The Thing About Inspections...

Posted by Muriel Ballard on Tuesday, January 14th, 2014 at 1:05pm.

               Every real estate transaction has a period in which there is an opportunity to inspect the property.  Protocols around who is responsible to book and pay for these inspections vary.  In Marin County the buyer generally pays, but regardless who pays the buyer must ultimately take responsibility—after purchasing the property—for having done their due diligence.  Matters discovered after the buyer has signed off on the inspections and closed on the property can be difficult to remedy.

               My husband is a General Contractor, and also a Home Inspector.  Together we have bought and remodeled four homes.  We have attempted to purchase others but backed out due to the findings during inspection.  As such, I feel I have a unique ability to assess a home for both its potential and its weaknesses.  Still, as an experienced Realtor and home buyer, I continue to learn important lessons about how to protect my buyers.  Most recently I was reminded that, when it comes to inspections, you get what you pay for.

               These days with plenty of folks seeking to “get rich quick” by flipping homes, initial impressions can be deceiving.  Be aware that a coat of paint, good staging and really clean windows can provide just the right smoke and mirrors to take a buyers attention away from larger issues that may be at hand.

               The first thing I look at when examining a new property is the roof line and exterior trim.  A straight ridge and no apparent rot and chipping are welcoming, but still no reason to exhale.  When I enter a house, I also take note as to how it has settled.  In Marin and the Bay Area there are many homes built on landfill.  If a home built in the last 50 years has a great deal of settling, that will mean much more than a 100 year old home having a little.  These are the obvious telltale signs, but there may be a great deal more that does not meet the eye.

               Inspections are ALWAYS a good idea, though very savvy buyers and investors may choose to waive them as a bargaining chip, usually because whatever costs they may incur to correct existing problems is well within their means.  Sometimes, when I have a buyer client who does not have a great deal of money to waste, every nickel being scrimped away to get that down-payment together, I will discuss with them which inspections are absolutely essential vs. those they might put off or pass on altogether.  Some inspections, like Radon Testing for example, are less relevant as the whole county has a very low percentage of the gas present therefore making its threat to home ownership immaterial.  When you are about to buy a house, your Realtor should provide you with a list of ALL of the inspections you may want to consider, and allow YOU to decide which are important to you.  Your Realtor can then review your decisions and, hopefully, set up the appointments with reputable inspectors.  Which leads me to the reason I am writing this article…

Recently I encouraged two different clients to use a company that offers a great deal by including the General, Pest and Roof inspections under one umbrella.  If you pay the fee at the time of inspection, they reduce the cost even further.  In both cases, the houses appeared to be in very good order on the surface and I thought this was a safe bet.  In both cases this inspection company missed problems that have cost my clients additional funds spent on repairs after close of escrow.   Inspection companies have you sign a contract relieving them of responsibility for anything they miss, so there is no recourse.  In one instance, this inspection company provided an estimate for repair of a roof leak (missing another one altogether!).  The roofing contractor they sent out was careless and sloppy.  They were obviously trying to make up the reduced cost of their inspections by offering contracting services as well, using cheap labor.  Also, in both of these cases, I hired an additional electrical inspection, as this particular type of home is vulnerable to inferior wiring.  The electrical inspector did miss something in both homes, but the difference is he came back out, himself, and corrected the problem at no additional charge.  Of course I worked closely with my clients after the sale to get them over these hurdles and save them as much money as possible, until they felt safe and happy.

Whenever you buy a home, you simply need to accept that there will be unexpected expenses associated with maintenance.  Even a perfectly maintained and/or inspected house can still throw you a curve ball.  Discuss with your Realtor the possibility of getting a Home Warranty.  Though they often seem to “not include” whatever your problem is due to one caveat or another, there are the times when they can save you thousands of dollars on an unforeseen breakdown—making them a worthwhile investment.

Be willing to spend those extra few hundred dollars hiring excellent inspectors.  Ask for the guys who have a reputation for being tough.  Though some of these guys may be known as “deal killers”, I’d rather have my buyers know up front what they are getting into.  In the long run, the extra money you spend on your inspection could save you tens of thousands in miserable surprises down the road.

Sellers may choose to pay for inspections to be done prior to going on the market.  In this case the price of the home will either need to be adjusted down to account for the cost of repairs, or the seller will, ideally, take care of the repairs before putting the house up for sale.  BECAUSE a seller has already done inspections does not mean the buyer should not also inspect!  It never hurts to get two opinions, or to delve more deeply into another area of the property that may have been referenced briefly in the sellers’ reports.

Make sure you know if the foundation is in good order, whether there is any active pest infestation or serious dry rot, if the house is likely to flood or is in a high liquefaction area, and whether the drainage on the property is sufficient.  Those are the biggies. Roofs and windows are cosmetic by comparison.  And use your common sense.  If a house is in a flood zone, for example, and has been there for 60 years and the foundation is good and it hasn’t done any weird settling, then maybe it’s a great place. 

In conclusion, don’t skimp on inspections.  Your new home is a major investment.  A good, solid home in a desirable location will undoubtedly help you build wealth.  Don’t be dazzled by shiny things.  Everything is not what it appears to be on the surface.  And think outside of the box.  Many excellent real estate investments are over-looked by the average buyer.  Make sure your criteria are well considered.  There are, after all, Peet’s and The Coffee Bean and Tea Leaf in addition to Starbucks!

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