Negating the Twin Evils of Appraisals and Home Inspections

By
Real Estate Agent with WEICHERT, REALTORS® - Briotti Group CT RES.0785956

Well, obviously we cannot get rid of appraisals and home inspections. They are perhaps the two most important parts of any real estate transaction. Indeed, many deals have either fallen through due to appraisal and/or inspection issues than all of us put together could possibly imagine, or they have been the savior of many a transaction due to the diligence of both parties involved.

Considering the fact that we have all heard more complaints about the former than the latter, let's assume that we have to deal with the issue of problem appraials and inspections.

What if there were a way to minimize the effect that appraisals and inspections could have on a sale?

I had a buyer who wanted to purchase a home that was listed by a fellow realtor in our other office. She gave me some very reassuring news: her sellers ordered an appraisal right before it was listed and the appraisal price and her suggested listing price were a spot-on match.

Wouldn't it just be easier for every seller to do that and then roll the cost of that appraisal into the closing costs? Provide the buyer's mortgage company a copy of the appraisal and if they want to order their own for verification, then they could do so, but at only a minimal cost to the buyer?

Same scenario with having a home inspection. If the sellers conducted a home inspection right before the listing, it could 1) disclose all of the problems that the seller might have been otherwise unaware of, and 2) reduce the need for negotiations between the buyer and seller over what needs to be fixed before the sale would proceed. Of course, # 2 also assumes that the seller would be reasonable enough to lower the listing price to reflect the needed repairs. Either that, or the seller would untertake to make the most economical repairs and then leave the rest for the buyer - and since disclosure has taken place, buyers would be able to say yes or no to proceeding with the sale right at the time of signing the contract, not deciding to back out afterwards.

Again, the cost of the home inspection could be rolled into the closing costs.

Does this make sense to anyone else? Or did I miss something?

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Courtesy of William James Walton, Sr. , Realtor, WEICHERT, REALTORS® - Briotti Group

Serving northern New Haven and southeastern Litchfield Counties (Waterbury, Wolcott, Prospect, Naugatuck, Middlebury, Southbury, Watertown, Thomaston and Plymouth)

 

Call William James Walton, Sr. Real Estate Agent with WEICHERT, REALTORS® - Briotti Group (203) 558-7463 for help with your real estate needs -buying or selling -  in Waterbury, Watertown, Wolcott, Middlebury, Southbury, Prospect, Naugatuck, Plymouth and Thomaston

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Rainer
5,103
Jeffrey Molloy
Check Mark - Westchester Home Inspections - Mount Kisco, NY

Yes...I missed the part where Home Inspectors became "Evil" and the Part where Real estate Agents and and Sellers became angelic figures who are so honest that we don't need inspections or appraisals. 

As an Inspector I agree with you that pre-listing inspections can build trust.  I can also tell you that the people most resistant to the idea are the Selling Agents!  Most buyers also want to choose their own Inspectors. And, by the way, when I ask clients how they found me I am told 95% of the time that they found me on the Internet...because they didn't TRUST the suggestions made by their Agents! (Lets not forget Radon testing performed by the sellers..those are always reliable too!)

I used to give away a free pre-sale inspection to every new agent that I met when I was inspecting for a client. In 6 years I have had ONE, repeat ONE Agent take advantage of my offer. Their Client loved the information and said that they never realized that their home had certain problems! Things got fixed the home got sold.yadda yada yada!

So its a good idea to try to find a way to "negate" the "twin evils" - that will make Sellers and Buyers even more trusting of you in the future. 

 

 

 

Jun 24, 2009 08:17 AM #1
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Totally missed my point. The title was an attention grabber - I in no way meant to imply that inspectors or appraisers were evil - but rather, those two elements of the home buying process are the most problematic for all parties involved because they can cause deals to fall apart. How best to keep that from happening you got, and your testimonial (only one??? wow) is proof that this is the type of thinking we need to educate our buyers and sellers about....and point out to them how it is in their best interests to do so

Jun 24, 2009 09:02 AM #2
Rainmaker
683,909
James Quarello
JRV Home Inspection Services, LLC - Wallingford, CT
Connecticut Home Inspector

William, I think Jeffery definetly missed your point. I took no offense from this blog. However sellers and agents are resistant to pre-sale inspections. I understand your point, but to get a huge shift in perception will take a MIGHTY effort.

Jun 24, 2009 09:23 AM #3
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

James, Thanks. But I think that in this market, with all of the changes taking place (especially with appraisal laws), that having all of those items taken care of before the listing can help more deals to make it to the closing table, because they've been dealt with before offers have been made and accepted. Is getting that perception to shift worth it? I think it is.

Jun 24, 2009 10:11 AM #4
Rainer
5,103
Jeffrey Molloy
Check Mark - Westchester Home Inspections - Mount Kisco, NY

Hey Guys ...I didn't miss the point at all...I'm playing the Devils advocate...I actually believe that with some hard work alot can be accomplished before hand. The problem that I was trying illustrate is how all of the parts are perceived by the whole.

I dont think Agents are "Evil" just as I know that you dont think Inspectors are evil.  Its the preception that Inspections and Appraisals are "evils" to be over come could be a problem.

I am also a listed and participating Inspector who provides "Move-in Certified" Inspections. www.moveincertified.com ..Guess how many requests we have had in my neck of the woods???

James... I have followed many of your comments on other threads and blogs and I can tell that we think alot alike as far as giving a Client the best Inspection we can. About going beyond the SOP's ...about being professional and doing what we were hired to do.  I also would guess that You are not the most loved Inspector in your area..LOL So I salute you for that!

I can also add that a few "Good" Agents have started to recommend "Good" Inspectors...because they feel like they are being protected from disclosure issues. Right now I would estimate that I am running about a 90% buy rate after Inspection. Those that didn't buy ended up buying something MORE expensive. So in the end everybody was happy.

Lets all keep pushing and maybe this time next year we will have better things to talk about!

William...thanks for starting the conversation... you sound like one of the "Good Guys"!

 

Jun 24, 2009 10:54 AM #5
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Jeff - Understood, and glad you clarified that. I just want all of us who are here to help clients to see the big picture and start working just a little more cooperatively toward that end. Getting buyers and buyer's agents to see the wisdom of having an inspection report already included in the disclosures I think would help closings happen alot sooner and with less complications, as would having the appraisal done ahead of the listing.

Jun 24, 2009 11:03 AM #6
Rainer
332,782
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ

William,

Excellent questions and food for thought!

I foresee a potential problem when the new appraisal is less than the one the sellers got. Let's say a listing gets no offers for 6 months. Perhaps 3 homes on the block go into foreclosure or become short sales the week after the appraisal.

Ditto home inspection. Here too we have enough trouble getting sellers to list where the market demands - before issues are ID'ed. At least with an offer in hand, sellers become less likely to blow a deal by refusing to fix something.

But still worth considering.

Jun 24, 2009 01:32 PM #7
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Irene, in that case the sellers would have their lienholder issue a new appraisal in order to keep current. And not for nothing, that's exactly what we have right now - without the benefit of having a seller's appraisal in place.

As far as the home inspection, the whole point of having the inspection done ahead of time is to avoid blowing the deal, period. The listing agent would note in the remarks that major issues are to be asumed by the buyer, unless the seller agrees to have the items fixed in exchange for listing it at a higher price (as long as that price doesn't effectively overprice it for its market).

Jun 24, 2009 02:24 PM #8
Ambassador
1,651,175
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

William - A pre appraisal and a inspection does give a potential buyer more confidence in moving forward since the seller would have addressed some of the issues upfront. From my experience the buyer will conduct his or her independent inspection and the bank will want do an appraisal.

Jun 25, 2009 01:04 AM #9
Rainmaker
426,933
June Tassillo
Owner/Broker RE/MAX Elite Realty - Franklin, NC
Let me help you with the next phase of your life!

William, I try to get all my sellers to do a pre-inspection per say to get everything fixed before it becomes an issue with a buyer. I have had ONE do this in the past 2 years.

 If I could get every seller to do a appraisal we would stop the home owner from thinking its worth a ton more and have to come down it price every few months.  They just do not see the value in spending the money now and saving lots of time, negotiating and or repair request. 

 I still however would suggest to a buyer to get their own Home Inspection and of course the banks will want to do their own appraisal.

Jun 25, 2009 06:49 AM #10
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

I understand the banks wanting their own appraisals...but what I don't get is an insistence on the buyers getting an independent inspection - especially if that inspection is going to turn up the same results as the seller-ordered inspection. I suppose that what scares most people about it is the potential for sellers to direct the inspector to overlook items that will not be fixed by the seller - which can simply be negated by contractual language between the inspector and the seller stipulating that the results of the inspection are independent of the fee that is paid.

Jun 25, 2009 08:20 AM #11
Rainer
4,233
Bud Hunsucker
Better Homes & Gardens MetroBrokers - Atlanta, GA
Bud Hunsucker

If in the last 6 years it had run so smoothly, many of these types of post would not be the recurring theme in my humble opinion.  I attend many many appraisal and realtor forums nationwide and the restated comment is Appraisers caused this mess because they over valued properties to "make the deal happen", now the comment is "they are coming in too low and killing the deals.  Interesting watching it all take place.  The one thing everyone seems to agree on is the FEDs have over reacted and in particular FHA and the establishing the HVCC policy.

As for the poor Home Inspector, he gets lambasted for doing his job if he's working for the buyer.  Seller's beware, it's worth getting a "Sellers Inspection".

Jul 17, 2009 10:00 AM #12
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Bud - you're right about that. But I don't think that appraisers alone caused the mess we are in; no, that would be an overstatement. All of the parties involved contributed in some way to the cascading snowball that we've all gotten buried by. Overracted is putting it mildly re: HVCC, but I don't think that it needs be be tossed out, just reworked.

As far as the inspectors, I think that having a pre-listing inspection just makes sense. It helps the seller to avoid so many problems with an inspection down the road when there's an offer to purchase on the line.

Jul 17, 2009 11:15 AM #13
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