Why Principal Reductions on Loan Mods Aren’t the Move

Last updated on January 19th, 2018

Unless you live under a rock, you’ve likely heard stirrings of a mega super duper fantastic solve-all trillion-dollar refinance program in the works to save America once and for all.

You know, the one President Obama plans to unveil just in time for the election to give his campaign a shot in the arm (at least that’s what the pundits are saying). For the record, I’m sure any other President seeking a second term would play this the same way.

(Read more about the rumored mass mortgage refinancing plan.)

Well, critics have already come out in droves to have their say about the proposed deal.

One that made me think was an opinion piece by the Motley Fool, who for some reason is talking about mortgages for a change, as opposed to tempting you with their “Hidden Gems.”

Doesn’t Address Underwater Homeowners

Their core issue with the proposal is that it doesn’t address borrowers with underwater mortgages, you know, those that exceed the current value of the associated homes.

The author argues that the lower mortgage payments would certainly help these borrowers (and stimulate the economy), but without any home equity, they won’t have the incentive to refinance.

This is where I think he (and anyone else with this argument) gets it wrong. You see, there are scores of borrowers, dare I say millions, who are underwater and making on-time payments (or at least trying to).

And a program with no loan-to-value ratio constraints that lowers their mortgage rate from 6% to 4% overnight would surely appeal to them, even if they had to pay some closing costs.

I don’t think they would need that extra incentive, in the form of principal reduction, to go through with the refinance.

And I do think a simple interest rate reduction would be enough for many of these borrowers to stay put in their homes, as opposed to buying and bailing, or bailing and renting.

After all, a loan modification should address affordability concerns, not necessarily a homeowner’s desire to stay put. We can’t beg people to stick around for the greater good.

Why Principal Reductions Are Trouble

Clearly borrowers who receive both an interest rate and principal balance reduction will be better off with regard to paying their mortgage, although certain data suggests otherwise.

But it gets to a point where the borrower is getting too much, and the cost is simply too high.

The fact is many homeowners are in negative equity positions either because they purchased homes with no money down, or because they serially refinanced until they zapped all the equity out of their homes.

And some people just bought at the worst possible time. I’ve purchased things at the wrong time too, but never expected to get bailed out for my bad luck.

So taxpayers can’t be on the hook for all these homeowners. It’s also not fair to the homeowners who don’t get any direct benefit. But I’m sure they won’t mind others refinancing to lower rates that they can obtain themselves.

As it stands, an interest rate reduction would be much more cost effective than a principal reduction, and still serve the same purpose.

There are plenty of homeowners who would be very happy to see their mortgage payment reduced by hundreds of dollars a month, even if they’re underwater.

Because let’s face it, if they haven’t walked away yet, there’s a good chance they’re sticking around for the recovery.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

New Refinance Program Probably Won’t Mean Much

Last updated on January 9th, 2018

refinance

During President Obama’s speech to the nation last week, he mentioned that the White House would be working with the federal housing agencies to help more homeowners refinance their mortgages at today’s low rates.

And on Friday, the Federal Housing Finance Agency (FHFA) released a statement, noting that it “has been reevaluating an existing program, the Home Affordable Refinance Program (HARP), to determine if there are ways to extend the benefits of this refinance product to more borrowers.”

Currently, in order to be eligible for a HARP refinance, a borrower must have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, be current on mortgage payments, and have a first mortgage that does not exceed 125 percent loan-to-value.

That last bit seems to be the issue at hand, as there are scores of borrowers who meet the first two guidelines, but not the third.

To give you an idea, 85 percent of the Miami and Orlando MSAs were underwater as of last year, with average LTV’s of 150% and 140%, respectively.

In Riverside, California, the average LTV was around 164 percent last year, and has probably worsened since then.

So pretty much all of the hardest-hit borrowers haven’t been eligible for HARP.

LTV Ceiling Lifted?

Under the new refinancing plan, the LTV ceiling would be lifted or possibly removed, allowing these types of borrowers to refinance to take advantage of the record low mortgage rates currently available.

But it’s very likely that you would still need to be current on mortgage payments to qualify.

And while the new proposal sounds decent in theory, many of these borrowers have been grappling with a lack of home equity for years now.

So if they were going to walk away, they probably would have by now. Or they would have at least missed a payment or two.

If payments are lowered for the select few who have stuck it through, but are deeply underwater, they’re still left holding onto a house worth much less than the mortgage.

How much better off will someone be paying $200 less per month on a $300,000 mortgage worth just $150,000?

Even if it does make a big difference, the program still banks on mortgage rates remaining low and home prices reversing course in a major way, as it doesn’t address principal forgiveness.

Targeting the Wrong Group?

Then there are the homeowners with mortgages not backed by Fannie and Freddie, which while far fewer in number, account for a huge chunk of the problem loans.

A few years back, former FHFA director James B. Lockhart noted that these private-label securities accounted for 62 percent of all seriously delinquent mortgages, and thus, were the root of the problem.

These have yet to be addressed on a large scale, and probably won’t be, aside from on a case-by-case basis.

And so there may be some economic stimulus associated with this program (more money in some pockets), but it certainly won’t be a silver bullet.

Perhaps only time will sort things out, as impatient as we are.

Concrete details of the program should emerge later this month…

Read more: Can I refinance with negative equity?

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Will you get a second stimulus check?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

By mid-May 2020, the IRS had issued more than $218 billion in stimulus checks related to the CARES Act, and it was still working to ensure all eligible Americans received theirs. But in early August, 2020, almost five months after the CARES Act was passed, many people were wondering if they would receive a second stimulus check. Find out what’s known about stimulus checks and future financial assistance from the federal government in the article below.

Will There Be a Second Stimulus Check?

Judging on the number of bills being passed around Congress, there’s a possibility another stimulus act is coming, and it may come with a second round of stimulus checks. But the details—including how much the check will be worth and who will be eligible—depend on which of the acts ends up making it through.

Bills currently being discussed include:

By mid-May 2020, the IRS had issued more than $218 billion in stimulus checks related to the CARES Act.

The HEALS Act

The HEALS Act comes from the Republicans and is a stimulus package similar to the CARES Act. If this act passes in its current form it will include many of the details described below.

How Much Money Will People Get?

Yes, this act does include stimulus payments to many Americans. The details of how much and who might get what amount are included below.

  • Individuals making less than $75,000 per year will get $1,200.
  • Couples filing jointly and making less than $125,000 per year will get $2,400.
  • People making above those amounts may still get a check. The stimulus is reduced $5 for every $100 of income above those limits until it tapers off completely. So, someone making $80,000 per year would get $950, for example.
  • An additional $500 is also included for every dependent claimed on the person or couple’s tax return, which is different from the CARES Act, which excluded dependents over the age of 16.

Who Would Qualify?

The income and dependent restrictions explained above will determine who would qualify for the stimulus. Qualification would likely be based on tax returns or Social Security benefit statements as was the case with the CARES Act.

What Other Benefits Are Included?

The HEALS Act contains a number of other benefits and stimulus efforts for businesses, schools and workers. Some of the main provisions are highlighted below, but this is not a comprehensive list.

  • Additional unemployment benefits would be provided, but it would be less per week than under the CARES Act.
  • The act would expand the Paycheck Protection Program by another $190 billion and make it easier for businesses to comply with the payroll requirement.
  • A return-to-work bonus may be offered to unemployed workers who find new jobs.
  • Funds to schools to help support reopening efforts would be included.
  • Some protection against lawsuits related to COVID-19 would be provided for businesses.
  • The act also includes $16 billion in coronavirus testing support.

The HEROES Act

This is the stimulus act being proposed by the Democrats. It also includes stimulus payments and other benefits for individuals and businesses.

How Much Money Will People Get?

As with the other bills, the HEROES Act includes a round of stimulus payments for qualifying Americans. The details of the payment amounts being proposed are summarized below.

  • Individuals making less than $75,000 get a $1,200 check under this act.
  • Married people filing jointly making less than $125,000 total annually get a $2,400 check under this act.
  • The stimulus is reduced $5 for every $100 of income above those limits until it tapers off completely.
  • The HEROES Act provides $1,200 per dependent for the first three dependents for an individual or married couple with no age restrictions. So if you claim three children, you would get an additional $3,600 in stimulus funds.

Who Would Qualify?

The qualifications for stimulus checks would be similar to those under the HEALS and CARES Acts as represented above.

What Other Benefits Are Included?

Here are some of the other benefits included in the HEROES Act:

  • This act includes the same enhanced unemployment benefits available under CARES, just extended for a longer period of time.
  • The HEROES Act also includes expanded eligibility for the Paycheck Protection Program and a reduction in the payroll requirement.
  • An expansion and extension of the eviction moratorium and protections for renters is included in the HEROES Act but not the HEALS Act.
  • Funds to support school reopenings are also included in this act.

When Could a Second Stimulus Check Come?

When a second stimulus check might arrive depends heavily on when a bill is passed. Both the House and the Senate must pass the bill, and then it has to be signed by the president. But the hope is that it won’t take as long for the IRS to turn around payments as it did in March and April. Ideally it won’t—the IRS has now done this once already and has probably learned lessons and put a system in place that speeds up the second round.

In fact, Steven Mnuchin, the US Treasury Secretary, said that the IRS could start sending payments within a week of an act being passed. So, if the act is passed anytime in mid-September, for example, the checks could start rolling out before the calendar moved into October.

The Stimulus check process in 4 steps

Will This Be the Last Stimulus Check?

It’s pure speculation at this point to discuss a second, or even third or fourth stimulus check. But it’s not impossible. It likely depends on the state of the economy and job market as the COVID-19 pandemic continues. If future stimulus checks do come, though, they may become increasingly more targeted as time passes. For example, it’s possible stimulus funds might start to go to people who can demonstrate a need.

However, until this second act is passed and lawmakers move on to considering future bills, there’s simply no way to know.

Protecting Your Financial Status During COVID-19 and After

Whether you’re waiting for and relying on a second stimulus check or you’re beginning to see a light at the end of your own personal COVID-19 financial tunnel, it’s definitely important to keep an eye on your personal finances during these trying times. That can include checking your credit report to ensure all the information is accurate and disputing inaccurate items so they don’t drag down your score in the future. It can also include managing your debt, income and investments in the most responsible way. During COVID-19 and beyond, Lexington Law offers information that can help you navigate finances and plan for the future. Check out articles that range from student loans to mortgages, and consider our credit repair services if you need help getting your credit report back to rights.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Obama Hasn’t Refinanced His Mortgage in Seven Years

Last updated on August 10th, 2013

Despite a push to allow more Americans to refinance their mortgages (Harp 2.0), the Obamas haven’t taken the time to refinance their own, according to a disclosure released yesterday by the White House.

The financial disclosure revealed that as of the end of 2011, the 30-year mortgage (not sure if that means fixed or just refers to the term) tied to their south Chicago home, taken out in 2005, was still active.

Obama’s Mortgage Rate is 5.625%

Now we’ll assume he’s got a fixed-rate mortgage, even though that’s not entirely clear because no one is specifying.

And at 5.625%, that means he’s paying a rate nearly two percentage points above what mortgage rates are currently being offered at today for a 30-year fixed.

What we also don’t know is the loan amount. The disclosure only revealed that the loan amount is somewhere between $500,001 and $1 million.

Now assuming it’s not a jumbo loan, he could possibly snag a rate two percentage points lower than his current rate.

And I’m sure he would receive the most favorable terms, given his income, assets, employment history, etc. Being the U.S. president is pretty helpful.

Let’s do the math to see what he could save, using $600,000 as the loan amount.

Loan amount: $600,000
Current rate: 5.625%
Refinance rate: 3.75%

If he were to refinance his current loan, his monthly mortgage payment would drop from $3,453.94 to $2,778.69.

That’s a monthly savings of roughly $675, or $8,100 annually.

Not a bad haul for a making a phone call and submitting some paperwork.

[What mortgage rate can I expect?]

Obama Should Check Out 15-Year Fixed Rates

But since they’re already seven years into a 30-year mortgage, and have presumably paid a ton of interest, it would probably suit them best to take a look at a 15-year fixed mortgage instead.

[30-year vs. 15-year mortgage]

Rates on the 15-year fixed are closer to 3%, so assuming the Obamas can snag a rate at 3% even, their monthly payment would climb nearly $700 to $4,143.49, which I’m sure they could afford.

But they’d pay less than $150,000 in interest over the entire duration of the new loan, which would definitely save them some money. Probably a few hundred thousand for that matter.

And they’d own their house sooner, preferably before retiring.

So President Obama, if you’re reading this, you may want to consider shopping around for a refinance.

Don’t Be Lazy

All jokes aside, the takeaway from this story is that there are a ton of homeowners out there that don’t take the time to shop their mortgage rate.

Yes, it’s a pain in the you know what, and it may all seem rather daunting, but think about all the other “stuff” you subject yourself to in order to save a few bucks here and there.

In the grand scheme of things, you could save a ton of money while putting in a very little amount of work.

So if you haven’t refinanced yet, grab a calculator and take a look at rates to determine if it’s the right move for you.

Read more: When to refinance a mortgage.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Financial Planning Lessons Regular Folks Can Learn from Professional Athletes

Baseball season is in full swing now. While the finances of baseball players and other professional athletes are not quite the same as yours or mine, what can we learn from their financial challenges? A lot, according to a financial planner for players on three pro teams.

I interviewed Scott Morrison for his take on the financial curveballs he faces while working with his clients.  He’s the President of Pennant Asset Management and a financial planner for professional athletes on teams including the New York Mets, the Chicago White Sox and the Oakland Athletics. 

Hey, Big Spenders?

Matt Goren: What is the first impression people have when you say you work with professional athletes to help manage their finances?

Scott Morrison: Athletes often carry around the “dumb jock” stereotype that they want to blow all their money faster than they receive it. Does it happen from time to time? Unfortunately, yes. But what has surprised me most is that athletes are coming in more educated now than ever before – many are frugal and want to track every penny of where their paycheck goes.  

Matt Goren: Frugal athletes is definitely not my stereotype. Is this a baseball thing?

Scott Morrison: I think the sport definitely has something to do with it. In baseball, it usually takes a while to get to the major leagues after draft day. Minor league salaries and lifestyles are, to be kind, not very luxurious, so there is a very real concern about how they will survive financially until they get called up to the big leagues. It forces players to be smart and to make their money last.

Matt Goren: We hear about some giant contracts, but they’re not very common. More often, an athlete gets a signing bonus to join the team and maybe a short contract. Professional athletes don’t normally see the big dollars until their second deal – if ever.

Scott Morrison: With athletes, we often plan as if they aren’t going to make another cent on top of their signing bonus. If and when they do make it to the big leagues and sign multiyear contracts for multimillions, then the fun can really begin. But from the start, we have to protect their initial lump sum with the correct budgets and strategies.

Their Biggest Challenge May Sound Familiar

Matt Goren: What is the biggest challenge you encounter?

Scott Morrison: Taxes! One of their biggest concerns is the amount of tax they have to pay on their signing bonuses and then again in the future on their major league contracts. Players often overlook that this large lump sum isn’t as large as it first appears.

Matt Goren: And that’s a lesson for the rest of us: Our take-home pay after taxes is much less than our gross pay. What other challenges do they have? Do you see problems with overspending?

Scott Morrison: Ultra-luxurious items are the No. 1 spending problem I run into. Aside from the designer items – the Louis backpack, the Gucci wallet, the Yeezy’s, etc. – many newly drafted athletes want to buy the Porsche and the million-dollar-plus home all with their signing bonus. I go through the taxation presentation and then, all of a sudden, they get a lot more realistic.

To be sure, not every penny needs to go into the bank – but we need a realistic approach that considers their uncertain longevity on the field. Is the boat, car and house out of the question? Absolutely not! All I’m saying is, depending on the signing bonus, maybe one or two of those items can be shelved until they are making big league salaries.

Matt Goren: Like retirement savings nest eggs, I’m sure that on-the-field money can be multiplied with sound investments. What sorts of challenges do you see there?

Scott Morrison: The biggest mistake I find that young players make is not all that different than young professionals with their retirement savings – they don’t understand the concept of putting their money to work for them, and they think it’s OK to leave their money on the sidelines. Once they see how important and beneficial it is to have their money appropriately invested, they all say the same thing: “I wish I had started earlier.”

Some Interesting Investment Choices

Matt Goren: Are there certain types of investments that athletes ask you about?

Scott Morrison: I have found an obsessiveness around real estate. So many young athletes want to dig into the cryptocurrency world as well – it’s crazy!

I also get a lot of requests from my clients asking about getting involved with childhood friends’ or distant family members’ businesses. There is always a long-lost friend or cousin who comes out of the woodwork asking for an influx of cash into their business, and it’s important for athletes to be prudent when considering those investments.  

Matt Goren: Good that they found you, then. How do you usually meet your clients?

Scott Morrison: Being a former Division I baseball player, I understand many of the complexities they are dealing with. I’ve known some of my clients since before they became professional athletes. Ultimately, the reason clients choose an adviser is because of relatability and relationships. Players want to trust their money with someone who they feel comfortable with.

Matt Goren: If you need a “pitch” to your clients at all, what would that pitch be?

Scott Morrison: Utilize a professional financial adviser who understands your situation so we can put the right guardrails in place. By working with a professional, athletes can focus on their performance on the field and – to the extent it makes sense – enjoy their money now. They’ve worked hard for their money, and we want them to enjoy it! We also want to make sure that they don’t have to work another day once their career is over if they don’t want to!

The Bottom Line for Athletes and the Rest of Us

Matt Goren: And that, to me, sounds exactly like why so many everyday people work with a financial professional.Scott Morrison: Sure, the numbers change, but the strategies for the most part don’t – depending on the risk tolerance and suitability. Ultimately, we want to preserve our clients’ wealth not just for years to come, but for generations to come. It doesn’t matter if it’s a professional athlete or a business owner, or families and individuals, I want our clients to enjoy their hard-earned assets. But no matter who it is, we want to encourage intentional, smart decisions.

Matt Goren: Agreed – thanks, Scott, for your insights! To everyone reading, you don’t have to be a big-league player to make great plays with your money. Focus on the long term, invest for your future, and avoid the temptation to buy that new yacht. If you need some coaching and guidance, make sure to reach out to a professional financial planner who can help you reach those goals.

Assistant Professor of Financial Planning, The American College of Financial Services

Matt J. Goren is an Assistant Professor of Financial Planning at The American College of Financial Services who focuses on the interplay of personal finance and psychology. In addition to teaching and developing content, he provides strategic consulting on financial literacy initiatives and hosts a personal finance radio show, Nothing Funny About Money, which was named 2018’s most outstanding consumer financial information resource by the AFCPE.

Source: kiplinger.com

How I Flip Garage Sale Items On eBay As A Side Hustle

Hello! Please enjoy this article from a reader, Rush Walters, on how he flips garage sale and auction items on eBay as a side hustle to make extra income.

Depending on who you ask, there are pros and cons to being a high school teacher. One con: income, One pro: having summers off.How I Flip Garage Sale Items On eBay As A Side Hustle

How I Flip Garage Sale Items On eBay As A Side Hustle

Both my wife and I are teachers in a small mid-Missouri town. During my first year (2015) as a high school teacher and head boy’s tennis coach I was making a whopping $38,000 a year.

Needless to say, the budget was tight some months.

When I got married in 2018, I thought a second income would be very helpful, but a second salary would not come until 2019. Long story short, my wife is from Bolivia and was not able to legally work for a year until she received her permanent residency status (green card).

Two people living off of one middle-class paycheck, let alone a teacher’s paycheck, was challenging. Thankfully my wife and I were decent at budgeting, and have been using a successful budgeting process since we have been married, but I’ll save that story for another day.

Financially we were fine, but what about the fun money? What about going out to eat with friends during the weekends? What about going to the movies? What about my “want” purchases?

This is when the idea of flipping items on eBay from garage sales & auctions came into full effect.

At the time, I heard about one of my coworkers making a significant amount of money from flipping sports memorabilia on the side. I thought to myself, “I could do that, I don’t have much of a sports background, but I do have an eBay account and I have been to garage sales before.”

So I began waking up Saturday mornings at 6am, grabbing my coffee thermos, heading to the local gas station to purchase the local newspaper, and marking up the classifieds with my pen.

(Sifting through the junk at garage sales to find the gold!)

Sifting through the junk at garage sales to find the gold!

I would circle all of the sales that started that day only. Forget the 2-day garage sales that started the day before. I am not saying that you cannot find anything of value at these sales, but everything has already been picked through and all the good stuff has been bought. 

Flipping items on eBay quickly became my side hustle! Starting out I sought some advice from my coworker I mentioned earlier.

I mean this guy is really into it, he would travel on the weekends to trade shows in other states and if he was going solo he would sleep in his car to save money. He is frugal, well some people like to call it “cheap,” haha.

Along with advice from him, I honestly learned a lot through experience. Trials & Tribulations. From a good flip I gained money and joy, from a bad flip I learned a lesson. Throughout this process I also learned about the value of my time.

Is it worth spending half a day at auction just for one item that may bring me $20?

I am going to share with you my step by step process for beginners flipping items on eBay. I have made mistakes and I have enjoyed successes, but most importantly is that I learned from my experiences. Experience is one of the best teachers you can find.

Related content:

How I make extra money reselling items on eBay.

Step 1: Mining for Diamonds

You will be mining for the “diamond(s) in the ruff” as they say.

There are three specific tools you will need before you hit the ground running. Let’s start with the most obvious: cash money. Make an effort to go to the bank the day before you go garage saling.

In the morning when I would buy the newspaper at the gas station, I would ask the register if they could change a $20, but I quickly found out that changing a $20 at the local gas station isn’t always reliable. Some gas stations have enough one dollars bills to spare, some do not. That being said, I have done it many times, but sometimes I am only able to get 10 or 15 one dollar bills at a time.

This limits my bartering power. You are not going to be able to go to the bank in the morning because they are closed and ATMs do not output dollar amounts in increments of 1.

My top tip for cash is to always carry $1 bills on you. Reason being, when you barter you will need to have the ability to pay any amount, not just increments of $5. I try to carry twenty one $1 bills on me at all times when I’m garage saling. If you make a purchase that you have larger bills for, use your large bills. Only use your dollar bills when needed.

Tool #2 is the newspaper. Always buy your local newspaper the day of the sale. Your local gas stations should always have a copy. As soon as you get in your car, pull out the classifieds portion of the paper, throw the rest in your backseat, pull out your pen and start circling all the garage sales that open for the first time that morning. Make a mental note of the times, obviously you want to go to the earliest ones first. Don’t spend forever doing this, you are on a schedule!

Have a game plan, you know the town you live in, take the most strategic route you can. Do not go all the way out to the East side of town then turn right around to go all the way to the West side of town. Go to the East side and hit up all the sales along the way. There isn’t a specific game plan that I can give you for what sales to hit first, only some pointers.

Obviously hit the first ones that are open first. Hit the ones that are in the same vicinity. Hit what you are looking for. I personally like to flip old video games for a number of reasons, so if I see a listing mentioning video games, I will put that sale on the top of my list. The final thing you need to consider is the type of garage sale listing. Here are the top 3 listings you need to know:

Moving Sales – The name the game is in the title: “moving.” These sellers are motivated to move and get rid of their items. Sure, getting some extra money is a plus, but they just want to get rid of items so they can move without having to worry about them. They are motivated to sell and are very open to deals.

Estate Sales – The best of the best in my opinion. These sellers are not moving, but they want to get rid of everything. I would argue that they are more motivated to sell compared to anyone else because they are just cleaning the estate of everything, sometimes for any price.

The normal “Garage Sale” – The most common sale, these sellers are more motivated to make money rather than to get rid of items. They are the hardest to barter with, but have some of the most valued items because they are priced to sell.

(Online Garage Sale Ad from my local newspaper)

Online Garage Sale Ad from my local newspaper

All in all, you can probably find deals at any of these sales, the title of them only helps me prioritize which one I am going to first. If both a garage sale and estate sale begins at 7am you better be dang sure that I am going to the estate sale first.

Some local newspapers have a digital version of the classifieds listed as well as a paper copy. The only benefit I’ve found to this compared to the paper copy is that it helps me make my decision on whether or not I want to go garage selling the next day. Typically my paper posts the day-of classifieds for Saturday online starting at midnight, which makes sense. You will have to do your own research if your paper offers this.

So if I see that the online classifieds are only listing two garage sales for the next morning, chances are I will not go unless the listing description is promising/convincing.

Also, people do post ads on Facebook and they should be considered, but I have found that if it is on Facebook it will be listed in the paper too, at least if it’s worth going to.

As soon as you’re done marking up the classifieds and establishing your game plan, head to your first sale, it never hurts to be early. I am going to repeat this, it never hurts to be early. I stress this because although the listing may say that they open at 7am, I have seen them open at 6:50am. Yes 10mins. makes a difference! A 10min window could be your chance to cash in on a great deal or could be a missed opportunity to cash in on a great deal if you show up at 7:00am. If you are there before it opens, no worries, wait in your car until they open. Yes I know I know, it may seem creepy to wait in your car outside their house but hey it will not be creepy when you’re walking away with great items to flip.

Always make every effort to be first.

You need to be the first person at the sale so that you are the first person to see what they have to offer and the first person to land the best deal. People are vultures out there, they want the best meat first and do not care who is in the way.

Last but not least, you will need your smartphone charged and the eBay app up and running. On the app you are able to conduct a search for previously sold items. This tool is your key for finding the current values of items. This tool is great because it is always updated and always accurate.

You find the “Sold Items” button under the filter when searching for a specific item, as shown in the picture below.

Left image: “Sold Items” button              Right image: Sold Items Search Results

Once you have learned more about what sells and what does not, you can move quicker.

Again you are on a schedule, I am not saying you need to run from sale to sale, but if you don’t find any deals at one you are wasting your time just walking around.

Your time could be spent better at another sale, where you could be beating someone else to the punch.

Step 2: Bartering

Here comes the pivotal point. When to say yes, when to say no, what price to ask?

When bartering for objects in the $20 and under range, I most often start by offering half of what they are asking. Example: the item is priced at $10 so I will offer $5. Now I know that 8 out of 10 times I am probably not going to get the item for half off, but it’s a starting point to get the item for at least 25% off the original price. So why do I shoot for half off you might ask?

There is a good chance that they are going to counter your original offer, therefore if you start your offer at 25% off the original price they could counter with 10% off the original price. The seller, as well as the buyer, wants to get that satisfied feeling. You as the buyer are satisfied with getting a deal whereas the seller is still happy with making money although it might be a little lower than what they were asking.

You also need to take in mind that most garage sellers are not out there to make money for a living. Their purpose is to get rid of items they do not want anymore and it is a bonus if they are able to get cash in return, it’s not like they are running a pop-up business. Most of the time they are more motivated to get rid of items compared to just making money.

When you are bartering you also need to establish your stopping point. What is too expensive for you?

The lower the price you purchase your item for, the larger window of opportunity you have to make money. This decision all depends on how much you want to make. The details are in the margins, if you see a video game that sold on eBay for $15 and you bought it for $5 that’s a decent amount of profit.

You tripled your money.

When you look up an item on eBay  you need to be as specific as possible, so your search results are as accurate as possible. If you cannot find an exact copy of the item that was sold, find the most closely related item and use it to set your standard for the value of an item and establish what you are willing to pay for it.

Do not get caught up in the excitement of the deal. Yes it’s exciting and yes it’s enjoyable to have success flipping products, but do not let it cloud your judgement or your knowledge. I am going to be honest, money does not care about your feelings.

Stay focused, get what you set out to get for the right price.

When I run into an item that I am still learning about I always ask myself is it worth the risk of X amount of dollars?

Are you comfortable with potentially losing X amount of dollars?

Risk is always involved.

I can remember when I purchased some collectible Harley-Davidson Steins. I did not know too much about them, I saw what they sold for on eBay and then decided to take a risk. The seller gave me a price that I was comfortable with so I purchased two of them. I broke positive, but only made a few bucks for a good amount of work. I am glad I did not lose money, but I lost my time.

My time is valuable and so is yours.

Behind every flip, there is a lesson to be learned.

Before we get into the final step, I am going to share with you lessons I have learned from my faults and successes.

Lessons to be learned

After dropping my wife off at the airport in the city, I figured I might as well hit up some auctions on my way back home.

At the time, I had been to auctions before so I knew the routine, but I had never been to an auction with the goal in mind to flip items. I had a few successful garage sale flips under my belt so I figured auctions are the next level in my side hustle pursuit.

I saw this collection of old American coins, mostly Kennedy half dollars and some steel pennies that were made during the war due to the shortage of copper.

I did the math, if I sold 50 of them at $5 a pop I would make $250 so I’d be comfortable with spending $200 for the lot. I remember that I liked that fact the coins are a small item so they would be easy to mail. I also liked that it was a collection therefore I could build my inventory without having to go to multiple garage sales to keep my eBay listings updated. I bought the coins, but I had to bid against others which drove up the price and my valuation was wrong 😬.

I did not know much about coin collecting and on top of my little knowledge of the items, I did not have good cell phone service in the building so I could not follow my rule of valuing items on eBay.

I knew that there was a market for collectible coins, but I did not take into consideration the specifics of coin collections. Collecting coins and currency is a whole other ball game. Let alone the quality certifications behind them.

Let’s just say I was in the negative on this flip. I believe I sold around $50 – $70 of the around $200 I spent on them. I also bought a collection of lighters that day for around $90 and sold them for around $20 – $30.

Sad day.

On the flip side of things my first big sell was a fishing lure. I bought a small tackle box of fishing lures and gear for $15 at a local garage sale.

When I was evaluating the price of the lures on eBay I was confident that I could make my money back and I was comfortable with risking $15. I had trouble choosing a listing price for the lures, I just did not know what to start them at.

Let me remind you that this was when I was first starting out. I asked my coworker what he thought, he suggested that I start auctioning them at 99 cents. So that’s what I did. That way I could see if they are worth anything and learn from my first attempt at selling lures.

Certain Fishing lures are very collectible.

I sold one for $100!!

This was my first big sale and I was ecstatic! I caught the eBay fever!

My first big flip: collectable fishing lure

My first big flip: collectable fishing lure

Step 3: Quality eBay Listings

I am not going to go through how to list an item step by step by step, but I am going to discuss my top recommendations when listing an item.

The reasoning I’m not going to go through it step by step is because eBay does a great job at outlining what is required for item listings.

I am going to give you what you need to take your listings from a default basic level to a high quality level.

By now if you were using the “sold items” feature on eBay during step 1, you should already have the eBay app installed on your phone. To list items you need to make a free account on eBay. The company does a great job and gives you a straightforward process for setting up an account.

I don’t have much complaints to say about the app, it provides an easy and understandable process for listing items.

Starting out, I would recommend that you focus on the “auction” listing more than anything else. You have the potential to make money and you can learn how expensive people value your specific item.

When you set up a “buy it now” listing, you set a constant price that won’t change.

Whereas buyers in auctions determine the final price; the sky’s the limit.

Another beautiful aspect that auctions offer is that they drive competition! Think about it, say you’re missing the last few presidents in your campaign button collection and president #3 is up for auction. President #3 is hard to come by so you know that you’re going to do whatever it takes to obtain his button……so is the next guy…..and the next guy…..and the next guy.

That means one thing for you: $$$$$$. I think you get the picture.

I believe this is what happened with my $100 fishing lures. Two guys were going at it, to add to their collection.

Now this doesn’t happen with all items, not all items are a part of a collection. The principle of supply and demand rings true and through auctions you are able to witness this process as a seller.

Let’s get into pricing.

Always start your auction at a price below what the previous item sold for. This may seem like common sense, but I have seen plenty of auction listings starting at the price they are valued at. Let me remind you that they have zero bids!

I wonder why. 😐

My rule of thumb is that the lower the starting price, compared to what it is valued at, the higher attention your listing is going to attract.

With a low starting point, potential buyers are going to see it as a deal to be made! I typically start the listing from $10 to sometimes $20 below what it is valued at. Also do not forget to take into account eBay’s 10% listing sellers fee. For most items eBay only takes 10% of your sold price. Here is a detailed list of eBay’s fees.

Once you have an idea for a ballpark price, you are going to want to take quality pictures of your product.

Display:

  • the back
  • the front
  • the sides, and
  • a bird’s eye view

Display every picture necessary to give potential buyers a full understanding of your item.

Once your pictures are uploaded you need to complete the description of the item, this is often overlooked/partially completed.

Now do not over do it, but your item’s description needs to be specific.

Example, if I am selling a video game that I have never tested on a console and the case is missing the original manual I would put the following in the description:“Untested and missing manual as seen in pictures.”

By saying this, it both informs your buyer and covers your butt. I have had it happen to me a few times where a buyer will purchase a produce that has a defect, that I mentioned in the description and showed pictures of 🙃, complaining that it is broken or not what they originally purchased. I then reference my original posting and they can’t win the argument. I will not refund them their purchase because they did not read the description.

What about reviews from the buyer!?!

If a buyer who is in the wrong attempts to give you a bad review, you can call eBay’s customer service, explain the situation, and ask for it to be taken down. Of course eBay must agree that you are in the right, but if you are right they will back you up.

1 point eBay, 0 points grumpy buyer.

Last tip on listing an item: shipping.

When starting out, always have the buyer pay for shipping. Ebay has a good system in place that calculates how much it will cost per person based upon their location.

All you have to do is enter the item’s weight and dimensions of the box/package that you plan to ship it in. When filling out the shipping portion of your listing, be sure that everything is correct otherwise you will be charged for extra shipping if your items actually cost more than you anticipated.

This is a lesson that I had to learn more than once.

Conclusion

  1. Establish your game plan for garage selling. Know where and how to mine for gold.
  2. Barter like it’s nobody’s business! The lower the price the greater the window of opportunity you have to make money.
  3. Simply follow directions when creating a listing, be thorough with your pictures and description.

Finally and most importantly, learn as you go.

After you do your research and read up on how to flip items on eBay, you need to try it! Experience is one of the best teachers.

I have experienced bad flips and good flips.

The path to success is not perfect otherwise everybody would be doing it.

Author bio: Rush is a Mid-Missouri high school engineering teacher and tennis coach. He and his wife Mia have no kids, only a smart Bernese Mountain dog named Zion. Along with teaching, he runs one blog; Clim & Joe’s. He enjoys exploring, cooking, board games, and time spent with his wife and family. 

Are you interested in flipping items for resale? What questions do you have for Rush?

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Source: makingsenseofcents.com

How to Become a Paid Caregiver for a Family Member

Ready to stop worrying about money?
The American Council on Aging strongly recommends finding a Medicaid planner to help with applying for caregiver roles and other benefits.
Genworth, a Virginia-based provider of long-term care insurance, conducts an annual survey on the cost of care for retirees. The median price for one month in a private room in a nursing home in 2020 was ,821. A semi-private room cost ,756 a month.
Medicaid eligibility in general, not just for these programs and waivers, is not consistent across the country. A general rule of thumb as of 2021 is senior applicants can’t have more than ,382 in income and ,000 in assets.
State-specific eligibility can be found here. If a senior is already enrolled in Medicaid, the next step is contacting their state’s Medicaid office.

How to Become a Paid Caregiver for a Family Member

“The vast majority of older adults want to stay in their homes as they age, and allowing them to pay a friend or family member to help with their daily needs can make that possible,” said Susan Reinhard, senior vice president of AARP’s Public Policy Institute. “The pandemic provided a push for states to expand this option, and we hope many of them will make their policy changes permanent.
Privacy Policy

  • Home and Community Based Services Waivers are offered by the majority of states. But many have a limited number of these waivers, so there may be a waiting list. This waiver allows the Medicaid participant to hire a friend or relative as a personal care assistant. This is also referred to as the 1915 C waiver.
  • The Self-Directed Personal Assistance Services State Plan Option allows a Medicaid participant to hire, train and pay the personal care assistant they choose. Based on the budget Medicaid offers, the participant decides what the assistant is paid. One unique part of this option is the participant pays employment taxes on the assistant. An intermediary helps with this financial aspect of the process.
  • Community First Choice, also called the 1915 state plan option, actually applies to Medicaid recipients who are in nursing homes but need personal care services. Instead of paying extra for a staff member at the facility to provide that care, this option allows friends or family to help with bathing, grooming, light housekeeping and transportation. According to the American Council on Aging, the following nine states offer this option: Alaska, California, Connecticut, Maryland, Montana, New York, Oregon, Texas, and Washington.
  • With the Caretaker Child Exception, Medicaid doesn’t pay the adult child a wage to care for their parent but allows the parent’s house to be transferred to the adult child as a form of payment. This comes into play when an elderly Medicaid participant is moving into a nursing home but wouldn’t qualify for Medicaid because they own their home.

Learn More About Medicaid 

Clients must show they need a certain level of care, and caregivers must show they are capable of providing that care. If the client needs medical care and the loved one isn’t trained for that, they cannot be designated as the caregiver.
Source: thepennyhoarder.com
Katherine Snow Smith is a staff writer for The Penny Hoarder.
“Paying family caregivers is a solution that saves states money and meets the growing need for long-term care.” <!–

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The Best Places to Live in Illinois in 2021

There is more to Illinois than Chicago, although the largest city in the state is home to almost three million people.

When thinking about some of the best places to live in Illinois, you probably immediately consider Chicago and its densely populated suburbs. While these are all great places to live, there are hidden gems all throughout Illinois that you should consider.

So, whether you’re seeking an affordable apartment in Chicago or a quiet tree-lined city downstate, you have a number of great options from which to choose.

Here are the best places to live in Illinois.

Aurora, IL, one of the best places to live in illinois

  • Population: 199,687
  • Average age: 37
  • Median household income: $71,749
  • Average commute time: 35.9 minutes
  • Walk score: 45
  • Studio average rent: $1,142
  • One-bedroom average rent: $1,344
  • Two-bedroom average rent: $1,590

The second-largest city in Illinois with almost 200,000 residents, Aurora offers a mix of options that appeal to everyone from young and single professionals to families.

During the first Friday of each month, food trucks serve up dishes along Benton Street Bridge. In addition, the revitalized downtown district has a great range of restaurants, from steakhouses to coffeehouses, and the area also has destination shopping outposts.

Plus, Aurora is nestled along Fox River, so nature-lovers will appreciate the opportunity to kayak and explore other activities nearby.

Bloomington, IL.

  • Population: 78,023
  • Average age: 39.8
  • Median household income: $67,507
  • Average commute time: 20.3 minutes
  • Walk score: 47
  • Studio average rent: N/A
  • One-bedroom average rent: $827
  • Two-bedroom average rent: $865

Bloomington often shares the limelight with its neighboring city, Normal, since it’s the home of Illinois State University.

While Bloomington lies in the heart of Illinois, at the junction of Interstates 55, 39 and 74, and within a few hours from Chicago and St. Louis, there is plenty to do in Bloomington.

Residents enjoy great restaurants, shopping and visiting attractions such as the historic Ewing Manor, named Sunset Hill by the Ewing family, or the David Davis Mansion which delights history buffs and garden lovers alike.

Bloomington is also the headquarters for State Farm Insurance and COUNTRY Financial.

Champaign, IL, one of the best places to live in illinois

Photo source: Visit Champaign County / Facebook
  • Population: 85,008
  • Average age: 36.5
  • Median household income: $48,415
  • Average commute time: 19.9 minutes
  • Walk score: 61
  • Studio average rent: $435
  • One-bedroom average rent: $629
  • Two-bedroom average rent: $947

Like Bloomington, Champaign is often associated with its neighboring city, Urbana, since the cities share the University of Illinois at Urbana-Champaign campus.

Champaign has a thriving arts scene, award-winning restaurants and great outdoor spaces. It’s a mix of rural and urban, giving residents options, whether they want a more quiet rural setting or a bustling urban environment.

Chicago, IL, one of the best places to live in illinois

  • Population: 2,721,615
  • Average age: 40.2
  • Median household income: $58,247
  • Average commute time: 43.4 minutes
  • Walk score: 84
  • Studio average rent: $1,796
  • One-bedroom average rent: $2,287
  • Two-bedroom average rent: $3,150

There is no shortage of things to do in the largest city in Illinois. Chicago is a city of neighborhoods and like any major metropolitan city in the country, it’s home to award-winning restaurants, world-class museums and Cloud Gate, the bean-like sculpture in Millennium Park also known as “The Bean” among locals.

In addition, the lakefront and the many parks throughout the city offer its residents a place to rest and enjoy their surroundings.

Rental rates vary based on the neighborhood but, in general, the closer to the downtown district and Lake Michigan, the higher the rental rates. Also, depending on where you live, it’s entirely possible to live in Chicago without needing a car since public transportation is pretty robust and accessible.

Evanston, IL.

Photo source: City of Evanston Illinois / Facebook
  • Population: 75,574
  • Average age: 41.4
  • Median household income: $78,904
  • Average commute time: 39.1 minutes
  • Walk score: 82
  • Studio average rent: $1,720
  • One-bedroom average rent: $2,141
  • Two-bedroom average rent: $2,974

Evanston borders the northern part of Chicago and while it’s a northern suburb, parts of it feel very much like a busy metropolitan city.

Northwestern University calls Evanston home so part of the north and east part of Evanston is home to students as well as established families who live in older and grand single-family homes.

Residents love their tree-lined and quiet streets and easy access to the beaches along Lake Michigan.

The city is large enough to have a few distinct shopping districts, including downtown Evanston, which has been completely transformed over the past decade with a large movie theater and larger retail establishments, while Central Street has more independent boutiques.

Naperville, IL, one of the best places to live in illinois

  • Population: 144,752
  • Average age: 41.3
  • Median household income: $125,926
  • Average commute time: 41.6 minutes
  • Walk score: 46
  • Studio average rent: $1,286
  • One-bedroom average rent: $1,483
  • Two-bedroom average rent: $1,828

The original home of the fictional Byrde family before they moved to the Ozarks, Naperville is a picturesque western suburb of Chicago.

The Naperville Riverwalk curves along the banks of the DuPage River and features independent boutiques, restaurants, bars and hotels with river views.

The DuPage Children’s Museum has fun hands-on exhibits that attract both residents and visitors to the area. In addition, the Naper Settlement is a family-friendly, 13-acre outdoor history museum that traces the history of Naperville.

Oak Park, IL.

  • Population: 52,227
  • Average age: 42.1
  • Median household income: $94,646
  • Average commute time: 43.1 minutes
  • Walk score: 84
  • Studio average rent: $1,427
  • One-bedroom average rent: $1,651
  • Two-bedroom average rent: $2,707

Oak Park is a tree-lined suburb just west of Chicago.

The Chicago Transit Authority (CTA) Green Line includes several Oak Park stops, making it particularly convenient for those who want to live in a suburb but still have easy access to Chicago.

Even so, Oak Park is a bustling city with an active downtown full of restaurants and independent boutiques, strong schools and active community members. It’s also home to the Frank Lloyd Wright Home and Studio, which attracts thousands from around the world to see the architect’s prairie-style home.

Peoria, IL, one of the best places to live in illinois

  • Population: 114,615
  • Average age: 40.8
  • Median household income: $51,771
  • Average commute time: 22 minutes
  • Walk score: 44
  • Studio average rent: $678
  • One-bedroom average rent: $771
  • Two-bedroom average rent: $954

Peoria is a laid-back city and most residents work for one of the major employers: Caterpillar (which still employees thousands despite its corporate move to Chicago), OSF Healthcare Saint Francis Medical Center or the school district.

Nestled along the Illinois River, it’s located between St. Louis and Chicago, which is approximately a two-and-a-half-hour drive. There is a mix of things to do in the city, from hiking outdoors to enjoying a cocktail at one of the many restaurants, bars or casinos.

In mid-2014, Peoria began offering bus route service on Sundays, something it hadn’t been offering since 1970, making it easier to get around town for those without a car.

Rockford, IL.

  • Population: 148,485
  • Average age: 41.9
  • Median household income: $44,252
  • Average commute time: 25.6 minutes
  • Walk score: 46
  • Studio average rent: N/A
  • One-bedroom average rent: $714
  • Two-bedroom average rent: $1,070

There is no shortage of outdoor entertainment options for those living of visiting Rockford. There are pools to swim, a river to kayak and nature preserves to hike.

The Klehm Arboretum and Botanic Garden as well as the Anderson Japanese Garden attract thousands of garden lovers.

Residents can choose between downtown lofts to quieter tree-lined streets in historic neighborhoods. Each Rockford community is active in its own way, with great restaurants, museums and shops located throughout the fifth-largest city in the state.

Springfield, IL, one of the best places to live in illinois

  • Population: 115,968
  • Average age: 43.2
  • Median household income: $54,648
  • Average commute time: 22.2 minutes
  • Walk score: 47
  • Studio average rent: N/A
  • One-bedroom average rent: $665
  • Two-bedroom average rent: $749

Home to the Illinois State Capitol, Springfield is a mix of those who serve the legislative and executive branches of the government during sessions as well as residents who live in the city full-time.

It’s also home to the Abraham Lincoln Presidential Library and Museum which honors and documents the life and work of the 16th U.S. President, Abraham Lincoln so the area gets a lot of tourists year-round.

Springfield feels a bit like living in a suburban setting but also has plenty of bars, restaurants and parks to keep locals and visitors entertained.

Choose among the best cities in Illinois

With world-class attractions, sprawling rural towns to fast-paced urban cities, Illinois has something for everyone. If you’re thinking about moving to the Land of Lincoln, we hope this list of the best places to live in Illinois helpful.

Rent prices are based on a rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory of one-bedroom apartments in March 2021. Our team uses a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
Other demographic data comes from the U.S. Census Bureau.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.

Source: rent.com

6 Home-Shopping Red Flags Even an Inspector Could Miss

The home inspection should catch any deal breakers, right? Not so fast.

Bill Loden, president of the American Society of Home Inspectors (ASHI), has been inspecting homes for the past 20 years. But he says some home headaches simply don’t reveal themselves during a standard inspection — and some are outside an inspector’s scope.

“There are things homeowners think we can do, but we can’t,” he explained. “And honestly, most people don’t want to pay for [a specialist].”

To get the most value from your home inspection, it’s important to know a few things even professionals might miss.

1. Partially blocked or damaged sewer lines

Some house problems don’t show up overnight, and a partially blocked or damaged sewer line often falls in this camp.

“We’ll run water through the fixtures, but we’re there for a limited time,” Loden explained. “Two to four hours might not be long enough for the problem to reveal itself.”

Inspectors will likely determine the type of drain pipe used and estimate its age. They may also look for trees or stumps near the sewer pipe that could cause damage. However, sewer-pipe scoping (sending a camera down the line) isn’t typically included in a standard inspection.

2. Failing HVAC equipment

Similar to damaged sewer lines, HVAC equipment can be fine one day and stop working the next.

“If I check an air conditioner when temperatures are moderate, it can seem fine,” Loden explained. “But under stress, when temperatures shoot up, it can fail.”

Loden says inspectors can bring an HVAC contractor with them for the inspection, but typically it’s not worth the investment when you compare the cost of buying a new unit.

“It will cost anywhere from $3,000 to $5,000 [to hire a contractor] and could take two to three days to complete,” he said.

3. Cracked heat exchanger

An area where you may want to pay for an HVAC contractor: an old furnace.

“In my area in Alabama, we have a lot of package units [furnace/air conditioner combined] that sit outside. It’s not part of the standard inspection to examine the heat exchanger, but a lot of them develop cracks that can allow the indoor air to mix with combustion air that has carbon monoxide,” he explained. “You don’t want that in the house.”

Loden recommends having an HVAC contractor examine the heat exchanger if a furnace is more than 10 years old.

“If the HVAC contractor does find such a crack, by law they have to replace it before the furnace can be used again,” he said.

4. Electrical problems

Loden says the best way to think about a standard home inspection is a “visual inspection,” because when it comes to electrical issues, inspectors can’t always determine the problem’s source.

“If I find a receptacle that doesn’t have ground, I know it’s disconnected somewhere, but I don’t know where,” he said. “You’re going to have to have an electrician find the disconnect in the system.”

5. Structural issues

Is the roof sagging, or is it part of your new home’s architectural style? Luckily, a home inspector should be able to tell.

“All roofs — at least wood roofs — have some inconsistencies. A home inspector knows what’s normal and what’s not,” Loden said.

However, when it comes to identifying how bad a problem is or how much it’s going to cost to repair, an inspector isn’t the right person to ask.

“Because we’re not licensed structural engineers, we’ll refer homeowners to one,” Loden said.

6. Leaks

Leaks may not be there one day and show up the next. For this reason, inspectors might not initially detect them.

“A lot of times we go into vacated homes,” Loden explained. “With the plumbing system not being used on a daily basis, any leaks may have dried up. And it may take a couple days after the water is turned on for the leaks to make themselves visible.”

Loden recalls his own home inspection when it was pouring rain. “The roof was not leaking when I moved in, but six weeks later it was,” he said. “A home inspection is not a guarantee that the house won’t have problems in the future.”

He says that the best thing you can do is carefully check the drains in cabinets before and during your move.

“A lot of times homeowners place belongings under there. Sometimes they’ll pack them up after the inspection and bump the drain traps, causing them to start leaking. The same thing can happen when you move in.”

At the end of the day, the key is to take precautions and make sure you find a certified inspector who has been inspecting in your area for a long time.

“They learn where failures are likely to occur,” Loden said.

Top featured image from Shutterstock.

Related:

Originally published September 5, 2014.

Source: zillow.com