Your Questions Answered
Real Estate Voices - Your Questions Answered
As the real estate leaders in Central Pennsylvania, we get a lot of questions. You will have questions - lots of them. Here are your voices, asking real estate questions on every topic. Oh, and by the way, if you have another question we want to hear it! Use the confidential form below and we'll get you the answer quick.
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Popular Questions
- Homeowners looking to sell or refinance are naturally going to be very interested in what their property will bring on the real estate market. Almost always, the best way to quickly establish a general valuation is to contact a real estate you’ve researched and selected and request what’s called a “Comparative Market Analysis”. The knowledgable agent will present you with a detailed comparison of your home against recent local sales, applying general market trends as well as neighborhood and even house-by-house value differences. Do NOT rely on any online estimators or statements of value; they are a flawed concept that only takes into account basic data such as bedrooms, lot size etc. and cannot account for the “soft” features your home offers versus other homes.
- A “short sale” is the term used to define the process that is necessary for a seller to sell their home while they are behind on their payments to their bank AND the property’s estimated value is less then the total amount owed to their bank. In order to sell the property, the seller will need to secure the bank’s approval since the bank will be losing money on the sale. While short sales in Central Pennsylvania are more common today than in past years, most home sales are not short sales. Home buyers can purchase a home at a significant discount from “market” price but the process of getting bank approval can be time-consuming; using a short sale negotiator such as Guardian Transfer can reduce the wait time for both parties in the sale.
- A “home warranty” in central PA is not homeowners insurance – it is a program you can buy that covers parts of a home in the event of failure – dishwashers, heating and cooling systems, other “moving parts”. Typical policy length is one year beginning with the closing date, and policy cost ranges from $450 to $700 depending on the coverage level elected.
Questions (by topic)
- · How do I find my credit score?
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You may obtain your credit scores through the 3 credit reporting agencies, Equifax, Experian, and Trans Union. However, when your mortgage company pulls your credit from these 3 bureaus the score they receive may be different than the one you received. If you are seriously looking to purchase a home, it is best to have a pre-qualification or pre-approval done by your lender. The lender is required to provide you with your credit score during this process.
- · Are all mortgage companies the same?
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No. Companies who offer mortgage financing may be a mortgage bank, mortgage broker, bank, on-line lender, or credit union. They may not all offer the same loan products. Their fees and interest rates can vary, as well as how they conduct their business. Some companies have local loan officers, processing, and underwriting. Others may conduct the full loan process on-line or physically be in a different location or state. It is also important that the property appraisal is being completed by a local appraiser familiar with your area. Some companies may use out of state or area appraisers.
- · How much money do I need for a down payment?
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This could be as low as zero. VA and Guaranteed Rural Housing Program requires 0 down payment. FHA requires 3.5% down payment. Conventional requires 5% down payment. This will vary depending on the financing program you and your lender decide is best for you based on credit scores, cash available, personal information, income, and location of the property.
- · What’s the difference between a prequalification and a preapproval?
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Pre-qualification is provided by using basic information you provide to your lender. Your lender will review your credit, income, and assets to determine if you qualify for mortgage financing. They can provide you with information as to what programs is best for you, the sales price of the home you qualify to purchase, and provide you with estimated cost to purchase. The next step would be a pre-approval. The pre-approval is making full application with your lender and providing documents needed to verify your information.
- · What fees should I expect to pay to get a mortgage?
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Your lender must provide you with a detailed closing cost estimate. Mortgage fees, or origination fees, will vary depending on the lender. The origination fee is usually the cost of processing and underwriting your loan. You will have additional fees for title insurance and title search, appraisal, credit, recording fees, flood certification, document preperaation fees, notary fees, and interest for the days remaining in the month you settle. You will also need funds to set-up an escrow account for taxes and insurance and reimburse the seller for taxes they have paid for the year, as well as paying the first year of home owners insurance. You should always review a closing cost estimate before making an offer to purchase a home.
- · What is an “FHA” loan and why is it different than a “conventional” loan?
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FHA (Federal Housing Administration) offers loans with a 3.5% down payment. They are more lenient with credit scores and credit situations than conventional loans. They allow a higher seller assistance amount than conventional 95% financing, all funds to purchase may be gift funds received by a family members. FHA is the insurer of your loan to the lender and is not your actual lender.
- · Can my family give me money towards a down payment?
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Yes. How much will depend on the loan program you decide to use. FHA, VA, and Rural Housing will allow all gifts funds from a relative as long as it is fully documented with a paper trail. Conventional will allow gift funds after the buyer contributes the first 5% of the down payment into the transaction.
- · Where’s the best place to start looking for a home?
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Most prospective home buyers start their search on the internet using a search service such as ___. The recommended approach is to identify an agent who specializes in the area you are interested in and contact them first; then they can arrange for you to receive notifications of all homes on the market based on your personal needs (price range, bedrooms, lot size, amenities etc) thus cutting down the number of homes you are having to review online.
- · Are all real estate agents able to show me homes?
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Yes, in Pennsylvania Real Estate agents are licensed without regard to whether they are serving a buyer or seller client, and have access to “show” homes to anyone as part of their membership in the local “Multiple Listing Service”. However, there are agents to make a specialization of who they serve and it’s a good idea to research them before contacting them to see if they demonstrate a knowledge of home buyer issues.
- · How do I know the list price is a fair one?
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Your buyer agent should be knowledgeable about the local homes market, and their advice on the relative values of homes will be very important to you. Once you find yourself focusing on a few specific homes, the agent will typically write up a market evaluation of the properties to better understand recent home sales and what they mean to the homes you like. By the time you write a purchase offer you should be comfortable with the “fairness” of the price you are considering.
- · When can I typically see homes in person?
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Licensed real estate agents who are members of the local “Multiple Listing Service” are able to “show” homes at any times that are convenient to the home seller. Ask your agent to arrange showings for you that fit your schedule; often buyers will lump several showing together on a Saturday morning, etc. to save time and better compare their favorite homes.
- · How do I choose a real estate agent to show me homes?
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We feel it’s important that you are comfortable with your buyer agent – you will be spending a lot of time together and there should be a team perspective in play. Also, you should take the time to review an agent’s qualifications such as local market knowledge, experience and what other clients have to say about them. You can’t do too much research in this regard – this is where you avoid many of the complaints that come later if you work with the “wrong” agent for you.
- · What paperwork do I need to make an offer on a home?
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There are many, many forms that exist within the business of real estate in Central Pennsylvania; in fact, the state real estate commission works with the state Realtor Association and related attorneys to have a form for as many eventualities as possible (to avoid confusion). The basic forms to purchase a piece of real estate, however, are a) the Agreement Of Sale, b)The Sellers Property Disclosure and c) the prequalification letter provided by your mortgage lender. These three documents plus the deposit check are what is generally required by the seller in order to consider your offer a valid one.
- · How long does it take to find out if the seller will accept my offer?
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The Pennsylania Agreement Of Sale contains a place to write in a time frame you as the buyer would be willing to give the seller in order to consider your offer and reply to you in writing. This time frame can vary depending on whether the seller is an individual or an organization (like a bank, who won’t be in a rush by the way). In general, your buyer agent and the listing agent will be in close verbal communication regarding your offer so a “verbal response” may only take hours to get. Ask your agent what their opinion is based on the circumstances.
- · What is the Pennsylvania “Sellers Property Disclosure”?
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The “Seller Disclosure” is a five page document that is required to be completed by all sellers of residential real estate containing 4 living units or less on the premises. The seller is required to fill out all sections, answering the specific questions to the best of their ability regarding the condition of the property and writing notes for any defects or conditions and how they were corrected. The PA Sellers Disclosure form is critical for you as a buyer to understand and be thoroughly comfortable with before you submit an offer. Incomplete seller disclosures should be questioned. Note that if the seller has no knowledge (as with a bank selling a foreclosure) then that should also be noted and attested to.
- · How do I find out the utility costs on a home?
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More and more listing agents are asking their sellers to provide energy and utility costs so they can advise potential buyers, so don’t be afraid to ask about these. Energy costs can be a significant piece of your costs to own a given home, and are often overlooked in the rush to get a good mortgage and negotiate an offer on a home. A home inspection will not include information on energy cost either, so it’s up to you to request the information from your agent. A “home energy audit” can also be requested as part of the purchase agreement should you want an exact estimate of the cost to heat and cool the home. These are performed by certified home energy auditors in Central PA.
- · How long does it take to move into my new home?
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The Pennsylvania (PA) Agreement of Sale contains a provision for “settlement date” that you will use to select the best date for you to “close” on the property. This time frame depends greatly on a) the mortgage financing process you need to complete, b) the property inspections and repairs/verifications you choose to perform and c) your personal schedule. You take possession of the property as of the date and time you sign the closing form (the “HUD” form). After that the property belongs to you! Move in whenever you prefer.
- · What exactly is a “distressed property”?
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The term “distressed property” refers to a property that is being sold under circumstances other than by the homeowners themselves. The majority of such sales are as a result of a foreclosure, but “estate sales” of property belonging to deceased sellers may be included in this category. “Short sales” in central PA also are considered distressed properties.
- · I see the listing is noted as a “short sale” – what’s that?
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A “short sale” is the term used to define the process that is necessary for a seller to sell their home while they are behind on their payments to their bank AND the property’s estimated value is less then the total amount owed to their bank. In order to sell the property, the seller will need to secure the bank’s approval since the bank will be losing money on the sale. While short sales in Central Pennsylvania are more common today than in past years, most home sales are not short sales. Home buyers can purchase a home at a significant discount from “market” price but the process of getting bank approval can be time-consuming; using a short sale negotiator such as Guardian Transfer can reduce the wait time for both parties in the sale.
- · What is a “HUD” home?
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Homes purchased using a government-guaranteed loan such as “FHA mortgages”, if they should go into foreclosure, are transferred to HUD (Dept. of Housing and Urban Development) for liquidation (resale). HUD contracts with regional brokers to list and sell those properties, usually at a discount to the estimate “market” value. You can see HUD homes for sale in Pennsylvania and nationwide at www.HUDhomestore.com.
- · I heard there are good deals at a “Sheriff Sale” – is that true?
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“Sheriff Sales” refer to public sales that are required by the legal process whereby the bank takes the deed back from the non-paying homeowner. The county (such as Lancaster County, Dauphin County, York County etc) holds a regular “Sheriff Sale” where the deputy Sheriff offers the properties to the public. If there are no bidders, the bank representative takes possession of the property for the cost of municipal fees and taxes due. Public bidders CAN find possible “deals” at Pennsylvania Sheriff Sales BUT must be aware that they are responsible for a)paying off the delinquinent mortgage plus all fees, and b) assuming liability for any leins on the property, which they themselves have to discover.
- · Are there a lot of problems with a foreclosed house?
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There can be. The condition of a home that has lain vacant for six months to two years can vary widely. If the property is not properly “winterized” the plumbing may have frozen and been damaged. Vandals and thieves can also do significant damage to the property over time. Given the circumstances, homeowners are generally lax in maintaining the home and can leave foodstuffs and other personal items. Banks generally hire “cleanouts” to remove these items early on in the foreclosure process but often the flooring, appliances and other parts of the house will need to be replaced.
- · Do I really save money when buying a foreclosure home?
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The short answer is “yes, usually”. As mentioned earlier, Foreclosures in Central PA can vary in condition widely, and often the selling bank will price the property relative to it’s condition as noted by the “cleanout” company and/or the listing agents recommendations. This means that the more intact properties will tend to be priced closer to market value, and the more damaged ones priced lower than market value. The goal as a foreclosure buyer is to know the costs to fix things and have a good buyer agent who can estimate the market values for you.
- · Can I get a mortgage on a distressed property?
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This is one of the biggest issues facing the real estate market right now – mortgage lenders are working to be able to finance properties in distressed condition. The issue is that most home buyers prefer to use “FHA” (Federal Housing Administration) mortgage loans due to their current low rates. However, the FHA requires properties to be in good condition which automatically excludes the majority of distressed properties. Until this issue is resolved, buyers of foreclosures in Central PA will generally need 20% down for a “conventional” mortgage.
- · What documents are needed to close on my home?
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As a buyer, you will need one form of government identification, i.e. drivers license or passport, proof of homeowners insurance and a certified check for the balance of the amount owed to purchase the property.
- · Does home closing (“title”) service cost money?
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As with any service, you will pay a fee to someone to prepare the documents for you to sign at closing. The good news is that in Pennsylvania, this fee is built into your title insurance fee. Title insurance is a one time fee paid at the time of settlement for the services provided by the settlement company to prepare your file for settlement, make sure any judgments or liens are paid, no outstanding title issues exist and the protection that the title to your property is secure while you own the home.
- · Do I always need to buy a “title insurance” policy?
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Almost every lender requires title insurance protection but a owners title insurance policy does not need to be purchased. You may sign a document to waive purchasing title insurance. In Pennsylvania, the costs associated with settling on your house, i.e., the title search and the handling of your real estate settlement is included in the one time title insurance fee. If you do not purchase title insurance, you will have to pay an attorney to handle your transaction.
- · What is an “escrow account” and why does my lender want one?
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The lender establishes an escrow account to make sure that your homeowners insurance and taxes are timely paid every year. A certain amount of money will be paid into your escrow account every month. (your tax and homeowners insurance amount divided by 12) when your taxes are due, the lender then pays the bill out of this escrow account.
- · What is a “home inspection” and how much do they cost?
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A home inspection is a non-invasive, primarily visual inspection of major components of a home in an attempt to identify current significant defects. Cost varies among providers but most average about $300-500, depending on the age and size of the home. Other services, such as radon testing are additional.
- · What if the home inspector doesn’t find everything?
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In PA, a home inspector is liable for missing issues that were present and not hidden at the time of the inspection, but only up to the cost of the inspection. There are two exceptions to this: gross negligence and willful misconduct. If the buyer can prove that issues were missed due to one or both of these reasons, the award can be for actual danages. There is a one year limitation to make a claim, based on most inspection contracts and PA case law.
- · Why do I need an insurance policy before I close on my home?
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Yes, every homeowners needs insurance to protect this significant investment. If you have a mortgage, the bank will require homeowners insurance. An independent agent such as The ClearSpan Agency can assist you with each step of the homeowners insurance purchasing process.
- · How do I choose an insurance company?
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Price is important, but not everything. Level of coverage, insurance company stability and responsiveness at the time of claims should be considered also. An independent agent at The ClearSpan Agency can help you make this evaluation.
- · What is “flood insurance” and do I need it?
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Flood insurance is required if the dwelling is located in a “flood plain”, or what FEMA calls a Special Flood Hazard Area. Because 25% of floods occur outside of “flood plains”, flood insurance can be beneficial to any homeowner and many times at reduced rates.
- · What is a “home warranty” and how much do they cost?
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A “home warranty” in central PA is not homeowners insurance – it is a program you can buy that covers parts of a home in the event of failure – dishwashers, heating and cooling systems, other “moving parts”. Typical policy length is one year beginning with the closing date, and policy cost ranges from $450 to $700 depending on the coverage level elected.
- · How can I get a “home warranty” on my house?
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Homebuyers can request a warranty from the seller in the purchase offer, or merely ask their own agent to order one before they settle on the house. Once they’ve bought the property, they can also order one from the warranty company directly. Sellers can also offer one with their listing as an incentive to buyers.
- · What is covered by a warranty?
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There are always certain exclusions, so be sure you read and understand the policy. When a problem arises with the property, the homeowner calls the warranty company and pays a “service fee” (usually about $50) for a local contractor to come out. At that point the warranty coverage is applied to the repair.
- · Is there more than one Home Warranty company?
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Yes, there are several companies that offer home warranties in Central Pennsylvania. Coldwell Banker recommends American Home Shield and First American. Each company has differences in what is covered and to what extent, so visit their websites or ask your agent for details.
- · How do I find out what my house is worth today?
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Homeowners looking to sell or refinance are naturally going to be very interested in what their property will bring on the real estate market. Almost always, the best way to quickly establish a general valuation is to contact a real estate you’ve researched and selected and request what’s called a “Comparative Market Analysis”. The knowledgable agent will present you with a detailed comparison of your home against recent local sales, applying general market trends as well as neighborhood and even house-by-house value differences. Do NOT rely on any online estimators or statements of value; they are a flawed concept that only takes into account basic data such as bedrooms, lot size etc. and cannot account for the “soft” features your home offers versus other homes.
- · I live in a development with a homeowners association – what do I do?
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If your home is part of a Homeowner Association, you will be required by PA law to provide a home buyer with a complete set of Association documents to review, and the buyer will have up to 5 days to terminate the purchase agreement should they dislike any provisions with the documents (called a “right of rescission”). Your listing agent should post a copy of the key Association forms online to be viewable by buyer agents and home buyers. Also, the Association may have guidelines for whether you can use yard signs, etc. so it’s best to contact them before signing a listing agreement with your agent.
- · Do I have to fix everything that’s broken before putting my house up for sale?
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No, but be aware that you will be required to note anything you know that’s broken on the Sellers Property Disclosure form, and it’s likely that a smart buyer will ask you to repair the issue or compensate them with some money to fix. Generally, it’s better to address issues up front that your agent feels will impact the saleability of your home.
- · What is “home staging” and do I need to pay for it?
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Home Stagers are businesspeople in the real estate market who specialize in setting up a home to look attractive and functional to prospective home buyers. There are certifications these people can acquire to confirm their professionalism, which is a good thing. A “decorator” is not a “stager”. Some home sellers use both decorators and stagers together to redo the home prior to listing it; others do the work themselves based on the advice of their listing agent. Staging costs range from $100 to $300 for a consultation and/or recommendations report, to several hundred dollars per month to rent furniture and accessories for vacant homes. Anecdotal research seems to indicate that staged homes sell faster than unstaged homes, but the home seller should consider their individual market needs before paying a stager.
- · How do I choose a good real estate agent to sell my house?
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Marketing, marketing, marketing. And not jus “how much” but “how”? First, a major consideration is the real estate brokerage marketing. A national brand such as Coldwell Banker offer advantages over local brands in that their property listings are actively promoted over the entire U.S. and even oversees, reaching the most possible buyers. Also, the brokerage your agent works for will offer it’s own marketing and promotion of your home. Finally, every agent does their own promotion of listings and you should ask them about the ways they intend to promote your home on their own over and above the stuff their company doe for them. Today, web marketing takes priority of “print ads” in every way. Learn more about the ways a company and agent can market your home here.
- · Should I try to sell my house myself first?
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Many potential sellers struggle with this question. There was a time a few years ago where it may have made some sense to “give it a go” without the benefit of a listing agent. Today, with the emergence of “pickier” buyers and the accumulation of more homes for sale in your area, it makes little sense to try to sell your home by yourself. The liability alone isn’t worth the risks to you and your family. Regardless, you should at the least contact a few reputable local agents and assess your options.
- · Does it cost more to build a home than to buy one?
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No, in fact with the ability to pick everything you want from the start you can get the home just the way you want, always keeping your budget in mind of course. A resale home will most likely need updated to your taste and it is still a used home and not brand new.
- · What is a “farmette”?
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A “farmette” in Central PA is generally a property with some element of land use that facilitates either the growing of crops and/or the husbandry of animals. The amount of acreage a farmette has can vary but typically is at least two acres. The local zoning is very important and should support the uses of the property. Farmettes usually have one or more secondary structures on the property such as a barn, stable or workshops. To some degree, farmettes “are what you make them”. Farmettes should be distinguished from larger “horse farm” or full farm properties. Farmettes can be created by the subdivision of larger farm properties, leaving the home and barns on a smaller lot.
- · I want to buy a horse farm in Central PA – how do I find them?
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In general, it’s a wise idea to start your search for “horse farms” by researching local agents who specialize in these properties – there are a lot of specific issues to a horse farm (or any farm property) and also lots of “jargon” related to them which you’ll want your agent to know well. Once you’ve interviewed an agent and hired them, they will research the available properties and the amenities that go with them to meet your needs. Your purchase agreement for a horse farm needs to include many specifics including the handling of animals, any existing rental agreements, equipment included with the real estate and many more. Having a knowledgeable buyers agent is critical to protecting your interests.
- · Can I raise farm animals on my property?
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Your ability to raise animals on your farmette (or larger residential property) will depend largely on the local zoning and codes/ordinances. It’s very important to research these before writing any offers on property, or be sure to include the verification of the rules in the purchase contract. Local officials are usually happy to answer your or your agent’s questions to the best of their ability, but the ultimate responsibility falls on you to verify you can raise animals, etc. on your property.
- · What can I use the barn on the property for?
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In general, barn-type structures need to comply with the local building ordinances for code and zoning use. Don’t assume that just because you have a barn-type structure that you can fill it with animals, for example. Always do your homework and be sure you have the needed permissions to use a barn for anything beyond as a parking area.
- · What is a “green home” and is there any in Central PA?
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The definition of a “green home” varies widely, but the general concept is to identify a home where energy efficiency and the use of environmentally-friendly building materials are used. The main point of difference between a green home and an energy-efficient home is that the green home will have been built with the use of sustainable materials (natural products, recyclables etc) and eco-friendly practices (low waste leftovers, use of the sun in design, etc).
- · What are “green features” of a home?
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Even a conventional home can incorporate “green” features, although it’s more difficult to do so without designing the home from the ground up to be “green”. Green features can vary from entire systems such as active solar (either for hot water or electric, two of the biggest energy hogs) down to the use of individual materials such as recycled concrete in countertops. The distinguishing point of a “green feature” is either a)that it uses the natural environment to advantage (such as a “passive solar” design to harness the sun’s radiation) or b)that it utilizes environmentally-friendly build or function (such as low-flow toilets or cabinets built with recycled wood).
- · What is an “energy efficient” or “high performance” home?
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Energy Efficient or “high performance” homes are designed (or retrofitted) in order to minimize the usage of costly fuels inside it. Recent advances in the design of heating/cooling systems have made even conventional homes much more efficient by themselves. However, the largest factor in whether a home is truly energy efficient is how the outer structure is put together (called “the building envelope”). An older, drafty home will not do as well with a new heating/cooling upgrade as will a home that have been “sealed”, for example. Note that a home can be energy efficient but not “green”.
- · I’m building a new home – how do I build it “green”?
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Embarking on a “green home” build begins well before the plans are drawn up. You will want to thoroughly research your options and more importantly, your lifestyle and whether “going green” will deliver the satisfaction you want; there are cost upgrades inherent over a conventional home that need to be evaluated. For example, after weighing the costs and benefits you may opt to merely build a more energy efficient home rather than “full green”. If you are serious about building a green home, your first task should be to contact home builders with a track record of building green and who can demonstrate clear knowledge in green building. They should hold at least one certification in green building, as well.
- · What is an "Energy Star" rating on a home?
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Energy Star is a program sponsored by the US Department of Energy that encompasses many areas, most notably the rating of consumer appliances (is your dishwasher “energy star”, etc) and home energy use ratings. There are a set of variables measured by the Energy Star program that, if achieved by a home’s design or measurement afterwards, allows the builder to use the “Energy Star” label when advertising. Generally, Energy Star is considered to be the lowest rating possible for a home to be considered energy efficient – a more widely accepted rating system is the HERS (Home Energy Rating Score). Any serious attempt to label a home as “energy efficient” will usually include both Energy Star and a tested HERS score.
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