By Rebecca Fugitt, MS, RS; Program Manager, Residential Water & Sewage Program; Ohio Department of Health
How many times has a failing sewage system stopped the sale of a home? A 2012 survey conducted by the Ohio Department of Health (ODH) of local health district data and inspections shows that 31 percent of sewage systems in Ohio are failing based on nuisance criteria established in state law. Site and soil limitations, discharges to streams and ditches that exceed safe water quality standards and old system age were identified as the major reasons for system failures. The failure rate in Ohio has cost millions of dollars for communities and citizens to extend sewer lines to areas of failing systems.
Many homes in suburban and rural areas use household sewage treatment systems installed on the property to treat sewage. State minimum rules for home sewage treatment system construction and operation were adopted by ODH more than 35 years ago. Just like many other technologies, much has changed since 1977 regarding sewage treatment products, and the science of how waste is treated in the soil. Most of the systems that are failing today are of unknown construction or are discharging raw to partially treated sewage to streams and ditches. In addition, state minimum rules allowed local health districts to adopt their own rules, and, over time, nearly every local health district in Ohio adopted a local sewage code. This led to a wide diversity in system types and practices for sewage system design and installation across the state and a wide range in system costs. In 2005, increasing concerns about sewage system failures led to the passage of Ohio Revised Code (ORC) Chapter 3718, which established authority for state law and rules for both household and small flow (<1,000 gpd) systems.
ODH convened a rule advisory committee (RAC) in 2010 representing 43 organizations including local health districts, product manufacturers, system installers, servide providers, septage haulers, local and state government, homebuilders, REALTORS, townships, county commissioners, and engineers. The Ohio Association of REALTORS provided a representative to the RAC. The RAC met monthly from 2010 through 2012. Rule advisory committee meetings were open to all stakeholders and the public and meeting minutes and other items were posted on the ODH website. How proposed standards would impact the cost of various system types for different soils and geographic regions of the state was a primary focus of the rule discussions. The committee worked hard to find a balance between system costs and ensuring public safety from sewage. After four years of rule discussion and multiple comment periods, the new state sewage rules became effective on Jan. 1, 2015. These rules provide modern standards for designing and constructing sewage systems for new homes and businesses, replacing existing systems that have failed, and altering existing systems when necessary to improve their ability to treat sewage and prevent public health nuisances.
Setting the record straight: How this is a win for homeowners
There have been a lot of rumours circulated in brochures and news articles about the new sewage rules, some of which are partly true, most of which are inaccurate. Most importantly, the rules do not require that all sewage systems must be automatically upgraded or replaced. The rules establish new modern standards for system construction, alteration and maintenance when a system fails or breaks and must be altered or replaced, or when a new system is installed. State law specifically says that all existing systems are deemed approved until they fail and cannot be repaired. The process for repairing or replacing an existing system, or installing a new system (new home) remains exactly the same as it has in the past.
Some people ask why the old rules didn’t work. The old rules used a standard cookbook design for systems — one design for all soil types (and we know soils are very different across the state) with the system size based only on the size of the house. Systems were often oversized to make up for the one size fits all approach often costing people more money. The new rules focus on using the natural soils on the property as a mechanical and biological filter to treat the sewage from the home. Evaluation of the soil by a soil scientist is necessary to understand the structure and texture of the soil, and to make sure the soil is not seasonally wet — all important characteristics to guide the correct system design to ensure proper treatment in the soil occurs.
The rules address key public health goals and environmental protection requirements. The direct discharge of sewage to ground water and drinking water sources is prohibited. Direct discharge to surface water or the ground surface without treatment to prevent nuisance conditions is also prohibited. The design standards in the rules provide for reasonable treatment of effluent through the natural soil, and where insufficient soil is present, the use of tools like pretreatment components or sand media combined with the natural soil, or the use of even (pressure) distribution across the soil. It is also important to ensure movement of treated effluent away in the landscape without surfacing or discharge somewhere else before complete treatment occurs.
The rules provide a wide range of sewage system choices and technologies for new or replacement sewage systems that provide safe and sustainable treatment in the diverse soils and geology of the state. This promotes healthy communities and safe development in suburban and rural areas not served by public sewers.
The rules carefully balance the protection of public health and safety from sewage related diseases with system cost using basic, proven designs in addition to new, innovative technologies. Good design options for systems help protect the financial investment of the homeowner and proper system maintenance ensures systems are sustainable for many years adding value to a home. Lower cost, low maintenance systems, such as septic tanks to leaching trenches that use the natural soils for treatment are the preferred design and will continue to be the primary system installed in Ohio. New technologies are available for use where the soils present greater challenges for sewage treatment, where there are other site challenges like steep slopes, or where lot sizes are smaller.
Because the soils and geography vary across the state, the rules combine state baseline standards with a range of systems options for local flexibility based on conditions in the soils. For example, local health districts can establish a local vertical separation distance (thickness of useable soil) between six and 18 inches to the seasonal water table, which is the most common limiting condition for soils in the state. This approach will help lower system costs where local conditions can allow more basic system designs.
Keeping Costs Down
Another misconception is that sewage system costs will double or triple under the new rules. Cost data provided to ODH since 2007 by the local health districts shows the state average cost of a new sewage system is $8,200. Depending on the complexity and components required of the system to work on the soils and lot conditions, costs may be more or less. ODH does not anticipate large increases in systems costs because many systems will continue to use the basic designs used now on many lots — with design adjustments to address specific limiting conditions in the soil.
For most home buyers, the purchase of real estate is one of the largest financial transactions they will make. Buyers purchase a home not only for the desire to own a home of their own, but also because of changes in jobs, family situations, and the need for a smaller or larger living area. This annual survey conducted by the National Association of REALTORS of recent primary residence home buyers and sellers helps to gain insight into detailed information about their experiences with this important transaction. The information provided supplies understanding, from the consumer level, of the trends that are transpiring and the changes seen. The survey covers information on demographics, housing characteristics and the experience of consumers in the housing market. Buyers and sellers also provide valuable information on the role that real estate professionals play in home sales transactions.
Buyers continue to face tighter credit standards than seen in previous years. A notable finding from this year’s report was a drop in first-time home buyers to a share not reported since 1987. Buyers in this year’s report showed incomes of buyers continuing to increase and buyers this year more likely to have the financial capability to own more than one property. Additionally, there is a continuation of trends seen last year of an elevated share of married couples and suppressed levels of single buyers. Married couples who purchased a home have the advantage of more buying power and added financial stability — their typical household incomes are higher than single households.
Tightened inventory is affecting the home search process of buyers and the homes that buyers are purchasing. Due to suppressed inventory levels in many areas of the country, buyers are typically buying more expensive homes as prices increase. The number of weeks a buyer is searching fell in this year’s report. Buyers continue to report the most difficult task for them in the home buying process is just finding the right home to purchase.
Buyers need the help of a real estate professional to help them find the right home for them, negotiate terms of sale, and help with price negotiations. Sellers, as well, turn to professionals to help market their home to potential buyers, sell within a specific timeframe, and price their home competitively. For-sale-by-owner sales remain at historic lows, while the use of the agent to sell the home stays at historic highs. Likewise the buyer’s use of the agent is at historic highs as buyers purchasing directly from a previous owner or through a builder falls.
This report provides real estate professionals with insights into the needs and expectations of their clients. What do consumers want when choosing a real estate professional? How do home buyers begin the process of searching for a home? Why do some sellers choose to forego the assistance of an agent? The answers to these questions, along with other findings in this report, will help real estate professionals better understand the housing market and also provide the information necessary to address the needs of America’s real estate consumers.
Characteristics of Home Buyers
- 35 percent of home buyers were first-time buyers in Ohio, compared to a national level of 33 percent, which is still at a suppressed level of the historical norm of 40 percent.
- Thirteen percent of buyers nationally purchased a multi-generational home due to children over the age of 18 moving back into the house, cost savings, and health and caretaking of aging parents. In Ohio this was 12 percent.
- In Ohio, the typical buyer was 46 years-old, while the typical first-time buyer was 31 and the typical repeat buyer was 53. Nationally the typical buyer was 44 years-old, while the typical first-time buyer was 31 and the typical repeat buyer was 53.
- The 2013 median household income of buyers was $84,500 nationally and $64,300 in Ohio. The median income was $68,300 among first-time buyers and $95,000 among repeat buyers nationally, and in Ohio this was $52,300 and $64,300 respectively.
- Sixty-five percent of recent home buyers were married couples. 60 percent of recent home buyers were married couples in Ohio.
- Nationally, for 24 percent of recent home buyers, the primary reason for the recent home purchase was a desire to own a home. Compared to Ohio at 32 percent of recent home buyers.
Characteristics of Homes Purchased
- New home purchases continue to drag at a share of 16 percent of all recent home purchases on a national level. In Ohio, this share is 4 percent.
- The typical home purchased was 1,870 square feet in size, was built in 1993, and had three bedrooms and two bathrooms. In Ohio, the typical home purchased was 1,800 square feet, built in 1975, and also had three bedrooms and two bathrooms.
- Seventy-nine percent of home buyers purchased a detached single-family home nationally; in Ohio, that figure was 84 percent.
- Thirteen percent of recent buyers over the age of 50 bought a home in senior-related housing, and 15 percent over the age of 50 made a similar purchase in Ohio.
- When considering the purchase of a home, heating and cooling costs were at least somewhat important to 86 percent of buyers nationally and 88 percent in Ohio. Commuting costs were considered at least somewhat important by 70 percent of buyers nationally and 69 percent in Ohio.
The Home Search Process
- For 43 percent of home buyers nationally, the first step in the home-buying process was looking online for properties and 12 percent of home buyers first looked online for information about the home buying process. In Ohio this was 40 percent for properties and 12 percent for information.
- Ninety-two percent of buyers used the internet in some way in their home search process and 50 percent of buyers use a mobile website or application in their home search nationally; and 92 percent of buyers used the internet in some way in their home search process and 48 percent of buyers use a mobile website or application in their home search in Ohio.
- Real estate agents were viewed as a useful information source by 98 percent of buyers who used an agent while searching for a home. In Ohio this share was also 94 percent.
- The typical home buyer searched for 10 weeks and viewed 10 homes nationally; in Ohio, also 10 weeks and 10 homes.
- Approximately nine in 10 recent buyers were at least somewhat satisfied with the home buying process. In Ohio, 88 percent of buyers were satisfied with the process.
By Peg Ritenour, OAR Vice President of Legal Services/Administration
Mishandling earnest money is an area that often results in license law violations for agents and brokers. Below are five simple things you can do to make sure you’re not making mistakes that could land you in front of the Ohio Real Estate Commission.
- Don’t sign the section on the purchase contract confirming the receipt of earnest money if you don’t have it. This may sound obvious, but violations for misrepresentation have been found when trusting agents sign this section based upon the buyer’s promise to get the agent the check the next day and then never does. To avoid disciplinary action, a good rule of thumb is that if you don’t have the check in your actual possession, don’t sign anything saying you do. Instead, indicate it will be collected upon acceptance or at a later date.
- Get the earnest money deposited ASAP. For agents this means that you need to get the check to your broker/manager (or the person at the brokerage responsible for depositing it) in a timely manner, which is usually considered to be within 24-72 hours of acceptance of the offer. And remember, the fact that the contract has contingencies doesn’t matter. If the contract says the earnest money is to be deposited upon acceptance, it needs to be deposited in a timely manner after acceptance, not after the contingencies are removed or satisfied.
- Make a good faith effort to collect any earnest money that the buyer is required to make and promptly notify the listing agent/ seller if you don’t receive it. Sometimes under the terms of the purchase contract the buyer will be required to provide a deposit after the contract is accepted or after a certain event occurs. As a buyer’s agent, it is important to document in your file your attempt to collect the earnest money from your client. Unfortunately, a buyer’s promise to bring it to the office the next day can sometimes can turns into several days. When this occurs it may be a signal that the buyer may not perform the terms of the contract. For this reason, the buyer’s agent needs to communicate the failed attempt to collect the earnest money to the listing agent in a timely manner and the listing agent needs to notify the seller immediately.
- Notify the listing agent and seller if the buyer’s earnest money check bounces. Like the failure of the buyer to make a required deposit, the fact that the buyer’s check was returned for insufficient funds is usually not a good sign. Therefore this must be communicated to the listing agent in a timely manner and the listing agent needs to let the seller know that this has occurred.
- If a purchase contract fails to close for any reason, don’t remit the earnest money to either the buyer or seller without the written consent of both parties or a court order directing disbursal. This is true even if financing was denied, the property failed to pass inspection or any other contingency isn’t met. The license law is clear on this and returning an earnest money deposit without the necessary written consent or a court order is a sure way to be disciplined by the Ohio Real Estate Commission.
By Carl Horst, OAR Director of Publications/Media Relations
The Ohio Association of REALTORS reports the number of single-family homes and condominiums put under agreement in February 2015 increased 13.7 percent from the level posted during the month a year ago.
The rate of purchase contract signings in February fell 6.4 percent from the market’s January 2015 pace.
Ohio’s February Pending Home Sales Index of 127.9, a forward-looking indicator based on contract signings, increased 13.7 percent from February 2014 (112.5). Activity in February decreased 6.4 percent from the pace of agreements reached in January (136.7).
“The Ohio housing marketplace is continuing to steadily exhibit signs of improvement, as our February pending sales index reached a best-ever level for the month,” said OAR President Greg Hrabcak. “Additionally, the Ohio market has now tallied 10 consecutive months of year-over-year gains in agreements reached.”
Compared to 2008, a historically healthy market that marked the end of five consecutive record years for existing home sales and the onset of the recession, January’s Index score of 127.9 marks a 27.9 percent increase.
A pending sale or a sale “under agreement” is when the buyer and seller agree on terms of the sale of a home and have a signed purchase and sale agreement, but have yet to close and be recorded as such. Refer to the following report to view the pending home sales index and methods.
OAR, the largest professional trade association in the state with more than 28,000 members, is the only organization that compiles this state wide information from selected Multiple Listing Services each month. The tracking of “pending sales” provides reliable information about where the market is heading in coming months.
By Paul Glass, OAR Director of Political Affairs
Two members of Ohio’s Congressional delegation — Rep. Joyce Beatty (D-Columbus ) and Rep. Steve Stivers (R-Columbus) — were key votes in passage of a bill that fixes the discrimination against affiliated title businesses in the 3 percent Qualified Mortgage “points and fees” cap. The Mortgage Choice Act (H.R. 685), part of a series of bills making changes to Dodd Frank, passed the House Finance Services Committee yesterday by a 43-12 margin.
The bill passed by Committee:
- Excludes affiliated title fees from the 3 percent QM cap to the same extent unaffiliated title fees are excluded;
- Clarifies that funds held in escrow for taxes and insurance are excluded from the cap; and
- Requires the Consumer Financial Protection Bureau (CFPB) to modify its final QM rule within three months in accordance with the new law to minimize any transitional uncertainty in the industry.
The bill is expected to be considered by the full House soon. Additionally, an identical bill will be introduced in the Senate.