home owners are familiar with these as the receptacle with the little buttons (test and reset buttons) that seem to always trip when using the hair dryer.

GFCI Outlet.The GFCI provides protection to the user and is tripped by sensing current leak/imbalance in turn shutting of the power to the electrical device. The GFCI does not trip by detection of amperage like a circuit breaker, and in tern, a standard breaker does not trip under the same circumstances that a GFCI will trip.

GFCI’s are a safety item and provides protection from electrical shock and potential electrocution. The GFCI’s are intended to be tested by the homeowner once a month to insure function. GFCI’s can be installed on both a two wire system without a ground and a three wire system.

GFCI’s are required by the NEC© in various areas, the following is a general list (not complete) of when and where: 1971 exterior receptacles and swimming pool areas, 1975 Bathrooms, 1978 garages, 1981 whirlpools and tubs, 1987 kitchens within 6’ of the sink and basements, 1990 unfinished basements and crawl spaces, 1993 wet bars sinks, 1996 all kitchen counter receptacles, dedicated bathroom circuits, all outdoor receptacles, electric car chargers.

In the event that a GFCI does not function properly, the GFCI should be repaired for safety. In older homes where GFCI’s are not present, I recommend that GFCI’s be installed for safety, this would normally be considered an improvement to the property.

A three-bulb receptacle tester is most commonly used during a home inspection to determine if receptacles are wired properly. This device is readily available at most hardware stores and can be used by a homeowner normally. The use of this device alone is not a replacement of the services of a qualified electrician.

Michael Patton is a Licensed Home Inspector and the owner operator of AA Home Inspection LLC located in Northern Kentucky. Michael is licensed in Kentucky and Indiana and qualified to perform inspections in Ohio (Ohio does not have a licensing requirement). Michael is the current President of the Kentucky Real Estate Inspectors Association Inc. (KREIA) and an active member of the American Society of Home Inspectors (ASHI). Michael started AA Home Inspection LLC in 2001, prior to this Michael had worked for firms providing a wide range of services including design, construction, and project management. Michael’s services include Residential Home Inspections, Light Commercial Inspections, WDI/Termite Inspections, and Radon Testing. The Greater Cincinnati area provides a wide variety of inspections; from the million dollar properties to the fixer upper homes, new construction to homes well over one hundred years old and clients from the well established to the first time homebuyers.

www.AAHomeInspection.net

• Buyers , Electrical , Home Improvement
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