On my post describing how to take care of a foundation, a commenter asked about repairs that were being suggested by a professional. Her last question struck me, because I frequently go over this topic with my clients. To sum it up: if I do these foundation repairs, what will happen in the future? I believe that most homeowners think once something has been fixed, it stays fixed; they do not worry about what may happen. Most are concerned if the repair is needed. We should all be asking both questions, and more to understand the issue.
    I had completed my home inspection, but I had to stay to lock up the property after my client and the foundation expert were done. I had gone over my findings, which included the foundation, and I had mentioned factors contributing to the foundation problem. I was now listening to the repairs laid out by the owner of this foundation company, which focused on the repairs that he was going to make and how this would resolve the problem. Since my client had just heard from me, he asked this professional, what about the large tree next to the house? Dealing with the tree was not in the scope of work for a foundation company, so he only dealt with the issues that were pertinent to his service. After a short stunned look, this professional suggested that the tree should come down. Then my client asked about drainage and gutters, which were dealt with well. Was this service provider not doing his job? Did he lie when he said that his repairs were take care of the situation? I know that this happens with contractors all the time.
    He was doing his job, but he was only thinking about his specific area. If my client had not been informed by me of these other issues, and how they relate to the foundation, he may never have asked. If he did ask a generic question, the foundation man may have answered “yes, this will take care of it”. What you may want to do is ask ” are the other things that might effect this repair?”, or you may want to come to a site like this one for a little research about contributing factors, so you can ask an informed question.
    Will repairing your foundation prevent future cracks? Will the repair last? Answering the more specific question about the foundation can be harder. What will be happening to the house? How will you take care of your home? Cracks are not always due to the foundation; they can be caused by movement, house settling, and this may continue to occur after the foundation has been repaired. I found that repairing the cracks after foundation work does last for a while, but eventually, I will have to make the repairs again, because other factors brought the cracks back. As for the foundation repair, I mention to my clients that you have to look at the whole system. Trees, condition of plumbing pipes, and drainage are all factors that will continue to effect the foundation. They may not be a problem now, but they could become one. Also, the quality of the foundation work is a factor, or type of repair. This may be harder to determine, but it could be that the repair is not needed, because other factors are repairing the foundation (in Houston, dry spells sink homes, while higher rain fall years raise them; this may, emphasis on the may, cause a repair to be unnecessary in some instances).
    If you start asking questions before hand, you will be in better shape later. You should also ask the opinion of several professionals. Each will bring their own thoughts to a topic, and this can lead to a fuller picture.

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I watched a home go from being offered for sale before the weekend. By Tuesday the house had a slight change to the sign out front: for lease. By Wednesday the sign had come down. The home had been rented. I do not know if this should be considered a success or settling on the part of the sellers. I hope that the sellers are getting whaqt they want. The Realtor has been quick to accept first offers from my experience, which may not be the best thing to do.
    The sellers denied the need for many repairs before the house went on market; however they did have a one day repair sprint. On Sunday, they informed me of several obvious repairs that were needed: a busted frame on the back door from when it was kicked in; a busted out window pane from a tenant who lost his keys; and a few others. When a house goes on market in a desired neighborhood, you can expect a flow of buyers and Realtors checking out the home to see if they should make a move before others make an offer. This can taper off after the first weekend, depending on varous factors. This initial rush can be important, because a bad first impression can be reported beyond that first crowd.In my limited experience in watching the full process of homes being offered for sale, I have seen buyers from the first weekend coming back to the home, and then making an offer. A bad impression will kill that opportunity.
    Do you need a home inspection before selling your home? My answer remains the same: not neccessary unless you have true concerns. However, not having a home inspection means you should not inspect your home. Step away from the house; put on your buyer thinking cap; and enter the home with fresh eyes. Be criticial of everything. The tougher you are on your home, the more you will find to correct. Go after the obvious first. This means visual items like that hole in the  bathroom ceiling, but also normal use items, like the bathroom. Your toilet will be flushed. Take care of these issues first. Some major issues may not be noticed by the buyers, but you should have a plan for dealing with them. What will not be noticed? You would be surprised. Some buyers walk into a home with rose colored glasses, but some do not sense the problems. Sense? Yes sense. I have had Realtors and buyer taken aback when I state in a quick walk through a home that there is a foundation problem. On a recent inspection, the buyer asked stunned: how do you know. I explained what I felt when walking across the first floor. Gave him a quick evaluation of what I thought the foundation expert would state, but added that I still had to perform my inspection. The buyer looked at me knowingly when the foundation expert told him in more detail what I had said after my first work through. I have no special gift; all home inspectors become atuned to the signs.
    I do think that before listing a home, you have to take the time to make an effort to create the best impression on the buyer. You are asking them to make the biggest purchase that they have ever made, so they will be worried.

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I have touched upon building science and thermal bridging in other posts; however, I feel that one post on the subject can make a homeowner a bit wiser when making green choices for their home. Using science or scientific methods and concepts has always gone into home building. These principles shine through in Roman engineering. In more recent years, there has been a renewed vigor in analyzing buildings by scientific means to improve their functionality, hence you will see more use of the term “building science”. One aspect of this science is studying how heat moves through a structure.
    By studying how heat flows through your home, we can stop it, in order to keep the homes warm or cool depending upon the season. We all are aware that insulation helps; however, we may not realize that heat can travel through various objects, eventually defeating our insulating efforts. The term we use to describe how heat travels is thermal bridging, because the heat can travel via a bridge from one area to another past your insulation. Wood and other materials out of which we make our houses happen to be conductors of heat. By creating more massive walls, like a really thick adobe, we slow down the progress of heat, so we say these walls are a thermal mass. Different materials transfer heat at different rates, so we can plan out our structures to limit thermal bridging.
    Here is what happens. Imagine a hot summer day with all of that sunlight hitting your exterior wall. The wall heats up, so the journey of the heat begins through that wall. Let us say that you wall has a typical amount of insulation in the stud (framing) cavities, an R19. This will slow down the heat, but now the framing is heating up. The wood transfers this exterior heat past your insulation to your interior wall. Now the heat has free reign into your cooled home. This is not a quick process, but it does reduce your energy efficiency. The reverse happens during winter, which is why your interior walls of exterior areas will be cold to the touch.
    In new construction, there are methods of preventing the heat from traveling along the framing. A home inspector can only tell that this has been done during the farming inspection. Once the wall covering goes on, there is no way to see if thermal bridging has been deterred. Most new homes address the thermal bridging issue to one degree or another.

What about an existing older home?

My home, built in the sixties, has no insulation in the walls, and it had very little in the attic. Adding insulation to the walls can be hard and costly, so I focused on the attic. One way to reduce thermal bridging is to cover the ceiling joists with insulation and make sure that you have insulation in every cavity between framing members. A popular means of insulation for do it yourselfers is the rolled batts. If your batt is 18″ in width, but you joist spacing is 24″, you have a six inch gap. That gap can greatly reduce the effectiveness of your insulation. Another problem with rolled insulation is that you might have so much, and the last framing space that you come to has a few inches before you get to the next piece. That tiny gap also reduces the efficiency of the insulation. These are two fairly common problems that I see in my home inspections. Another is only insulating up to the framing for the ceilings. This leaves the wood framing exposed, allowing heat to transfer. You cannot cover up the framing holding your roof on, but you can cover the joists. This helps reduce thermal bridging, which will be our main goal in an older home.
    As I said, my home has no insulation in the walls. The easiest and most effective method would be for me to take down the sheetrock to install insulation. This would be good to do when remodeling, but otherwise, few homeowners will undertake this task. What can we do? As building science is progressing, manufacturers are studying ways to improve products to help older homes. There are paints which can help slow down heat, so that may be your first step. On the interior, you can remove electrical outlet covers, and place one of these specially designed insulation pads behind them. My joke is next hang a tapestry on the wall. This was actually the function of tapestries on castle walls.
    On an old home, your most inefficient locations will be the wall openings. You will have heard of adding weather stripping to doors and windows, and that is a good first step, but let us consider how heat can travel to the other side of the wall. Most older homes have solid wood doors, so there is not much that we can do, except paint the surface. The real problem will lie with the windows. If the house has an aluminum frame, single paned window, you have a problem. Aluminum is like a wick, pulling heat from the unwanted surface to the area where we do not want it. A single pane (sheet) of glass also is not the best at stopping heat. Replacing windows is the best option, but be sure to recycle the old windows to be green. Most new aluminum windows will have a vinyl cladding to help reduce thermal bridging. If buying new windows is not an option, we could consider a few steps. Painting is the simplest choice. Adding strips of wood over vinyl over the aluminum can help. Neither of these options are perfect, but the begin the path of reducing heat transfer. The next big concern would be the glass panes. Modern windows are engineered to reduce heat transfer, but adding a second pane of glass can reduce heat transfer. There are companies which manufacturer products that can be installed by the homeowner. These are custom products in most cases, so it may be better to buy the new window. Look at the costs. What I do like about this product is you are using the existing window. I did rig up my own plexiglass second pane, and this helped.
    The next choice to reduce thermal bridging may be a decorating one. Wood and vinyl shutter help reduce thermal bridging; however, there are insulated shades which can do a great job. My wife and I have been going from room to room to add either shutters or new shades. These can be an expense, but you could pick the most important rooms to do, and keep working at adding them over time. I prefer wood shutters over other materials for shutters, but these can be expensive. When examining curtains and shades, ask for insulating shades and thicker materials. They may cost a bit more, but again, plan out decorating one area at a time.
    Now that you are thinking about reducing thermal bridging, look at your own home to consider how heat will travel through the materials, and how you can stop it. New green / eco products for the home seem to be offered all of the time, so look around you favorite stores to see what is on hand. There may be somebody right now thinking how to manufacture some retrofit product to help you.

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Lately, I have experienced some problems with my bank, that I feel is a mark of poor customer service. Some issues may be that the bank is trying to increase their earnings. Like many people, I guess that I am on edge about my finances , and I am concerned about the economy. When I obtained a bill for a mortgage payment that I had already made, I was wondering what happened to my payment. Was I going to have to pay again? What would happen if the original payment was then cashed?
    I discovered that my original payment was taken out of my account on the first of the month. I had never received a bill like this previously, so I was thrown from my normal. Did the mortgage company intend for me to feel this way? I could have rushed out another check. I mentioned this to a friend, and he related an issue that arose with his own mortgage. He really did fall behind by a month, and he was under pressure to pay. He worked out a payment option where he would pay an extra three hundred dollars per month to pay the missing payment. After a while, he found that he could not pay this extra payment, so he called the lender to see what the ramifications would be. Nothing, he had already paid back the missing payment; the lender kept adding the extra payment though. He worked out that it should be removed, but this did not happen until he called.
    I had the situation where I incurred an overdraft charge on my account. The problem: my account had not been short of funds, so why would I be charged? When I called the bank, the representative immediately agreed that the charge should not be there, but my call is the reason for the charge being removed. My point to you, dear reader, is not that lenders are big bad businesses. Rather that your financial health is in your own hands. You have to monitor your accounts and question that which you do not understand. I think most of these charges from lenders/banks are done by automatic programs when they are triggered. No one is really monitoring if the charge is necessary.
   The basics of financial knowledge are not hard, but maybe we are not teaching them anymore. I remember once when the computer system went down nation wide at a firm where I was working, I was the only manager in the entire country to turn in my inventory report. No one else knew how to do a manual inventory. The process was not hard; it was out of the norm. I feel that this is happening to many homeowners when dealing with their own finances. If you see something that you do not understand, ask why. Sure, there could be a bank representative who will give you a hard time (try using online chat to resolve a problem- that never works for me), but in general, they will help.

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In my last post, I was discussing neighborhoods, but yesterday found me in two very different parts of the greater Houston area. I drove along Eldridge Parkway from I10 to a little beyond West Airport, then I headed for downtown Houston. Instead of considering the value within a neighborhood to look at the larger surrounding area. I came to the conclusion that defining value depends upon what you may want, but what you may also wish to obtain.
    In downtown, you will have an easier time walking than driving, and their is a host of public transportation means at your disposal. On the far western reaches of Houston, walking may not be ideal, and there are few public transportation methods available. I hope that most of us could agree that having an option besides the car may be helpful at times. On the other hand, living along the far edges of the city may give you more peace and a better family environment. The value will be defined by the people who are buying into the area. The fact that public transportation was lacking bothered me though.
    Most affordable homes are found along the outskirts of the city. This means that the house price may be closer to what most families can afford, but then these families may experience increased costs (like in transportation). I would argue that these affordable homes do not have value. We could look at other factors, like stores, to determine value. This may add value to some homeowners in the far reaches of the city. I could then admit that some value is added. This could go back and forth to refine the definition of value.
    What does this mean to the home buyer? You have to think about value beyond the home that you wish to buy. The greater area plays its part. However, you do have an option to guide the area you choose into one that has great value: your participation. Being involved in community associations or voting for a candidate who will deliver that value to you. To make Houston affordable, home owners should become involved to encourage Metro to bring transportation systems to their neighborhoods, watch what city council members are doing to improve their quality of life, and speak up at events to let their concerns be known. Do not be satisfied with the value that you have; strive for the value that you should have.

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What do you look at when buying a home? Most of us inspect different houses, and we may obtain some community facts. For us parents, school information is at the top of the list. However, to make a house a real home, would you consider other aspects of a neighborhood, such as the park? If home buyers will be looking for value, this means considering more than the value of the home and the  services provided, when purchasing a house. Home buyers may want to examine the community as closely as the home that they are purchasing.
    This past weekend I was taking my family out, when my teenage son announced that he would be spending the remainder of the day with friends. We were at the farmer’s market at Rice University, and he wanted me to take home to Highway 6 and Westheimer. It was lunch time, and the girls wanted to be at a park. I drove home to his destination, and then told my wife of a park nearby in the Energy Corridor area. Across from the park was a new shopping center with one of these tea houses that sell teas, smoothies, and sandwiches (the place was called Smoothie Queen, and it was pretty good for a lunch). We then headed over to Ray Miller Park, which is on Eldridge Parkway close to Briar Forest. Although a windy day, we did have a nice picnic.
    Looking around the park, and spending a good four hours there, gave me a view of the neighborhood in the area. I have had quite a few home inspections in the 77077 area, so I knew the homes, but I had not stopped to think about the community in the neighborhood. In one corner of the park, we had a group of Indians playing cricket. There were two playground areas for the children. A path for those who wished to walk or run. There were some berms as well, from which the children tumbled down. This park was being used. Parents chatted while the kids played. Families were having picnics, and groups gathered for out door fun. I would not say that this park offers everything that I want in a park, like a little natural area, but the community which congregated there caused me to think about the neighborhoods.
   I love my home, and I get along with most of my neighbors. Since many people have moved in recent years, I have felt a change in community interaction. The neighborhood park is not much used by us. There is no community gathering place that really draws everyone. I think that if I was planning to move, I would add the idea of community as one of my factors, and I would study the neighborhood for what I would consider as adding value. Stopping by the neighborhood park would be a first step. I might also consider the layout of the neighborhood with its traffic patterns. Moving on, I would consider the quality of the care that homeowners give to their homes. Then I may look at some facts and figures about the schools or other data.
    In the end, a community does not exists unless you want it to be there. If I do not go out to meet my neighbors, then I will never have someone to turn to when in need. How do you determine value? Does your home, or perspective home, fit that model?

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What title insurance company will you use? Have you checked into the costs? If you are like most people, you will follow the pattern that I took; go with the company your Realtor suggested. Hopefully your Realtor did their research on which title insurance is best for you, but they may not have. I picked title insurance, because this is one of the expenses you will have when closing on your new home, and because the topic has been studied already.
    In 2007, I and many others saw a new world opening up for the real estate industry with how the internet was being used by home buyers. More real estate search engines were coming online, and ratings of service providers was quickly making headway. New style brokerages, such as Redfin, were getting a lot of press. What some real estate professionals realized was that home buyers could pick and choose from products that they wanted and the service providers that they would hire. This boded well for reducing the costs of buying a home. At that time, the Government Accounting Office (GAO) did a study of one aspect of home closings: title insurance. The hope was that buyers would start choosing which insurance to buy, creating more competition and lower closing costs.
    By 2008, we were in the housing crisis, so we were not focused on this quest to allow buyers have a choice. We were focused on getting buyers. In some recent articles on Realtor marketing, there has been a renewed commitment to the idea that your Realtor should be a knowledge base instead of a gate keeper. The idea is that your Realtor is there to help you with their knowledge, but you make the decisions. Realtors would not hire the service providers or arrange for specific title insurance, they would let you make the arrangements, so you can find what is right for you. Is this happening? No, or not always. By opening this field up, you may find that brokerages are charging you for items that you do not need (stress may, each brokerage is different).
    If you ask me to recommend a Realtor, my first inclination is to pull up a list of Realtors that I know personally. From that list, I will probably pick someone who fits your needs( I think), or who I like. This may not be the best for you though. Realtors would do the same. They will set up the home inspector that they like, or any other service that they prefer. This is normal in all of our business lives. Of course, as consumer begin to take charge of their own destinies, the internet will be even more of a resource, allowing them to pick more wisely. Realtors who can show that they are a resource by their websites will do better. This applies to all real estate professionals.
    Getting back to title insurance, I want to direct you to the summary page for this document. Most of you my not want to read the report, but the summary page may be enlightening. As stated, the report is from 2007, but there was an evaluation of the recommendations done in 2009. What we can see is that we consumers may not be getting all of the information that we need (the dreams of 2007 are still on hold). If you look over this summary, I am sure that you will be a wiser consumer, but I hope that you will question the steps in your own path to purchasing a home leading up to the closing. You may save yourself a good deal of money. Here is the the Title Insurance Report Summary. 

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I was so happy to hear the report on NPR about a new green home,and they included the view that some green home programs do not consider restoring historic or older homes with proper consideration. Readers of this blog may recall that I have touched upon this topic. You should hear the report, or read the transcript, to find out what Linda Dishman said.
    I have the problem that to many advocates of green items seem to be more concerned with their income than promoting real green values. Take Eco-Brokers or Green Realtors. How often have they suggested that you buy an older home with ideas of how it could be made green? Do they even know how that can be done? I see them focusing a newly built green homes, hopefully a LEED home. Why LEED? Well, the cost of producing a LEED home is much greater than other green homes, which means the cost of the home goes up, which leads to a larger commission. Let us not forget remodelers who guide us to the new green material (bamboo floors anyone?) instead of refinishing the floors that are there. The list can go on.
    The LEED certification program is great for new commercial buildings, but I have favored the Green Verifier Program for residential construction. This program may not be perfect either (I am sure we can spend time taking pot shots), but the Green Verifier Program does reference building codes which deal with the concept of defining a green home. The International Residential Code (IRC) is used by many communities to create their own building codes, so I believe that the green code sections can be more easily adopted by cities.
    To appreciate architecture, we need to preserve what we have, as much as creating the new. New designs and ideas are wonderful; however, they come out of a tradition, the historic home. Also, if we want to improve the housing stock which already exists, we need individuals who want green innovations, which will inspire others. Maybe what we need is a green verifier program for remodelers. I sincerely hope that Ms. Dishman succeeds in having older homes have more value in the LEED point scale. We need it. Thanks for reading my rant.

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I have been thinking a good deal about analytics lately, since I redoing some of my business reports. This set me off to consider what metrics would be important for a real estate investor if he was looking at a market report. I am still formulating some ideas on that topic, but when I heard that foreclosure sales went down, and that this possibly may be due to the poor quality of the housing stock that is left, I decided to write this post to share my thinking on the real estate market for investors.

Understanding real estate data

    You have to understand some things about data in the housing market. One, unlike the web, data cannot be retrieved in real time, so you will find certain market conditions being reported for either January and December around the middle of February. You will never know what is happening at this moment. When you hear comparison numbers, the analysis will be comparing what happened last January to this January. This is actually helpful, but you could be misled if you think the number is comparing January 2010 to December 2009. Two, the data is being presented might be meaningless. For example, more permits are issued than the number of housing starts, and the number of housing starts is greater than the number of completions. You may know 100 permits were pulled for a given area, but that does not mean that the builder will construct 100 homes. Three, data is presented in a way that is useful to the intended audience. A number is a number, and to understand its value, we need a context. That context will be driven by the goals of the people creating the reports. If you have a real estate investor’s association producing reports, you may obtain different bits of data, with different interpretations.

The Houston Real Estate Market for Investors

    When the statement was made that the foreclosure stock (the lifeblood of investors) may not be of the best quality, I was taken aback. I have been inspecting foreclosures that were good choices for investors. However, I gave the topic some thought about what I had seen around town. I also checked some real estate search engines to see what may come up. Over the last six months, I had inspections in neighborhoods or developments where the builder or owner never completed the project, and the homes went into foreclosure. Some of these units were near completion, but others required a good deal of work. When I conducted my search, many of the great deals were partially completed homes. Home buyers had been competing against investors for foreclosures, but home buyers would not purchase these partially complete homes, and most investors would not as well. I could not find anyone who was tracking the number of incomplete builds, but this may be a good value for real estate investors.
    The news also mentioned that housing starts are up. I noticed that construction was increasing on my travels around Houston, so I was not surprised by this number. When I did some checking, I discovered that Texas has the highest number of permits issued for residential construction when compared to the other states (this data comes from the December figures). Will this high number of permits, and the increase of housing starts, mean more new homes on the market (home completions)? This may be good news for real estate investors (less competition for foreclosures) and bad news (competing against new home sales, which bodes better for renting your property). I will take housing starts as good news, because that metric indicates confidence in the economy, which could mean higher returns for investors who manage their holdings well.
    The number of foreclosures does depend on the economy, so how is Texas faring? Here is a tricky topic to observe. We do not know how many homes are going into foreclosure, because the lenders are not going to advertise that number. We also do not know what lays in store for economic growth. The number of foreclosures depends upon the job market. If people are working, and they are earning well, then we will have fewer foreclosures. Texas has done well, but there are storm clouds on the horizon. The EPA could force changes which will cost industry in Texas, which may cause industry to lay off workers. (Debating the merits of the case is not in the scope of this blog; I will say that I applaud the decision by the EPA, but I acknowledge that there may be job loss due to this finding, simply because industry will be scared of the consequences). We also have to worry about what may be happening in other parts of the world. This past recession demonstrated that world markets are more connected than we thought. Actions in Greece or China could have a dramatic effect on our own economy. Didn’t think that a real estate investor in Houston had to worry about what was happening in Greece? My point is that although the economic forecast for Texas is good, we do have some factors to consider which may effect the economy this year.
    Let me go back to the number of pending foreclosures. There is some grounded speculation that lenders held off on foreclosures during the holidays that many homes were going into the foreclosure process. Remember, we will not have these figures for several months, because the foreclosure process can take some time, and reporting will take a bit longer. Most real estate search engines will permit you to search for foreclosures alone, so the fastest way to see a rise in foreclosures may be checking the number of listings on these sites (this will not be entirely accurate, but you can watch the trend). If this number does rise, consumer confidence can suffer, effecting the economy. The one stimulus plan that does not seem to be the focus of complaints is the one for housing through tax credits. This plan has placed many sellers in the position of rushing to have their home on market before the deadline, and many buyers to find homes before the deadline too. However, the program will end. It has helped consumer confidence in this market, but we will have to see what will be happening in the summer months. My guess is that is when we will see more foreclosures on the market (if they are coming).

Real Estate Investor Strategies

What can we glean from this data? If you are looking to sell a property, now is the time. Overall, you may be better to hold the property for next year, so renting is a good option for this year. If you have the funds and ability, you might find that buying partially completed homes could bring you great returns. You will need a good crew to complete the homes, and you will need to evaluate them carefully ( the weather will have caused damage). There are properties in prime locations which can be purchased cheaply. If you are looking for a property which requires little work, that you can turn around to rent or sell, you will have a tougher job. Some investors do not like working with Realtors, because they feel that they can save some money, but this may be the time that you want a Realtor who knows foreclosures as a source. A Realtor will be aware of listings faster than you. Lastly, be ready for the summer. Now matter your strategy or your beliefs about the economy, we will be seeing new data at that time, which can effect how you should act.
    Your real estate investing business is unique. I am providing a generalized summary based upon my own experiences and feelings. I hope that you will take a look at the figures coming out, take the time to understand them, determine their relevance to you, and then develop a plan of action. I have to refine this data. I did not include the performance of REITs  in this report, but that can be a key indicator for insights. The number of permits is a good value to see interest in an area. Housing starts is a good value for builder confidence; however, we did not look at housing completions, which can be a good indicator of economic conditions. Remember treat your real estate investments as a business (meaning evaluate all aspects of what you are doing).

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For a house to function efficiently, we need three components to work well together: insulation; air movement; and moisture control. I have touched upon these topics recently, but quite by chance, I saw an answer to the insulation question in the title answered by an expert on a website who boiled his response down to one line. When speaking to a client, I discovered the same idea, so I thought a post about how insulation works may be a good idea.
    First, a clarification is in order; something you may recall from science class. Do you remember learning about absolute zero? The concept seems to have nothing to do with our daily lives, so there would be no reason to engrave that lesson in your brain. At absolute zero, there is no energy for movement. Everything above that temperature has some degree of energy. You can think of that energy as being equal to heat. On a hot day, we have too much heat, and on a cold day, we have too little heat. You could imagine greater amounts of heat causing ping pong balls to move more quickly. These faster moving balls will force slower or stationary balls to move faster when they collide. This starts to spread the heat around an area.
    If we wish to stop this transfer of heat, we need insulation. Insulation has a resistance to transferring heat, which we describe in terms of it having an R-value. The insulating material achieves this by two means: having trapped air pockets, which slow down the heat; and being made of a material which does not transmit/conduct the heat well. Insulation might not stop air flow, so that is why you may also have an air barrier on your home. If there are gaps in your insulation, you could significantly reduce the R-value. The open space will allow for the heat transfer. You also loose insulation effectiveness by thermal bridging. Consider the structure of your attic. You have wood framing members holding up the roof, which go down to wood framing running above your ceiling. As the wood below the roof heats up, the heat is transferred to the other attached pieces, eventually making its way into your home. In older homes with little insulation, you will see the joists (wood framing) above the ceiling when you go into the attic. Newer construction covers this framing to prevent some thermal bridging.
    As a reminder, if you are considering insulation for your home, you also have to consider air flow (you need fresh air for quality) and moisture control (to prevent mold). I had the post about why over insulation could be bad, but I wanted this insulation post to be separate, after my experiences.

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