The Great American Homeowner Reality Check

In a recent survey conducted by The Proper Home, less than 1 of every 560 homeowners understood the risks to their home and property or how to manage them. Not understanding the risks to your home can cost you financially. It is also responsible for the needless loss of tens of thousands of lives each year.This special program has been created by the home experts of the Stonebridge Home Assistant™ by The Proper Home to help you to understand more about risk homeowners encounter; and how to manage your exposure to them.

What most fail to consider is the fact that a home is one of the most complex machines they will ever own. A well maintained home is a wonderful place to live life. A poorly maintained home can cost homeowners significant money, and in all too many cases, the lives of its occupants. The fact is that a poorly performing home is not exclusive to older homes. Many new homes today suffer from poor maintenance and design and are as susceptible to risks as older homes.

The purpose of this program is to not intimidate, but to provide you with foundational knowledge that allows you to recognize, reduce or eliminate risks and their impacts to your family. By having this knowledge, your home can be safer, easier to manage to afford and more enjoyable.

We will explore how you can eliminate or lessen the impacts when the unthinkable occurs. You will expand your essential knowledge about managing risks to your home and ways you can eliminate – or diminish the impact when tragedy strikes.

The chances of your home being impacted by crime, theft, fire or natural disaster are greater than most think. The chances of your home and family being impacted by improper maintenance are about three times greater. Still, few homeowners understand the risk exposure to their homes. Even fewer understand how to protect their property and preserve their ability to recover when disaster strikes.

Take a few moments to answer each of the questions below. After you have answered each question, please click on the link after the questions to get the answers.

The Proper Home Homeowner Risk Survey

1. Is your home in a flood zone?
2. Is your home in an earthquake zone?
3. What are the chances that your home will experience a significant fire event during your 30-year mortgage?
4. What are your chances of experiencing a property crime event in or at your home during your 30-year mortgage?
5. How much of your home expense does heating and cooling represent?
6. Which is less expensive: maintaining your home properly or paying for less efficiency?
7. How much time is spent maintaining the average home properly?
8. If your home is struck by lightning and a tornado, flood and wind, or flood and fire, is it covered by your homeowner’s insurance policy?
9. What are the most expensive costs of maintenance to the average homeowner?
10. What are your overall odds of experiencing at least one catastrophic event during your 30 year mortgage?

Click here for answers to the questions above.

So, how did you do? Did any of the answers surprise you? If you are like most homeowners, you were surprised by more than a few of the answers.  The bad news is that our homes and families are likely to be impacted by a wide variety of perils. The good news is that, with proper attention, you can eliminate or at least dramatically reduce the impacts and your ability to recover from most perils that homeowners confront today.

When we talk about perils, we are actually speaking about the impact on our lives those perils represent. Some impact us financially. Other perils begin benignly and often go unnoticed until a life-threatening event occurs at the unanticipated point of failure. Still other perils are the result of little things that we overlook or take for granted. Life is not neat and perils are not all created equally. Most perils present a combination of impacts to homeowners. The challenge for homeowners is to understand the nature of threats facing their property and how to minimize or eliminate those risks.

Understanding Risk and the Home Risk Chain

"When we talk about managing risk, we are really talking about eliminating or reducing our exposure to the impacts of that risk."

The word risk is defined as “exposure to the chance of injury or loss; a hazard or dangerous chance.” In terms of our homes, our goal is to manage risks in ways that reduce exposure to injury or loss. It is that simple.

The secret to managing risk is to understand more about the nature of risk. When we talk about managing risk, we are really talking about eliminating or reducing our exposure to the impacts of that risk.

Risk is a funny thing. It is actually rather brittle. The reason we say this is because for most catastrophes to occur, a specific set of conditions must exist. If one or more of those conditions does not exist, in many cases, catastrophes do not occur.

A catastrophic event is most often the result of several smaller failures. The key to reducing your exposure to risk is to break the chain of events in risks that can lead to disaster. We call this the home risk chain.

Breaking the Risk Chain

Let’s look at an easy example: robbery. Windows and doors left unlocked make robbery easy for the perpetrator. By simply locking your doors and windows, you make it more difficult for the criminal to enter your property. In essence, you have broken the risk chain that would allow a criminal to steal your possessions because of unlocked doors and windows.

Naturally, most thieves are well prepared to deal with door and window locks. By adding an alarm system with signage, you break the risk chain for forced entry – or at least reduce your exposure in most cases.

Not all risks are criminally related. Physical risks can be as simple as rotted wood on your deck or as complex as a defective heating system. The $2,500 broken leg caused by a $20 repair will open anyone’s eyes – and wallet. The unnecessary death from an ill-maintained furnace is unforgettable. Once again, a simple repair or inspection can break the risk chain. Unfortunately, most homeowners do not discover this until it is too late.

These are only a few simple examples of breaking the risk chain for your home. Absolutely everything in your home is a part of your home’s risk chain. Not every risk can be eliminated. For some, your only action is to reduce your losses or strengthen your chances to recover when the extraordinary occurs.

 

Oh Yes, The Little Things Really Matter!

As a homeowner, we tend to think of risk incorrectly as a catastrophic event covered by insurance. In reality, the bulk of the risks associated with home ownership are related to keeping the home operating properly. In fact, the greatest impacts to our lives come from the perils that are often the last ones most would consider.

Before we begin, here is a quick definition. When we speak about the cost of ownership of a home, “CO,” we are speaking of the cost to maintain and operate that property. This includes expenses associated with owning your home. This does not include mortgage payments, insurance and taxes, which are included in the total cost of home ownership, or “TCO.”

 

Managing Home Risks...

"Risk is something that all homeowners can manage easier than ever with new resources available to them."

So, how do we manage the risks of our home? After all, risk is everywhere! In fact, it sounds like a huge job! Actually, risk is something that all homeowners can manage easier than ever with new resources available to them. The process of managing home risk is referred to more simply as “home management.”

When it comes to managing our homes well, mitigation and recovery are the basic two steps of the process. It is not difficult. It just requires the knowledge you are learning right now.

Mitigation involves lessening the possibility of impact, failure and loss of anything in your home.

Recovery requires having the appropriate information and protections in place to recover your property and life more easily when the unthinkable occurs.
Let’s take a look at each of these areas in greater detail.

MITIGATION

Can we really influence risk and impacts as homeowners? Absolutely. Do most homeowners do it well? Not really. The primary reason most homeowners fail to manage home risk well is that too few understand how to do it properly and lack the organizational skills to do it. The good news is that risk is easier to manage than most think.

It has been said that an ounce of prevention is worth a pound of cure. When it comes to managing your home, prevention is where homeowners have the greatest influence to reduce risk and reduce the cost of owning their homes. Mitigation is the practice of eliminating or reducing the impacts of failures or disasters that can occur in your home.

Generally speaking, mitigation is a combination of maintenance and home management.

The Enormous Opportunities of Maintaining Your Home

The term “maintenance” is a bit too ugly for most homeowners. The mere term conjures visions of tedious work, dirty conditions and all sorts of bad memories from childhood for many homeowners. Actually, maintaining your home is more of an effort of seizing opportunities to make your home safer and more cost effective! Instead of maintenance, think of it as opportunity!

Maintenance is the process of preserving and protecting our home and property. The ultimate objective of maintenance is to maintain the best possible condition of our property and belongings.  It has been estimated that about 58% of all reported home disasters could have been avoided with simple maintenance. The role maintenance plays is substantial. Unfortunately, few homes are maintained adequately.

The impacts of poor maintenance range from simple inconvenience to the creation of potentially life-threatening situations. A well maintained and constructed home may survive much of what Mother Nature and humans throw at it, while poorly maintained homes more often will fail and imperil its occupants needlessly. An important fact to remember is that disaster rarely occurs without warning. In most cases, the final disaster is the ultimate result of a chain of non-catastrophic events – the risk chain at work again.

 

Opportunities to Reduce Catastrophic Effects

An example is the category 5 tornado that occurred in Xenia, OH in 1974. The outbreak killed 315 people and injured over 5,000. On one street, one home was left standing intact while its neighbor was completely destroyed. It was learned later that the garage door on the destroyed home was in severe disrepair. The tornado struck and the poorly maintained garage door failed. This allowed the winds to breach the garage and destroy the home almost instantly, killing 4 occupants in the process. In this case, a $50 fix may have made a significant difference.

 

Opportunities to Make Your Home Safer

Another example of poor maintenance is found with many people killed every year by carbon monoxide from faulty heating systems. Simple inspections can change such outcomes easily. However, carbon monoxide is a silent killer that presents few symptoms or warnings and critical heating system inspections are often overlooked by homeowners.

Admittedly, these are extreme examples. They are also common. They, however, do demonstrate how proper maintenance can eliminate or inhibit the risk chains that often lead to disaster.

 

Opportunities to Save Money

Many impacts have far more to do with your bank account than your personal safety. For example, a failed roof can cost tens of thousands of dollars to replace, yet many homes are improperly vented or fail to correct structural deficiencies that an inspection would otherwise reveal. A $100 inspection can often lead to the discovery of a small item before it becomes larger – and break the risk chain. Suddenly, the roof that would have failed in ten years is now capable of surviving thirty to forty years.

Another example of impact is the cost of owning a home itself. In my first home, I noticed that my electric bill was about five times as much as my neighbors. I suspected immediately the air conditioning and heating system. I made the uncomfortable and stuffy trip to my attic to discover several ducts had separated completely while others were leaking air from poorly sealed joints. After reconnecting and sealing the ductwork, my home was once again comfortable, safer and far more cost efficient.

 

Opportunities to Reduce the Cost of Ownership and Help the Planet

Not all maintenance issues are as obvious as others. In my home, I have about 120 recessed lights. When you consider that each light contains a 60 watt bulb, I am consuming about 7200 watts per hour when they are all turned on. This costs me about $11.75 a day, $352.50 per month or $4,320 a year. By replacing them with 13 watt CFR lights (60 watt incandescent equivalent), I not only have better light, but am also only using about 1560 watts an hour when all are on and am contributing to a greener planet.  With CFL lights, my cost of 24 hour operations is about $2 a day, $60 a month or about $720 annually. My savings are $9.75 a day, $292.50 a month or about $3510 a year! That is about an 83% annual savings!

Naturally, I do not have my lights on 24 hours a day, but I have saved substantial money by a simple maintenance opportunity that has more than paid the cost of the new CFL lights and lowered my cost of ownership dramatically.

I replaced my conventional thermostats with two digital programmable heating and cooling system controls. That maintenance opportunity reduced the costs of heating and cooling my home by about $4000 annually! Once again, a maintenance opportunity!

The addition of CFL lights and digital programmable thermostats has reduced my electric bill from $1,000 per month to less than $500 a month – an immediate $6,000 reduction in the cost of owning my home for less than a $600 investment. Over the course of 30 years, that represents $180,000 in savings - even more if energy costs continue to rise.  In my case, my savings represents one fifth of the cost of my home – a real incentive!

My home is only about nine years old. Since I have gone through my home and made small changes, I have reduced my costs of ownership by over $13,000 annually

 

Opportunities to Reduce the Cost of Maintenance

There are many maintenance opportunities within every home. For instance, the average air conditioner is built with a life expectancy of about 15 years. However, the average air conditioning system fails within 9 years.  Why? Most homeowners fail to rinse their outside coils off four times a year with a hose and do not receive annual inspections! Something this simple costs virtually nothing but can cost you upwards of $5,000 in nine years instead of 15 when the unit fails prematurely.

Now for those cute little electronic devices that makes our lives so much easier. The primary enemy of today’s electronics is heat. We often forget to blow the dust from our electronic friends. Unfortunately, that dust causes heat buildup and premature failures. Once again, an overlooked simple task can result in premature failure (and potentially a fire) resulting in the unexpected expense of replacement before its time.

From a financial point of view, that $4000 home entertainment system has a life expectancy of 20 years. That represents a cost of ownership of about $200 a year. The average home theater system fails in about 6 years. That failed system has a cost of ownership of about $667 a year PLUS $4000 to replace it. Suddenly your home theater has an annual cost of $1333 per year! Would you lease a home theater system for that much a year? Probably not. By simply blowing it out with canned air a few times a year, you will save almost $1100 a year! That’s real opportunity!

 

Ease of Maintenance

"Many maintenance requirements require only a simple visual check or a light cleaning. However, when systems fail from inadequate maintenance, they are also far more expensive to replace."

An interesting fact to recognize is that technology has become easier to maintain. Many maintenance requirements require only a simple visual check or a light cleaning. However, when systems fail from inadequate maintenance, they are also far more expensive to replace. In many cases, planned obsolescence of technology means that replacing a failed product in your home can mean replacement of structures, or other supporting technology – which can be extremely expensive unexpected costs to homeowners.

The benefits of proper maintenance are very real in terms of safety, value and peace of mind. Benefits include longer home product life, decreased costs of ownership and increased safety. A well maintained home is far less expensive to own and operate than a poorly maintained one. Recent research conducted by The Proper Home tells us that an average home costs less than $1,000 annually to maintain properly, but saves the average homeowner more than $6,200 in the annual cost of ownership. The larger the home, the greater the savings and benefits.

 

Your Home Management Strategy

"The Proper Home tells us that an average home costs less than $1,000 annually to maintain properly, but saves the average homeowner more than $6,200 in the annual cost of ownership."

Home Management is the process of organizing the information, tasks, service and maintenance that your home requires. Without a home management strategy, proper maintenance is extremely difficult and an almost impossible task to achieve for most homeowners.

One of the most important aspects of home management is that it is your strategy that determines the effectiveness of your home maintenance program and your exposure to risks and their impacts. In short, your home management strategy really does matter.

Let’s take a look at the more common management strategies.

The “Failure” Strategy

The most common home management strategy is the “failure” method. If it fails, fix it! As you might expect, this is absolutely the worst and most dangerous method of managing any home and exposes homeowners to significant risk and little benefit a well managed home offers.

The “Pen and Paper” Strategy

A very few homeowners use the “pen and paper” method of managing their home. The problem with this method is that most homeowners fail to adequately record the correct maintenance tasks. More often than not, the “paper” gets damaged or lost never to be recreated. In the end, most pen and paper strategies end up resorting to the failure method of management. Once again, the homeowner’s exposure to risk is only marginally greater than the failure method.

The “Home Computer” Strategy

There are a few computer programs out there that homeowners are using to manage their homes. Unfortunately, many of these programs would be physically jeopardized because they exist on the computer within the house itself. If the house were destroyed, so too would be their data and records. The risks of home computer-based methods are not acceptable as a management resource due to their exposure to the perils of the home.

The “Internet” Strategy

"For homeowners, the Internet offers the best strategic home management options available today. Home management programs like the Stonebridge Home Assistant™ by The Proper Home™ offer exceptionally powerful automated capabilities from systems that are very easy to use and remarkably powerful."

For homeowners, the Internet offers the best strategic home management options available today. Home management programs like the Stonebridge Home Assistant™ by The Proper Home™ offer exceptionally powerful automated capabilities from systems that are very easy to use and remarkably powerful. Others benefits include the facts that your data is in a safe, controlled access data center with security precautions to protect your information. Oh yes, Internet programs are typically more robust, updated more often and cost less than many other solution types.

A key benefit of solutions like the Stonebridge Home Assistant is that your information is safe and accessible instantly from any location with Internet access. This capability can prove crucial for law enforcement and insurance purposes when time is of the essence.

Until the introduction of automated smart technology like the Stonebridge Home Assistant™, home management typically was performed by hand and was less than effective for most homeowners.

 

RECOVERY

"Most homeowners report that the greatest frustration comes in the recovery process."

Some risks are simply unavoidable. From natural disasters like flooding, earthquakes and more, the disaster itself is traumatic. Most homeowners report that the greatest frustration comes in the recovery process. Not enough can be said about the importance of the second step of a well managed home: recovery preparedness.

Recovery preparedness ensures that you have accurate information available when the unthinkable occurs. When you consider the fact that your chances of experiencing a disastrous event are 1 in 2, recovery preparedness is a serious consideration that most homeowners fail to consider until disaster strikes.

Examples of recovery preparedness include documentation of your property, images, inventory and possessions. Many homeowners believe that simple records stored in a “safe” location are enough. All too many discover that this is not the best approach. Proper records include descriptive images, records, maintenance records and product identifications to demonstrate that you not only own the products but also have maintained them to an acceptable standard.

Another common problem encountered by most homeowners is inadequate and improper insurance coverage. Few homeowners understand the difference between “replacement value” and “fixed” insurance limits. It is also estimated that almost 80% of all homeowners are underinsured. Unfortunately, this is a lesson learned after disaster strikes in too many cases.

A new generation of technology like the Stonebridge Home Assistant™ helps you to understand where your insurance coverage should be and provide you a safe and secure location to keep your information when disaster strikes.

 

Putting it All Together

"Smarter homes are now a reality to hundreds of thousands of homeowners today."

Managing your home effectively can be a daunting task for any homeowner. However, thanks to new and smart technology that can make it all incredibly attainable. Smarter homes are now a reality to hundreds of thousands of homeowners today.

The Stonebridge Home Assistant™ was created by The Proper Home to make smart home management easier, possible and affordable for all homeowners.

Learn more about the Stonebridge Home Assistant Now…

In The End

We would like to thank you for taking the opportunity to learn more about managing your home effectively. Whether you create a management system of your own or use the Stonebridge Home Assistant to manage your home, managing your home is something that has incredible benefits and rewards.

Here’s to a home that hosts beautiful smiles, happiness and timeless memories.
Your friends at The Proper Home

Statistical Sources: US Fire Administration 2007 Fire Statistics; US Department of Justice 2008 Crime Statistics, FEMA, Insurance Information Institute, The Proper Home Homeowner Survey 2009