First and foremost, I feel compelled to state that this post is strictly my personal opinions based on my own professional experiences with my own borrowers here in Los Angeles & Ventura counties. As an NMLS licensed Mortgage Loan Originator (MLO) as well as a CA DRE licensed agent, it's important that anyone from outside of CA reading this understands that in their area or state, the rules, regulations and codes may differ from the ones here in Los Angeles & Ventura counties.
I’ve recently come across a few posts that got me to thinking of my own borrowers here in Los Angeles & Ventura counties and about a couple of the trials and tribulations they have in trying to purchase a home here. While there are numerous issues for buyers when searching for a home to buy here, one of the most challenging issues are property conditions and how the condition of a property can actually disqualify a property for financing.
In Permits? We Don't Need No Stinkin' Permits! by Jay Markanich, Jay (a VA state home inspector) outlines the issues with a recent property that he inspected that had some serious construction issues with an unpermitted addition. Jay discusses not only the building code standards that this homeowner violated in the way that the addition was constructed but he points out the safety hazards as well as the insurance coverage issues that this unpermitted work created.
For anyone considering the purchase of a home, I simply can’t stress enough, the importance of conducting some absolutely vital due diligence before you proceed with that property that you have just contracted to purchase, starting with a home inspection.
Having that home inspected by a certified and licensed home inspector is just the first step in conducting the necessary due diligence before buying a home. For only a few hundred dollars, a good home inspector can ultimately save you thousands of dollars by discovering and assessing any issues with the home that may or may not be a problem now or later.
I have countless stories of how so many of my borrowers have avoided buying absolute money pits by having the property they wanted to purchase inspected during the inspection period. Furthermore, a good inspection can also identify any minor issues that a prospective home buyer may want to take care of after the close of escrow.
Having said this though, I am not proposing that buyers use inspection reports as a means to renegotiate their purchase contract or to create long repair requests demanding the seller repair every minute thing on the report. That is just silly and not that smart in this market where competition is fierce for halfway decent properties in relatively good condition.
While I can’t speak for other markets, here in Los Angeles & Ventura counties, halfway decent properties, with no major issues (key word here being major), are in high demand. If you push a seller to repair minor issues that have no major health and safety issues and/or no building code violations, then you could very well find yourself cancelled out of the game so that the seller can just take one of those other offers that they got during the multiple offer negotiations.
However, any major issues that were discovered during the inspection period need to be brought to the sellers and their listing agents attention, especially if those property conditions were not previously disclosed on the CA seller’s transfer disclosure statement (TDS) or the CA agents visual inspection disclosure statement (AVID). Here in CA, these are required disclosures for all property sales and they must be as accurate as possible.
Furthermore, here in CA, inspection reports belong to the property and not the parties so providing a copy of the inspection report both the seller and their listing agent will allow them to honestly and accurately disclose any property conditions that they had not previously disclosed or knew about.
Getting an independent home inspection is only the first step in buyers conducting their own due diligence during the inspection period. On that note, I hope you stay tuned for my next installment, where I will discuss other due diligence matters that buyers need to be doing on the property they are contracted to purchase, especially here in Los Angeles & Ventura counties. For some properties, this can actually be a deal breaker in closing escrow.
Buying a home is one of the most important decisions someone can make. Today’s real estate market can be really scary, which is why it’s important to get as much information as possible before you start your search.
The home buying process is not a simple process and it's because it can get really complicated and convoluted, that borrowers today need to be working with professionals that will work in your best interests. If you have any questions and/or concerns, please feel free to contact me, Donne Knudsen at C2 Financial Corp., at donne4loans@earthlink.net or 805.2069123 and I will be happy to assist you in any way I can.
ATTENTION PROSPECTIVE HOME BUYERS: Do Your Due Diligence BEFORE You Close Escrow!!! - Part 2
Photos courtesy of flickr: vahm54 jledme mustipher giacomomacis
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