Mike's Blog

Pillar To Post #1 - Just Had to Toot Our Horn!

Mike Williams (Pillar To Post Professional Home Inspection) — Tue, 15 Jan 2008 20:14:34 -0600

I hope this isn't to arrogant but I just had to share this info. Thanks to everyone in the Pillar To Post family, clients and all our realestate friends for making us #1 again for the 6th year in a row.

PRESS RELEASE

Tampa, FLA/Toronto CAN-January 15, 2008-For the sixth consecutive year, Pillar To Post, Inc., the leader in home inspection services, has been named #1 in the Home Inspection category by Entrepreneur Magazine's 29^th Annual Franchise 500® issue. Overall Pillar To Post ranked #143 in the Entrepreneur 500 list.

"Earning a #1 ranking in Entrepreneur Magazine is one of the highest accolades we could achieve," said Dan Steward, president. "The foundation to our success is the relationships we have with our Franchise owners and the innovative programs we enact together. Having been acknowledged with such a high ranking from Entrepreneur is extremely gratifying."

Entrepreneur Magazine conducted extensive evaluations of franchise organizations covering a range of criterion to create the Franchise 500 lists. Key points included financial strength and stability, growth rate, and size of the system. Entrepreneur also considered the number of years in business and length of time franchising, startup costs, litigation, percentage of terminations, and financial data. Financial data was audited by an independent CPA firm. Every company with verifiable data received a cumulative score, with the highest scoring franchises becoming the Franchise 500.

"Pillar To Post has maintained our dominant position in rankings this year thanks to the dedication and success of our franchise owners and staff," said Steward. "We anticipate continued forward momentum and growth in 2008, and appreciate Entrepreneur's support as we pursue aggressive business objectives."

About Pillar To Post

Pillar To Post is the leading provider of home inspection services to home buyers and real estate professionals in North America. Operating more than 450 franchises in the U.S. and Canada, Pillar To Post offers the most comprehensive inspection program available to residential buyers and sellers and real estate professionals.

Founded more than a decade ago, Pillar To Post is today ranked #1 in the Home Inspections category by Entrepreneur Magazine. The company's home inspections and Ready For Sale services ensure that Pillar To Post supports home buyers, sellers and real estate professionals to provide peace of mind and informed decisions. For more information visit http://www.pillartopost.com/.

Home builders versus home inspectors

Mike Williams (Pillar To Post Professional Home Inspection) — Tue, 06 Nov 2007 10:09:59 -0600

Home builders versus home inspectors
Over the last few years I have inspected many new homes for clients. Most of them I have inspected at the time of completion and a handful I have inspected during the construction process. I have found most builders to be respectful and understanding to the clients wants of a third party looking out for them.
While doing these inspections I try to be mindful of the builder, understanding that I am a guest on his property. I feel no need to beat up on the builder or to try and belittle them in some way. I just want to be sure the client is getting a properly built home. In many cases I feel as though I am a mediator between the builder and client since I have no intrest in the property except for the inspection fee. Having spent many years in the building industry I understand it is not all science. In fact in my opinion it is as much an art. Since most clients have never built a new home their expectations can be unreasonable so I try to help find common ground between the builder and client.
My question is this. How do you builders feel about home inspectors checking up on you? Are we a nuisance or do you feel we are providing a need? What say you builders?

Home builders versus home inspectors

Mike Williams (Pillar To Post Professional Home Inspection) — Mon, 05 Nov 2007 20:52:43 -0600

Over the last few years I have inspected many new homes for clients. Most of them I have inspected at the time of completion and a handful I have inspected during the construction process. I have found most builders to be respectful and understanding to the clients wants of a third party looking out for them.

While doing these inspections I try to be mindful of the builder undestanding that I am a guest on his property. I feel no need to beat up on the builder or to try and belittle them in some way. I just want to be sure the client is getting a properly built home. In many cases I feel as though I am a mediator between the builder and client since I have no intrest in the property except for the inspection fee. Having spent many years in the building industry I understand is not all science. In fact in my opinion it is as much an art. Since most clients have never built a new home their expectations can be unreasonble so I try to help find common ground between the builder and client.

My question is this. How do you builders feel about home inspectors checking up on you? Are we a nuisance or do you feel we are providing a need? What say you builders?

Moldy Situation

Mike Williams (Pillar To Post Professional Home Inspection) — Mon, 05 Nov 2007 20:22:02 -0600

I just ran into this news article and thought it was worth sharing. Seems to me the buyers lawyer is chasing the biggest money trail. This is a scary situation for everyone involved. both realtors, inspector, mortgage company.

What was the seller thinking? Does anyone in South Carolina know details of this story? Seems to me there is alot more to it.

www6.comcast.net/news/articles/odd/2007/11/02/ODD.Moldy.Secret.Room/

Top 10 Concerns for homebuyers and Sellers

Mike Williams (Pillar To Post Professional Home Inspection) — Fri, 02 Nov 2007 11:58:09 -0500

Top 10 Concerns for Homebuyers and Sellers

When buying or selling a home, people are often surprised to find how appropriate that old maxim "The more things change, the more they remain the same" can be. That's because no matter the age, style, size or location of a house, there are common problems that are likely to turn up during a home inspection.

Knowing what these potential defects are, and preparing to deal with them, is key to making the most of the buying experience. Here is my top 10 most common list:

Structural damage: As the foundation settles, it can knock doorways, walls and support beams out of alignment. The end result could make the entire house a safety hazard.
Leaky roof: Roofs may leak due to poor construction or aging materials. The question is, will the subsequent repairs be minor (replacing shingles) or major (replacing the entire roof)?
Faulty wiring: Older homes often need electrical upgrades, especially if you plan on installing a lot of electronic equipment (computers, exercise machines) or a pool or hot tub. When electrical circuits are not overloaded, the risk of fire is reduced.
Defective heating system: If it's an older system, it can pay to upgrade to one that uses less energy and is more efficient. If you've got gas or oil heat, a carbon monoxide detector is advisable.
Poor drainage: If the property is not properly graded, water may not run away from the house. In addition, gutters and downspouts should be checked and replaced if necessary.
Plumbing problems: Older homes may have faulty pipes made of polybutylene -- popular in the 1970s till the mid-1990s-which are prone to leakage and should probably be replaced with newer, more reliable materials.
Poor ventilation: Check the bathrooms. Without sufficient ventilation, moisture may have built up, potentially causing structural damage inside the walls.
Water seepage: If water's coming in, be sure to add caulk and/or weather stripping to your shopping list. Water leaks can lead to mold,> mildew and dry rot.
Improper maintenance: Any did-it-themselves, nonprofessional repairs could be a source of aggravation down the line.
Hazardous materials: Older homes may contain lead-based paint, asbestos, carbon monoxide, radon gas or toxic molds. Any of these could eventually cause serious health problems.

Prelisting Inspections Help Sell Homes

Mike Williams (Pillar To Post Professional Home Inspection) — Sat, 27 Oct 2007 11:34:39 -0500

Owners hope to head off trouble and speed sales by hiring their own inspectors.
By Frank Nelson, Special to The Times
August 26, 2007

JUDY MELLO wasn't looking forward to buying a new place to live, imagining a lengthy, complicated and perhaps stressful experience.

"I figured it was going to drag on for months and months," she says. "But it wasn't like that at all."

In fact, it took Mello, a retired registered nurse, a total of only 3 1/2 weeks to buy a $500,000 condominium in Carpinteria, a small coastal town a few miles south of Santa Barbara.

Although a number of factors smoothed the process, Mello says an inspection report commissioned in advance by the sellers played a large part in her decision to buy and helped speed the sale.

As housing sales continue to bog down -- last month Southern California sales were the slowest for any July since 1995, according to DataQuick Information Systems -- property owners are turning to new strategies.

One tactic increasingly bringing buyers and sellers closer together is a property inspection obtained by the seller before the home is even listed. A seller's inspection report is not in lieu of one commissioned by the buyer, but it often accomplishes the goal of signaling openness and good faith while at the same time unearthing any unpleasant surprises.

In some cases, a preemptive seller's inspection means repairs, such as leaks or faulty electrical wiring, will likely be completed in advance on the buyer's behalf; less pressing matters may be flagged and the asking price adjusted down accordingly. "To me, the report meant they were definitely interested in selling and cared about selling to somebody who was going to be satisfied," Mello says. "I felt comfortable that they were thinking of my interests."

Colleen Badagliacco, president of the California Assn. of Realtors, says not so long ago, when sellers were being bombarded with multiple offers, they didn't have to worry that much about the shape of the home.

"Now, the seller has to go the extra mile," she says. For some, the downside means making sure the house is priced right, taking disclosure to the next level -- the more they know, the more they legally have to disclose -- and offering to fix things.

But on the upside, a pre-listing inspection that gives buyers a better idea of where they stand and what, if any, additional work is needed, can also help sellers fend off demands for unrealistic price reductions to cover repairs.

According to Dan Steward, president of Pillar to Post, a nationwide home inspection company, buyers typically expect a $2 to $3 price discount for every $1 worth of defects turned up by their inspector.

With their own report, sellers can choose, for example, to spend a few hundred dollars fixing a plumbing problem that might otherwise mushroom into a claim for more than $1,000 off the price and, in the process, spark further potentially prickly negotiations.

"It definitely makes sense," says Chuck Miller, a 16-year veteran of the real estate business and now associate manager and sales agent with Coldwell Banker in Studio City.

In his own and other real estate companies, he's seen a marked uptick in the number of pre-listing inspections, perhaps a rise of 10% to 15% in the last year, and believes the ploy is helping sales move faster and more smoothly.

"Most people want to turn the key and walk in," he says. "They don't want repairs, and they certainly don't want surprises. If they know they have to do some work, they can at least prepare for that."

The National Assn. of Certified Home Inspectors, based in Boulder, Colo., also has noted a rise in the number of inspections carried out for sellers, though founder Nick Gromicko says they do not have national statistics.

However, on a local level, Gromicko does have some figures: "Our Denver chapter went from doing less than 2% of their inspections for sellers last year to doing 28% for sellers in 2007."

When Jack Lucarelli and his wife, Jeannie Wilson, decided to put their Toluca Lake home on the market for $3.75 million, they followed agent Miller's suggestion and first had an inspection.

The way it turned out, they need hardly have bothered. As Bob Wood, senior inspector with Sunland-based LaRocca Inspection Associates, combed through their 3,700-square-foot, two-story home, he was hard-pressed to find anything wrong.

A little dry rot in one post in the backyard, two faulty sink stoppers, a loose faucet and a cracked tile in the driveway. "It cost us about $18 for repairs," Lucarelli says, adding that the clean bill of health did not surprise him.

He says that he and his wife -- both of whom work in the entertainment industry -- have done a lot to the 1936 Spanish Mediterranean-style home and always kept the place in top shape. "But we thought the inspection and termite inspection were important to alleviate any fears or anxieties about any internal, hidden problems," he says. "It's an added convenience to the purchaser."

Chris Wrightsman, co-owner of LaRocca Inspection, sees these types of inspections becoming more prevalent and estimates that the number of homeowners choosing this option has risen about 5% in the last year.

He says the practice is much more common in Northern California, especially in the Bay Area, and he expects the trend to continue to grow. "When homeowners know the condition of their property, they can avoid a lot of problems and price accordingly."

Lisa Endza, director of communications for the Boulder-based national home inspectors group, says the cost of inspections ranges from $300 to $600, depending on the size and age of the property.

Tom Valinote of Thousand Oaks, who inspected Mello's Carpinteria condo for the sellers, runs Pillar to Post franchise offices in Camarillo and Goleta. Armed with a digital camera, laptop and a 1,600-point checklist, he typically spends two to three hours working through a house for an average cost of $425.

Inspections give sellers options, he says.

"They can say to the buyer: 'We found these problems. But we wanted to make sure we sold the house in the best condition possible. So, we fixed things, here are the receipts and now you don't need to deal with this.' "

That approach certainly appealed to Robert and Judy Parkinson. Longtime Los Angeles residents before moving to Oregon two years ago, they are in the process of selling a Montrose house they've owned as a rental for about five years.

Robert Parkinson says it was because they had never lived in the property, which is almost 90 years old, that they opted for the pre-listing inspection. "We wanted to do the due diligence and know the condition of the house before we put it on the market," he says.

"We didn't want to get into escrow and have someone do their own report and have a bunch of surprises. We mostly wanted to know that the price we're asking, $615,000, is a good, fair, solid price. We wanted to have a real clear idea of the condition of the house and do any work that needed doing. We felt that put us in a stronger position."

The inspection brought to light a number of issues, he says, the main ones being some plumbing, electrical and roof caulking work. They have now fixed most things and feel that having the inspection and spending about $7,500 on repairs were good moves.

The Parkinsons' agent, Gena Pinkerton, with Richard Keilholtz Realtors in La Cañada Flintridge, says the feedback from potential buyers to the roughly 30-page pre-listing inspection report has been very positive.

People assume because the house is old that it must need a lot of work, she says. "But the report shows that it doesn't. It's a huge relief for people to know that."

Choosing a Handyman

Mike Williams (Pillar To Post Professional Home Inspection) — Mon, 30 Apr 2007 19:39:06 -0500

HELP FOR HOMEOWNERS: CHOOSING A HANDYMAN*

Whether it's a big project such as a bathroom remodel, something small like putting up shelves, or repairs and routine maintenance, many homeowners turn to handymen to get the job done. It used to be that everyone knew "a guy down the street" who could do everything, but these days finding a qualified, professional , and reliable handyman can be a real challenge. Here are some tips for homeowners to ensure that they have the right person for the job:

MAKE SURE THEY ARE QUALIFIED FOR THE WORK

Certain projects require specific skills that all handymen may not have. Make sure that they have the qualifications and experience to do the job. In addition, many states and provinces require persons performing certain work to be licensed; electrical and plumbing often fall into this category.

ASK FOR REFERENCES

Request at least two local references from previous customers. The handyman should be willing to do this without hesitation. Then, contact those references! Ask about the quality of the work, timeliness, professionalism, and how the handyman handled any changes that may have occurred during the course of the project. Also ask how satisfied they were with the work overall.

CHECK ON INSURANCE COVERAGE

Liability insurance is always a good idea. If the handyman or another worker is injured while working on your property, you may be held liable for medical costs. Ask for evidence of coverage before agreeing to any work. Uninsured handymen often charge less for their services because they lack the overhead expense of insurance, but using one could cost you in the long run.

GET WRITTEN ESTIMATES AND A CONTRACT

Ideally, you should ask three handymen for written estimates for the work you have in mind. Be sure that each estimate contains enough detail so that you can make a comparison between them. For example, are the specified materials of the same quality? Does the cost include cleanup and hauling away any debris or old/broken items? Read all contracts carefully and be sure to ask about anything that you are unsure of.

DETERMINE THE PAYMENT SCHEDULE BEFORE YOU SIGN

Beware if you are asked to pay for the entire job up front - this is not an accepted business practice and could leave you open to fraud. Handymen will often ask for 50% when the contract is signed, which will allow them to purchase materials for the job and assure them that you are committed. Be sure to request receipts for all payments.

* source: http://www.handymanconnection.com/

Changes in Florida Home Insurance

Mike Williams (Pillar To Post Professional Home Inspection) — Fri, 26 Jan 2007 21:48:00 -0600

I received this from NEFAR this week and thought it might be of intrest to those who haven't been keeping up with what is going on in Tallahassee. Happy reading!

Whip's Policy Brief

The Office of the Majority Whip

Representative Ellyn Bogdanoff

323 The Capitol

850-487-0536

Special Session on

Hurricane Preparedness & Insurance

Conference Report

HB 1A

January 22, 2007

Policy Brief Table of Contents

1. Insurance Industry Accountability and Consumer Protection 2

2. Homeowners Rate Reduction 5

3. Mitigation 8

4. Uniform Building Code 11

5. Citizens Reform and Private Market Restoration 12

6. Estimated Average Insurance Premium Savings 16

INSURANCE INDUSTRY ACCOUNTABILITY AND
CONSUMER PROTECTION

Insurance Company Accountability & Regulatory Reform

The bill instills additional accountability requirements for insurance companies, including higher reserves for "pup companies," prohibition of "cherry picking," an oath of truth in rate filings, temporary suspension of "use and file" and arbitration, and expedited payment of claims.

Summary of the Bill

1. Heighten standards for Florida-only subsidiaries (Pup Companies)

•· Require all Florida-only subsidiaries to have a surplus of at least $50 million in liquid assets to help ensure that policyholders can receive payment when they need it.

2. Greater Accountability in Rate Filing

•· Prohibit excess profits by property insurers and require return of excess profits to policyholders. An insurance company earns an excess profit when its surplus (cash on hand) exceeds its PML (total projected loss) for a 250-year return period and it has earned a net underwriting gain (actual premiums - losses + expenses) in Florida in excess of 10% above its anticipated underwriting profit over the most recent 10-year period.

Suspend until December 31, 2008 the "use and file" procedure for rate increases. Insurance companies will have to seek and obtain OIR approval before implementing a rate increase during this two year period.

Suspend until December 31, 2008 the arbitration procedure for resolving rate disputes. During this two year period, all rate filing disputes would be settled according to the Administrative Procedures Act within the Department of Administrative Hearings.

Require an oath of truth, with penalty of perjury, for rate filings. Rate filings must be signed by the insurance company's CEO or CFO and actuary. The signed oath must state the rate filing reflects all premium savings reasonably expected to result from legislative enactments. Violation is an unfair trade practice, subjecting the insurance company to disciplinary actions against its license.

Require insurance companies to evaluate the hurricane-security of a structure rather than the date of construction when determining risk. Age of the home may not be used as the sole reason for rejection of coverage.

3. Require participation in the Florida property insurance market (Cherry Picking)

•· Require any insurance company that writes homeowners policies in other states and writes auto insurance in Florida to sell homeowners insurance in Florida, unless the affiliate writes homeowners in Florida. This is effective January 1, 2008.

4. Additional Miscellaneous Insurance Company Accountability Measures

•· Require insurance companies to provide greater loss reporting information to OIR.

•· Require insurance companies to give at least 100 days written notice, or written notice by June 1, whichever is earlier, for any non-renewal, cancellation, or termination of a homeowners' policy that would be effective between June 1 and November 30.

•· Require insurance companies to expedite payment of claims following a storm. Insurance companies must pay or deny property claim within 90 days of notice of the claim with an exception for factors beyond the control of the insurer. Violation is subject to penalty under the Insurance Code, subjecting the insurance company to disciplinary actions against its license.

Expanding Consumer Choice & Savings

The bill provides consumers with new options for insurance policies including premium installment plans, coverage options that reduce premiums, and discounts for obtaining multiple lines of coverage through the same company.

Summary of the Bill

Eliminate the cap on deductibles so a homeowner can choose a deductible other than the standard 2%, 5%, or 10% in current law. However, the policyholder must execute a written statement demonstrating understanding and intent and must obtain approval by a mortgage or lien holder if the deductible is over 10% on a home valued under $500,000.

Allow homeowners to choose quarterly and semi-annual installment plans to pay the premium, subject to OIR approval.

Allow insurance companies to provide discounts to policyholders who obtain multiple lines of coverage through the same insurance company (e.g. a policyholder that buys auto and property insurance coverage from one company).

Allow homeowners to exclude windstorm coverage from their policies by writing a statement and providing approval from the mortgage holder.

Allow homeowners to exclude personal contents coverage from their policies by writing a statement that serves as a conclusive presumption that the election was an informed choice.

Provide legislative intent language that in the 2007 Regular Session the Legislature should create a program to help low-income Floridians pay for property insurance.

Expanding Consumer Information

The bill provides consumers with additional information about the amount of and reasons for their premium costs. Policy renewals will identify the amount as it relates to each assessment authority and explain the amount of premium that is due to rate and/or coverage changes.

Summary of the Bill

Identify on policy renewal notices the amount of assessments and identify the full name of the assessing authority for Citizens, FIGA, and the CAT Fund.

Identify on policy renewal notices the amount of premium due to rate changes and the amount due to coverage changes.

Require the Insurance Consumer Advocate to provide an annual report card on insurance companies, including information on complaints and payment timeliness. The report will use a letter grade under guidelines set by the Financial Services Commission. Currently, no such program exists for property insurance.

Require insurance companies to provide notice of combinations of discounts, credits, rate differentials, or reductions in deductibles for windstorm mitigation.

HOMEOWNERS RATE REDUCTION

CAT Fund Reforms

The bill creates a 3-year-period during which the CAT Fund retention level will be set as low as $3 billion, and the capacity will be as high as $32 billion. Insurance companies must pass savings associated with the CAT Fund changes to consumers, whether or not they purchase this new coverage. The State Board of Administration and Legislative Budget Commission will jointly share the ability to adjust the parameters of the CAT Fund.

Summary of the Bill

See rate savings scheduled attached to the end of this brief.

Make additional reinsurance available through the CAT Fund.

Temporary additional coverage will be available for a three-year period.

CAT Fund retention for the 07-08 contract year will be $6 billion. With the approval of the Legislative Budget Commission ("LBC"), the State Board of Administration (The Governor, CFO, and Attorney General) ("SBA") will be empowered to offer additional coverage BELOW the retention level to as low as $3 billion in $1 billion increments (i.e., $5 billion, $4 billion, or $3 billion).

For each billion below the retention level, the pricing of the additional reinsurance will be set at near market rates ($1B below: 75% rate-on-line; $2B below: 80%; $3B below: 85%). This is also known as "TEACO" (Temporary Emergency Additional Coverage Option).

On the top end, the CAT Fund will make available 12 additional $1 billion layers of coverage up to a $28 billion total capacity (i.e., capacity of $16B + $12B in extra coverage layers = $28B total). This is also known as "TICL" (Temporary Increase in Coverage Limits).

This additional coverage will be priced according to the current statutory formula for CAT Fund coverage, which would be slightly over 2% rate-on-line. This is an actuarially sound rate.

Also with LBC approval, the SBA could add $4 billion more in TICL coverage to a total of $32 billion. The price for this extra coverage would be the same as other TICL coverage.

By March 15, 2007, OIR will submit an analysis of projected premium savings through this additional CAT Fund coverage.

Every residential property insurance company will be required to make a rate filing showing what premium savings would be available if it purchased this additional coverage, regardless of whether it buys the additional coverage. The company will be required to pass to consumers whatever savings it would have received if it purchased coverage.

Suspend the Rapid Cash Build-Up Factor, which would save policyholders 3% on their premiums.

Allow the CAT Fund to use capital market tools to build its resources.

In sum, this bill achieves the proper balance among four important public policy goals for CAT Fund reform:

•o Provide guaranteed rate relief for policyholders.

•o Ensure continued broad availability of reinsurance.

•o Maintain protections against crowding out the private reinsurance market.

•o Protect the state's taxpayers from taking on too much liability for a catastrophic event.

MITIGATION

Mitigation Inspections

The bill creates a statewide list of authorized inspectors and requires inspectors to pass a level 2 background check. The bill transfers $100 million in new federal funds to the mitigation program.

Summary of the Bill

•· Require wind mitigation inspectors to pass a level 2 background check. Current law will still require all wind mitigation inspectors to complete seven hours of specialized classroom training and pass a one-hour test.

•· Develop and maintain a statewide list of authorized wind mitigation inspectors.

•· Exempt low-income homeowners from the requirement to have an insured value of $500,000 or less in order to participate in the program.

•· Transfer $100 million in new federal funds from the Florida Small Cities Community Development Block Grant Program Fund to the disaster recovery program.

•· Form a public/private partnership between DFS and a not-for-profit organization to increase awareness among Florida homeowners of the benefits of mitigation.

Uniform Home Grading Scale

The bill creates a uniform home grading scale for withstanding wind damage.

Summary of the Bill

•· Require the Financial Services Commission to develop a uniform home grading scale to grade a home's ability to withstand wind damage.

Every Florida house will receive a simple grade that carries with it a specific and tailored description of its hurricane resistance strength. Consumers will then know how ready they are to face a storm and what they can do to prepare.

An objective grading system will encourage homeowners to better prepare their homes against hurricane damage. Even older homes or homes located in high risk areas, when properly retrofitted, would become less of an insurance risk.

Grades will also allow potential homebuyers to make informed decisions as they will be able to consider a home's hurricane grade much as they consider factors like anticipated renovations, the quality of neighborhood schools, or potential property tax liability.

The hurricane grading system will help hold insurance companies accountable. Insurance companies will be forced to justify their premiums in relationship to the assigned hurricane grades. This will bring much needed fairness to the ratemaking process as homes will be judged on their ability to survive a storm not on arbitrary characteristics like age.

Windstorm Mitigation Study Committee

The bill creates an eight-member Windstorm Mitigation Study Committee that will hold its first meeting by February 9, 2007, and provide recommendations, including proposed legislation, by March 6, 2007.

Summary of the Bill

•· Create a Windstorm Mitigation Study Committee to analyze solutions and programs including, but not limited to, those that provide for:

•o The availability of home inspections for windstorm resistance;

•o Grants to assist homeowners, and possibly other groups of property owners, to harden their property against windstorm damage;

•o The full actuarial value to be reflected in premium credits for windstorm mitigation;

•o The most effective way to inform policyholders of the availability of and means by which to obtain premium credits for windstorm mitigation;

•o Coordination among federal, local, and private initiatives;

•o Streamlining or strengthening applicable state, regional, and local regulations;

•o The stimulation of public and private efforts to mitigate against windstorm injury and damage;

•o The discovery and assessment of funding sources for windstorm mitigation;

•o Tax incentives for windstorm mitigation;

•o Consumer information concerning the benefits of windstorm mitigation, including personal safety as well as property security; and

•o Research on windstorm mitigation.

Deductible Buy Down

Homeowners can reduce their hurricane deductibles through mitigation.

Summary of the Bill

•· Allow homeowners who invest in mitigation the option of lowering their hurricane deductible or choosing instead a reduced premium.

Rate Reduction

The bill requires insurance companies to inform homeowners of available means for reducing homeowner costs through mitigation and to account for hurricane mitigation measures when determining rates. The bill also calls for a uniform mitigation verification inspection form and requires insurance agents to be familiar with the available premium discounts for mitigation.

Summary of the Bill

•· Require insurance companies to reflect hurricane mitigation measures when determining rates.

•· OIR will develop a uniform mitigation verification inspection form to be used by all insurance companies when determining discounts for wind insurance.

•· Require insurance agents to complete continuing education hours related to premium discounts available on property insurance policies for various hurricane mitigation measures.

UNIFORM BUILDING CODE

Uniform Building Code

The bill eliminates the Panhandle exemption to the Florida Building Code and creates code-plus guidelines for structures that exceed the minimum code. The bill limits future modifications to the building code to changes that enhance structural integrity for wind protection or the prevention of water intrusion.

Summary of the Bill

•· Eliminate the Panhandle exemption to the Florida Building Code by adopting the International Building Code and International Residential Code without exceptions as a uniform statewide building code. Delete the internal pressurization option for buildings in the 120 mph wind zone.

•· Eliminate all exceptions in the Florida Building Code regarding windborne debris.

•· Require the Florida Building Commission to develop voluntary "Code Plus" guidelines that will increase the hurricane resistance of buildings.

•· Prohibit future changes to the building code unless the changes enhance the structural integrity of buildings related to wind resistance or the prevention of water intrusion.

CITIZENS REFORM AND
PRIVATE MARKET RESTORATION

Citizens Rate Relief & Service Improvements

Citizens will no longer be required to charge the highest rates in an area. After a rate freeze for 2007, rates will be required to be actuarially sound. The bill specifies that the Citizens Board of Directors can be terminated at will by the appointing officers and creates a Strike Force to improve consumer service and options. It removes all commercial policies in the PCJUA and places them in Citizens.

Summary of the Bill

1. Reduce Rates for Citizens Policyholders

See rate savings scheduled attached to the end of this brief.

•· Repeal the January 1, 2007 Citizens rate change and refund the premium collected pursuant to that rate filing.

•· Require a new rate filing for an effective date of January 1, 2008.

•o The "rate freeze" only prohibits rate increases in 2007. During that year, rates may be lowered due to coverage changes or mitigation. The 2006 Monroe County agreement for lower rates is unaffected by this provision.

•· Eliminate current statutory requirement that Citizens rates be the highest. Rather, Citizens rates will only be required to be actuarially sound as of the rate filing on January 1, 2008.

•· Eliminate current reinsurance requirement for Citizens rate filing. Citizens will no longer factor the cost of private reinsurance into its rate filings.

•· Rates must be actuarially sound and not excessive, inadequate, or unfairly discriminatory. Rates will not be required to cover costs of specified PMLs.

•· Citizens will be required to file a recommended rate at least once a year, and OIR will establish Citizens rates within 45 days of the filing.

•· Delay until 2008 the requirement that Citizens impose a 10% of premium assessment on nonhomestead policyholders if a deficit occurs.

•· Delay until 2008 the requirement that Citizens impose a 10% renewal surcharge on all Citizens policyholders after a deficit if the first 10% on nonhomestead policyholders is not sufficient.

•· Subject to the approval of a business plan by the Financial Services Commission and the Legislative Budget Committee, and no earlier than March 1, 2007, Citizens may offer multi-peril policies in the High Risk Area. Citizens already offers multi-peril policies in other areas of the state.

•o Citizens will be required to continue to offer wind-only policies in the High Risk Areas.

•o The bill states a legislative intent that this change should create a 10% reduction in Citizens premiums.

•· Allow the SBA to invest and manage Citizens' assets.

•· Allow the Citizens board to set coverage limits.

2. Improve Consumer Choice, Options, and Protection

•· Create a Strike Force to review Citizens outstanding claims, make recommendations for disposing of outstanding claims, and recommend revisions to Citizens claims handling process.

•o The first report, due July 1, 2007, will offer recommendations for Citizens to resolve and dispose of open claims from the 2004 and 2005 hurricane seasons.

•o The second report, due July 1, 2008, will focus more generally on future improvements in claims handling and disposition.

•· Citizens board members serve at the pleasure of those state officers who have appointed them and may be removed from the board at any time for whatever reason by the officer who appointed them (The Governor, CFO, Speaker of the House, and Senate President).

•· Correct technical deficiency in Florida Market Assistance Plan (FMAP) relating to real estate closings that occur during the 10-day waiting period for Citizens.

•· Specify that take-out policies removed from Citizens are considered to be the sole obligation and direct insurance of the take-out company. This clarifies that Citizens does not retain any liability for policies that have been taken out of its book of business.

3. Reforms to Citizens Eligibility

•· Move all commercial non-residential policies out of the PCJUA and place them in Citizens. Citizens will write commercial coverage statewide and will cover the first $1 million on commercial property. Citizens would be allowed to require commercial properties to meet specified mitigation construction features in order to be eligible for coverage.

•· Require buildings that are 2,500 feet on the landward side of the Coastal Construction Control Line to be built to "code plus" standards in order to be eligible for Citizens coverage or up to the standards of the Miami-Dade building code if such standards have not yet been created. Begins on January 1, 2009.

•· Remove requirement that non-homestead policies are ineligible for coverage in Citizens beginning March 1, 2007 unless rejected by three surplus lines and one authorized insurance companies.

•· Require Citizens to be subject to assessments by FIGA, which levies assessments when it assumes the liabilities of bankrupt insurance companies.

•· Allow Citizens to require commercial properties to carry out specified mitigation techniques in order to qualify for coverage.

•· Expand Citizens assessment base to match that of the CAT Fund, which is all lines of property and casualty insurance except for workers' compensation and medical malpractice.

•· Current Citizens policyholders can stay in Citizens unless they decide to take a policy with a private carrier. Those seeking new coverage in Citizens may only obtain it if they receive an offer from a private company that is more than 25% greater than comparable coverage in Citizens.

Market Incentives & Regulatory Reforms

The bill removes regulatory barriers to risk pooling among similar entities, to self-insurance for multi-family dwellings, and to competition among reinsurance companies.

Summary of the Bill

•· Allow risk pooling of "like" entities, such as hospitals, municipalities, condominium associations, and not-for-profit corporations.

Relax restrictions on multi-family dwellings, condominium associations, and other such entities that self-insure.

Limit insurance requirements in the Condominium Act to "residential condominiums." Also specify that "adequate insurance" for a group of at least three communities operating as residential condominiums, cooperatives, homeowners' associations, or timeshares must be adequate to cover a 250-year PML windstorm event.

•· Eliminate the collateral requirement for non-U.S. insurance companies based on a determination by OIR of the adequacy of regulation of the country of licensure and the financial strength of the reinsurance company.

•o This would allow reinsurance companies based in other countries to have the same market access as domestic reinsurance companies provided they meet Florida's regulatory standards.

Repeal the deregulation provisions allow insurance companies to raise or lower rates within a certain percentage without OIR review (i.e., "rate flex").

Reduce the amount of funds insurance companies writing coverage for manufactured homes must put up to receive a state funding match in the Capital Buildup Incentive Program. Insurance companies that write new coverage for manufactured homes will now be allowed to participate in the existing program but will only have to contribute $7 million in new capital in order to participate. They would also be given first priority for fund distribution.

Create a bifurcated system for obtaining sinkhole coverage by creating definitions for and differentiating between a "catastrophic groundcover collapse" and a "sinkhole." All homeowners policies will include full coverage for catastrophic ground cover collapse, including coverage for contents and the structure. A policyholder may choose to go without sinkhole coverage after signing a plain declaration.

Clarify prior statutory language that allowed FIGA to use its assessment authority to directly pay claims of an insolvent insurer rather than using the assessment to issue bonds.

HURRICANE PREPAREDNESS AND INSURANCE LEGISLATION
ESTIMATED AVERAGE INSURANCE PREMIUM SAVINGS

Florida Homeowners *with policies from companies other than* Citizens and State Farm Insurance companies.**		Total Premium	Wind Premium
	Suspension of Florida Hurricane Catastrophe Fund (FHCF) 25% Rapid Cash Buildup	2.7%	5.0%
	FHCF Reinsurance from the $12 billion layer	19.1%	38.1%
	TOTALS	21.8%	43.1%

State Farm Insurance Policyholders		Total Premium	Wind Premium
	FHCF Reinsurance from the $12 billion layer	5.0%	14.0%
	Suspension of FHCF 25% Rapid Cash Buildup	2.0%	5.0%
	TOTALS	7.0%	19.0%

Citizens Property Insurance Company Policyholders		High Risk Total Premium	Personal Lines Total Premium
	Multi-peril Policies Sold to High Risk Account (if approved)	10.0%	---
	FHCF Reinsurance from the $12 billion layer	2% - 3%	2% - 3%
	Eliminate Requirement that Citizens Purchase Excess FHCF Coverage at 10% Rate On Line	1.7%	1.0%
	Suspension of FHCF 25% Rapid Cash Buildup	3.0%	2.0%
	Expand Citizens Assessment Base to Match FHCF Assessment Base	1.0%	---
	TOTALS	17.7% - 18.7%	5% - 6%

Citizens Premium Increase Avoidance		High Risk Total Premium	Personal Lines Total Premium
	Repeal of Citizens rate filing previously approved for January 1, 2007	23.1% site-built 4.8% mobile homes	12.4%
	Repeal of March 1, 2007 rate increases	56.5%	2.2%

Mitigation/Home Enhancement and Loss Prevention - Potential Savings
	Use of Uniform Grading Scale for Setting Premiums All residential homeowners (Based on sampling of homes inspected in 16 counties, average savings without any improvements)		18.4%
	Mitigation Grant Program - Potential Savings to Grantees All residential homeowners (Based on sampling of homes inspected in 16 counties, average savings depending on improvement plan selected)		25.8% - 31.5%

Introduction

Mike Williams (Pillar To Post Professional Home Inspection) — Thu, 25 Jan 2007 17:19:22 -0600

As an inspector who is involved with many new construction homes I know there are special needs and problems associated with these transactions. Hopefully we can have good dialogue in this group to help each other out. Write a comment or ask a question and lets see what we come up with.

Mike

Making Your Home Attractive to Potential Buyers

Mike Williams (Pillar To Post Professional Home Inspection) — Tue, 23 Jan 2007 18:57:57 -0600

Here's some advice on making your home attractive to potential buyers.

Get routine service done on heating and cooling systems. Pre-sale service will prevent big surprises uncovered by the buyer's home inspection.

Wash windows. In addition to improving the home's appearance, washing may uncover broken seals in thermal pane windows, which sellers may choose to repair prior to showing the home.

Have a home inspection performed. Current knowledge of a home's condition helps when pricing the home and negotiating with buyers. Sellers can repair damages pre-sale, and can save money on repairs-for instance, replacing damaged sections of the roof rather than re-roofing the entire home.

Repair windows and doors that don't operate correctly. Windows stuck closed may simply be painted shut, or a symptom of the foundation settling.

Have a garage sale or donate to a thrift store to clear out excess "stuff." The home will seem larger and more attractive, and offer improved accessibility to the home inspector.

To learn more, visit the Web site at www.pillartopost.com.

Experts say making your home inviting to a buyer can make a big difference

Prelisting Inspections Help Sell Homes

Mike Williams (Pillar To Post Professional Home Inspection) — Fri, 19 Jan 2007 17:51:18 -0600

This article was published on: 07/01/2006

SELLING: Prelisting Inspections

Prelisting Inspections: Head off trouble
BY CHUCK PAUSTIAN

Sandy Schoon, ABR®, GRI, a sales associate with Arizona Best Realty in Scottsdale, knows firsthand just how quickly a deal can be put in jeopardy - or slip away altogether.

Schoon had a listing on an older house, built in the early '70s. Two weeks before the sale was to close, the air conditioning system broke down. After some scrambling by the sellers and a $2,000 repair, the deal went through, but Schoon says the added stress could've easily been avoided.

"If you do an inspection and make the necessary repairs before listing a home, the house basically has a clean bill of health," says Schoon, who has regularly recommended prelisting inspections to her clients during the four years she's worked as a real estate salesperson. "It's an opportunity to take care of things that could go wrong so that they won't come back and bite you."

Prelisting inspections - examinations paid for by the seller before a house is put on the market -are becoming an increasingly popular way for practitioners to not only reduce the possibility of last-minute surprises but also give their clients' homes a marketing edge.

Although some practitioners suggest prelisting inspections for older homes or those in obvious need of repair, Susan Spellman, ABR®, a salesperson with Long & Foster, REALTORS®, in Williamsburg, Va., recommends them to all her clients. Her average sales price is about $700,000, and her clients tend to live in gated communities. "Just because a home has granite countertops doesn't mean it's well built," she says.

She feels so strongly about prelisting inspections that if her clients don't agree to do one, she gives them two options: sign a letter acknowledging they're not following her advice or work with another practitioner. "I tell my clients not to be penny-wise and dollar-dumb," Spellman says.

In the end, "my clients feel it's been money well spent," she says.

Schoon and Spellman both mention the inspections in all of a home's marketing materials, and make the inspection reports, as well as any repair receipts or cost estimates, available during showings.

From the Experts

According to the "2005 Home Inspection Business Operations Study," conducted by the American Society of Home Inspectors in Des Plaines, Ill., the number of prelisting inspections has been increasing slowly but steadily during the past decade. The study, which is based on a nationwide survey of about 18,000 home inspectors (response rate: 14.7 percent) and covers business operations during the 2004 calendar year, found prelisting inspections accounted for about 2.6 percent of an inspector's annual business, up from 1.5 percent in 1996. On average, an inspector conducts about 200 home inspections annually.

OVER

Although the percentage of prelisting inspections is still relatively low, the increase is significant, especially as many real estate markets show signs of cooling, says Rob Paterkiewicz, executive director of ASHI based in Des Plaines, Ill. "Sellers are realizing it's not just their market anymore. Thanks to the Internet, potential buyers are walking into homes more knowledgeable than ever before, and sellers know they must do everything they can to sell their house," Paterkiewicz says. He estimates prelisting inspections might already represent as much as 5 percent of an inspector's business, and he expects the trend to continue.

"A lot of this activity is being driven by real estate practitioners," rather than consumers, says Dan Steward, president of Tampa, Fla.-based Pillar To Post Inc., a national franchise of home inspection companies, because practitioners want faster transactions with fewer surprises or hiccups.

Like Paterkiewicz, Steward's also seen an increase in prelisting inspection activity. "A prelisting inspection helps get buyers comfortable with the idea of making an unconditional offer. There's also a greater sense of security because the seller and practitioner are being very forthright, demonstrating that there's nothing to hide."

The need to make certain repairs-such as to mechanical systems (heating and air conditioning, plumbing, and electrical) and to address safety issues (broken locks, loose handrails)-almost goes without saying. But the prelisting inspection can help the owner and practitioner decide which, if any, of the remaining projects to address before putting the house on the market.

Even if sellers decide not to make any of the suggested fixes, a prelisting inspection can still prove beneficial, Steward says. For example, it allows sellers to obtain cost estimates for needed work, so they can offer potential buyers an appropriate, not excessive, discount off the listing price.

A Smooth Ride

By bringing potential problem areas to light before sellers put their house on the market and creating an environment of trust and goodwill between sellers and buyers, prelisting inspections can reduce parties' stress level and eliminate many of the bumps that can throw a deal off track, says Long & Foster's Spellman.

"You want a smooth, successful transaction," she says. "If the house doesn't sell, it's a lose-lose for everyone."