Friday, June 16, 2006

Home Inspections II

Wow... just finished watching the NBC Dateline interview with Britney Spears. Fascinating.

I began writing about home inspections a couple days ago due to a cluster of closings in the last couple months. I discovered clients were asking many of the same questions and shared the same anxieties- most of which surrounded two areas; the home inspection and the actual closing itself.
Home inspections had been a bit of a sore subject for me personally. When my wife and I bought our first place together we were very busy and just used the inspector recommended to us by our agent. We did not seek out other companies or check into how the inspection would be conducted and how the summary report would look (in fact, there wasn’t even a report issued!). Big mistake.

Because we bought a new conversion, the inspection was very important in creating a punch-list of items that the developer must repair. I mean, some real basic things can be left undone or significantly deficient in a development. In our case, let's just say the inspector was significantly deficient.
That said, we were dilligent in punch-list items on our own, but still did not know if all the systems in the home were installed properly or if there were any code violations.

So, let's talk about good inspections. I have been around awhile now and have sought out a great group of home inspection companies to reccomend to my clients. I'd say about 75% of my clients accept my reccomendation for an inspector. I've settled on these companies for a few reasons:

1. They go about the inspection in a very systematic way
2. They produce detailed, easy to read reports to the client
3. Experience and customer service

I'm the type of guy who likes the whole package when it comes to services. I don't like to cobble everything together, seaching for the very best deal for each component of the process. For instance, I like to find a place to shop that has clothes I know I’ll like and has the cuts that fit me, good service, nice atmosphere, near the house etc… a place like Banana Republic (sorry, no link or plug here, just happen to like the store). I may pay more money on average than if I shopped the “rack” stores or looked for sales often, but I just don’t want to take the time to shop around… the clothes don’t fit as well at some department stores, the employees are not as committed at “cheaper” stores… It’s a pain in the ass.

Another example is building management. If your condo association has a good building management company, they should have a host of excellent service providers you can trust to carry out maintenance or capital improvements.

So, when I have a moment and go buy some clothes or need something done at our condo building, I’m spending time that I’ll never get back and I incur an opportunity cost. I just want to determine what my needs are and and let the service providers and retailers I trust get the job done for me. It saves time, energy, money and sanity.

Now, apply it to real estate and your agent. This is what I do… quarterback the transaction. I learn what you’re looking for, find the realistic property options while you’re working on your own stuff, teach about neighborhoods and quality of life in particular areas, help assemble a team of attorneys, lenders, inspectors, contractors that provide quality service… that get the job done. This way you don’t have to shop around, try to piece-meal the transaction without experience. If you happen to get a great recommendation from close relations, that’s good too… but consider the source and who will be conducting the service.

The key here is trust. If you trust me to do the job based on my record, you can trust the inspector I recommend is good. I’ve weeded out the bad service provider to give my clients a choice of a few competent parties. It saves you time, energy, money (fewer errors along the way), and your sanity.

So, to reiterate the statement I left with in my first column about inspections, my career in a nutshell is about making sure the right type of inspection is scheduled in the correct time frame and results in a positive component of your real estate transaction.

I aslo explained earlier that there are different inspections for different transaction circumstances. I even said (gasp!) that there are times you may not even get a home inspection. You did not! Yes, I said it.

There are two instances that you may not get an inspection when purchasing real estae that will be your primary residence.

1. The dwelling is sold "as is". The purchase is not contingent on the inspection. If you are a handyman, and we decide the legally required seller disclosures look good and the property is at a justified lower than market price to consider the "as is", you might not get an inspection. However, you may still order an inspection for your own knowlege of the condition of the place, but the seller may not allow this before you are "in the deal".

2. You may also waive the inspection as a bargaining chip. Remember, we are negotiating a property here folks. There are customs, but no hard rules on what it will take to get a good deal for you. If the place is a condo, looks very good and the building is in great shape, and the price is below market, you might consider skipping the inspection if it will avoid a multiple offer situation. I'd only suggest this if there is some intelligence on the building in general that I possess.
This is a good strategy for an experienced buyer, because if it gets you a great price, you can always get an inspection later and correct the minor issues. For instance, I might take a real good look at a property on a couple visits and decide I'll skip the inspection if it gets me a great price... it puts pressure on the seller. They will know I'm serious about purchasing the property and will have to make the decison to walk away from a qualified buyer (even though they are not getting the number they want).

Always get a home inspection on a a single family house or multi unit unless your qualified to build a house yourself!

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