Home inspection surprises

home inspection surprises
home inspection surprises (from wini.com)

The American Society of Home Inspectors (ASHI) often conducts surveys to measure home buyer satisfaction. Although most home buyers are typically satisfied with their home inspections, you should be prepared for home inspection surprises after you move into your new home.

A 2012 ASHI survey conducted by Harris Interactive indicated that home buyer confidence was boosted in eighty-eight percent of respondents who had a home inspection before buying. A 2011 ASHI survey revealed that about seventy-two percent of homeowner respondents indicated that their home inspection helped them avoid potential problems with their home.

Although the surveys suggest a majority of home buyers are usually satisfied with their home inspections, there are some that are not.  It’s not unusual to read or hear about a home inspection that is not perfect.  And sometimes the home inspection goes awry from the start.  An agent once told me a story about a home inspector who flooded a condo because he wanted to check the fill rate of tub by closing the drain; he walked away and forgot about the quickly filling tub.  Years ago, I witnessed how a home inspector almost caused a fire by turning on an oven – if the inspector first checked inside before turning the oven on, he would have noticed that is where the homeowner stored pans separated by paper towels.

There’s a lot going on during a home inspection to distract the inspector from their duties.  And no one said home inspectors are supposed to super human or perfect; but there is an expectation that they are thorough.  Not so much because they are paid professionals; but rather, they’re relied on for information about one of the highest cost purchases of a lifetime – your home.

When you first meet with your home inspector, they will tell you they are not perfect.  However, they are supposed to follow “standards of practice.”  Years before home inspectors were licensed, ASHI developed standards of practice as a means of establishing expectations placed on inspectors.  Many of those standards have since been incorporated into state home inspector licensing laws.

Maryland’s home inspector licensing law (COMAR Title 9 Subtitle 36 Chapter 7) states that the inspector identify the scope of the inspection, and visually inspect “readily accessible areas” to determine it the items, components and systems are operating as intended, or are deficient.  Further, to be in accord with the standards of practice, a home inspection: “Is intended to provide…objective information regarding the condition of the systems and components of a home at the time of the home inspection; Acts to identify visible defects and conditions that, in the judgment of the home inspector, adversely affect the function or integrity of the items, components, and systems inspected, including those items or components near the end of their serviceable life; May not be construed as compliance inspection…; Is not intended to be construed as a guarantee, warranty, or any form of insurance; Is not an express or implied warranty or a guarantee of the adequacy, performance, or useful life of any item, component, or system in, on, or about the inspected property…”

Given the limitations of the home inspection, home buyers are sometimes confronted with surprises about the condition of items that were not readily seen during the inspection, such as: the roof, chimney, foundation, and HVAC.  However, you can limit subsequential issues by having a licensed contractor further examine those areas during the inspection period.

Copyright © Dan Krell

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Don’t skip the home inspection – old, new, or renovated

homesLike the 49ers seeking gold in California, real estate investors have flocked to D.C. in recent years to seek their fortunes. As home values rebounded, many distressed homes were snapped up by investors with the intention of renovating/rehabbing, and then selling them. For many home buyers, these “flipped” houses have become home; however, for a few, the dream has become a nightmare.

Martin Austermuhle reported on WAMU (A Dream Home Becomes a Nightmare; wamu.org) about D.C.’S house flipping environment and highlighted one family’s dream turned nightmare. Characterized as a “cautionary tale of home-buying in a hot real estate market,” the story was basically about how rotted wood in the porch has led to a multimillion dollar law suit between the purchasers and the rehabber.

If you haven’t received the memo, “house flipping” is once again a bad thing – or is it? Unfortunately, “flipping” has become synonymous with fraud and scams because of the attention that it received in the mid 1990’s (as the result of widespread fraud and scams that involved flipped homes). At that time, several cities (Baltimore being one) were known for flipping scams because of the investors’ ability to purchase a home for very little money and turn it around for a big profit.

Although, there should be nothing wrong with buying a distressed property, rehabbing and selling it (aka home flipping); flipping has generally become the term used when there is an accusation of fraud or con involved with a rehabbed home. During the 1990’s, flipped homes were the center of many mortgage fraud cases that took advantage of lenders by providing false income statements, fraudulent credit reports, and/or fraudulent appraisals. In these cases, the investor was not the only scammer; as accomplices often included: loan officers, appraisers, title agents, real estate agents, and even “straw” buyers.

Many home buyers were also scammed into buying homes in disrepair that were represented as being rehabbed. And believe it or not, some of these homes were nothing but shells (e.g., gutted).

In the aftermath of the flipping crisis of the 1990’s: lenders wrote off hundreds of millions of dollars, lawsuits were filed, and a movement grew to educate home buyers about the need to conduct home inspections. Mortgage underwriting changed to safeguard against future scams with the introduction of title seasoning (length of ownership).

Legitimate rehabbing of distressed properties has always been a viable industry; and can transform an eyesore into a livable home. However, just because renovations have been made to an old home doesn’t mean that it is now brand new!

When buying a home, you must do your due diligence regardless of the age of the home. A thorough home inspection should be conducted, even on new homes. Although home inspectors don’t have x-ray vision, the technology they employ can sometimes make it seem as if they do. Besides the routine identification of deferred maintenance, home inspectors can typically identify issues with renovations and can usually identify code violations. Furthermore, you should check permits when considering a home that has been renovated or expanded. Many jurisdictions offer online services to search permits; locally, the Montgomery County Department of Permitting Services has such a search portal (permittingservices.montgomerycountymd.gov).

If you’re buying a home, you might also consider working with an experienced Realtor®. A seasoned professional is not only knowledgeable about neighborhood price trends and disclosures; many are skilled to work in tandem with the home inspector to negotiate repairs.

Copyright © Dan Krell

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Is a home inspection good enough? Enter the Building Inspection Engineer

by Dan Krell © 2012

The need for a home inspectionIt wasn’t too long ago when home buyers wouldn’t even consider writing in a home inspection contingency in a contract for fear of losing the home of their dreams. Presently, of course, you can expect to find some type of home inspection in a most home purchase contracts. Some home buyers are even going a step further and employing Building Inspection Engineers for pre-purchase inspections.

With a little help from real estate agents, home buyers place high expectations on the home inspection. After all, the home buyer is making a big investment in their new home; they want to ensure the home’s condition is acceptable. To standardize expectations placed on home inspectors, the American Society of Home Inspectors (ashi.org) developed a standard of practice. According to ASHI, the home inspector will inspect the condition of visible and “readily accessible” home systems according to the standards of practice. The systems observed typically include: the HVAC system (heating/cooling depending on outside temperature); interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement and structural components.

Even Maryland’s home inspector licensing law has a thing or two to say about what to expect from your home inspector. According to the standards of practice that are described in COMAR Title 9 Subtitle 36 Chapter 7, home inspectors are required to visually inspect the structural system and components, including the home’s foundation and framing. If the home inspector suspects that deterioration exists, they are required to probe the structural component, unless probing will damage the finished surface.

However, (usually at the time of the home inspection) the home inspector will briefly explain that they are limited. They will explain that the inspection is not “technically exhaustive,” and “may not identify concealed conditions or latent defects” (home inspection limitations are described in “Limitations and Exclusions” COMAR So, maybe home inspectors are not the super heroes we make them to be.

Enter the Building Inspection Engineer. The Building Inspection Engineer may take the home inspection to the next level. The National Academy of Building Inspection Engineers (nabie.org) was established in 1989 to establish the highest standards in the home inspection, investigation and consultation industry. Along with verifying the qualifications of engineers and architects providing these services, the NABIE has developed the Building Inspection Engineer standards of practice.

According to NABIE, their members “have demonstrated competence involving inspection of buildings and building systems;” which can include site conditions and structure, as well as mechanical, electrical, plumbing and other major systems. The building inspection engineer’s perspective of the inspection is from a “demonstrated engineering judgment.”

The need for a home inspectionThe standards of practice set forth by the NABIE explain that the purpose of the inspection is identified and specified for each client, as the purpose can vary from a general inspection to investigating specific problems; the level of inspection and limitations are mutually agreed upon by the Building Inspection Engineer and the client. Typical inspections are defined by four levels: A) a visual inspection of systems and components; B) a functional inspection of systems and components; C) a specialized inspection that goes beyond level B and may require invasive techniques, material removal, or destructive testing; D) a specialized inspection with consideration to repair or improvement.

Regardless of the type of inspection you choose, make certain your inspector is licensed.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of April 9, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Making the right decisions starts with choosing your agent

choosing your real estate agent
By Dan Krell &copy 2009

For a smooth transaction, choose the right providers

If you are a first time home buyer, you may feel a bit confused and certainly overwhelmed by the huge amount of information that suddenly seems to cascade over you. Let’s face it, the real estate industry has changed significantly such that if even if you’re an experienced home buyer you may feel a bit confused and overwhelmed too. Choosing your service providers before you begin searching for a home can assist you through the different phases of the process as well as build a foundation for a smooth transaction.

Taking the time to interview and choose a Realtor, lender, home inspector and title agent before you begin searching for a home will create a team of professionals to guide you through the major aspects of home buying. It may sound a bit much, but when you are embarking on (probably) the most expensive purchase of your life, it’s important to know you are well represented.

Although the Realtor is generally known to assist in home searching and negotiating sales contracts, the agent you choose should be by your side throughout the transaction to help when the road gets bumpy. Besides asking how long the agent has been licensed, you should also ask if the agent is full-time so they may be accessible throughout the day. Additionally, calling an agent’s list of references of recent clients can shed light on the agent’s strengths and weaknesses.

Consulting with a lender prior to making an offer on a home is important; narrowing your choices by interviewing loan officers can help you learn more about their attention to detail as well as focus on customer service. The loan officer will help you through the mortgage process and should be available to assist you from application to closing. Comparing mortgage costs is more than comparing interest rates, asking for and comparing lender fees and points can help you differentiate total lender costs.

After you enter into a contract, you will most likely want to conduct a home inspection to determine the condition of the home. Many home buyers don’t consider choosing a home inspector and rely on the real estate agent to arrange the inspection; however, experience and scope of inspections can vary significantly! Choosing the right home inspector can help you not only accurately determine a home’s condition, but also put you understand age related problems of a home (such as settling) and prepare you for future maintenance. Make sure that the inspector you choose is available by phone and willing to return to the home if you have questions about the inspection.

Like the home inspection, choice of a title agent is often left to the real estate agent. However, choosing a title attorney early in the process may provide you a strong and useful advisor- a title attorney. The title attorney will not only help you understand the closing process, some title attorneys will make themselves available to answer legal questions that may arise from your home purchase.

Taking the time to interview and choose the providers whom you feel comfortable with is important to help guide you through the ups and downs of the home buying process. For more information on the home buying process, please visit the Department of Housing and Urban Development (www.hud.gov/buying).

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 3, 2009. Copyright © 2009 Dan Krell.

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