The “Perfect Storm”----Home Inspectors and Foreclosures

By
Home Inspector with Charles Buell Inspections Inc.

     Another example of “collateral damage” in the current Real Estate mess----that most of the country finds itself----is that more and more home inspectors are becoming un-intentional “deal killers”----including this Seattle Home Inspector.

    Even in a fog some things can be seen Before the bubble burst, it was much less common for a home inspector to kill a deal in such a way that the house might not sell in a timely fashion.  This was because if one buyer walked away there might be 10 others waiting in the wings.  Previously, while a home inspector might nix the deal for a particular agent involved, the sale at least would likely happen even if it was for some other agent----and in a timely fashion.

     Nowadays it seems, with so many distressed properties for sale, there are a great many more issues that come up that justify more caution on the part of buyers----especially first time buyers without the cash reserves to fix the additional issues found at these properties.  The result is that more buyers walk away after the inspection----and it is more likely that there are not going to be ten people waiting in the wings----and that the house is not going to be sold in a timely fashion.

     The odds are stacked against a house having been properly maintained----if the owner was not able to pay the mortgage in the first place. 

     Add to this that some of these homes get vandalized by unhappy owners being forced to leave, or that homes are trashed by being winterized and we end up with the “perfect storm” for the home inspector to “write a book” about.  Many of these places look like they have been hit by a tornado ----followed by a hurricane to “smooth things over.”

     Please remember (for the most part) inspectors are not “deal killers.”  Each house has a “story”----we merely write that story down.  For many of these properties, it would be splitting hairs to say that it might be possible for the home inspector to write the report in such-and-such a manner so as to negate the tornado and the hurricane.   It is up to the agent to sort out how these storms have compromised the deal.

     It likely had nothing to do with the agents or the home inspectors.

Charles Buell

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Jason Aldrich 01/29/2010 03:06 AM
  2. Steven L. Smith 02/17/2010 02:06 AM
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Rainmaker
455,579
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Charles - The issue you describe is a serious concern which will only grow as foreclosures continue.  I've recently wondered just how much home value may have been lost due to damage and theft following foreclosure.  I suspect the number would be staggering.  That's the reason buyers must hire a professional inspector to look at any home, especially foreclosres.

Jan 28, 2010 05:10 AM #6
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Paul S. Henderson, REALTOR®, CRS
RE/MAX Northwest. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

This is such an eye opener Charles!
Thank you for your post!
Paul

Jan 28, 2010 05:56 AM #7
Rainmaker
1,560,731
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

True!  I caution buyers who want a "deal" to stay clear of REO's (bank owned) because a lot of them have a lot wrong with them. 

Jan 28, 2010 06:32 AM #8
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Anna Banana Kruchten CRB, CRS
Phoenix Property Shoppe - Phoenix, AZ
602-380-4886

Charles - many of these homes should be walked away from....unless the banks are willing to do the repairs needed and I might add with a licensed contractor. Personally I am glad inspectors like you point out every little item whether it's BIG or small.  The latest one that came across my desk this week was a freaking nitemare - and somehow the agent didn't think it was a big deal as it was.  Can you say HELLO?  It was so bad the inspector took me aside at another meeting and told me all about the problems.  Why a buyer would pursue this kind of mess is beyond me............my take is they need to walk away or sign off on it from my broker point of view.

Jan 28, 2010 06:58 AM #9
Rainmaker
1,247,264
Steven L. Smith
King of the House Home Inspection, Inc. - Bellingham, WA
Bellingham WA Home Inspector

Charlie,

That is true. Many of those places just are not ordinary houses needing a bit of maintenance. Some are disasters.

Jan 28, 2010 07:32 AM #10
Rainmaker
1,247,264
Steven L. Smith
King of the House Home Inspection, Inc. - Bellingham, WA
Bellingham WA Home Inspector

Charlie,

PS..if you are contacted by your buddy Nutsy, let him know that unless he contacts me soon he will miss the plane connections.

Jan 28, 2010 07:33 AM #11
Rainmaker
160,406
Ana Hitzel
AccentPositives Home Staging - Corona, CA
Professional Home Stager Inland Empire

Charles, so many of those type homes around here.  They get stripped bare by angry onwers. They are a disaster on the outside I find it hard to understand why anyone would want to go inside no matter what the price.

Many of these lenders do nothing at all to maintain even the minimum upkeep or protect them either. Who's the real bad guys?

Ana

Jan 28, 2010 10:34 AM #12
Rainmaker
251,098
Debi Boucher
Real Estate Showcase Photography - Woodland Park, CO
"Realtor Showcase" - Real Estate Photography/Virtual Tours

Isn't it the truth? And yet often times, someone wants to shoot the messenger...

Debi

Jan 28, 2010 12:12 PM #13
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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Russell---too often the case it would appear
Michael---ouch:)
Barbara, it does seem risky
Frank, thanks for the kind words.
Vince, it is interesting that banks get interested when homeowners don't take care of their properties but seem to care less when they own them
Paul, thanks
Carla, Deal and Foreclosure is an oxymoron it would seem:)
Anna, anyone that isn't capable of doing the work on these places in a qualified manner probably should stay away from them in my opinion---unless they are rich.  And if they are rich why are they interested----unless it is the lot they are buying:)
Steven, for sure
Steve---mum is the word
Ana, hard to find a "victim" bank:)
Debi, I know it comes with the territory---but.......:)

Jan 28, 2010 02:49 PM #14
Rainer
65,823
Shoshana Shay
St. Pete Realty - Treasure Island, FL

Charles, it is a terrible situation. Around here, you know that a house that has sat through the humid summer without A/C will be LOADED with mold... without any of the awful things angry or desperate ex-homeowners have done to the property.

Jan 28, 2010 03:20 PM #15
Rainmaker
1,858,131
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

The same thing here!  Every now and then I get a call from an agent asking that something be worded a bit differently.  Sometimes what I write may be a bit clunky, but it is hard to put moldy, wet basement walls or damp, sparking circuit breakers in a good light...

Jan 28, 2010 06:39 PM #16
Rainer
332,782
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ

Charles,

My ace home inspector find a pipe that suggested an in-ground oil tank in an otherwise fabulous foreclosure. Local building department had NO records, old listings indicated propane heat. Scan found a tank...

We're trying to work with the bank on the issue. In any case, that sharp inspector saved my buyer's hide by spotting this!

Jan 28, 2010 11:00 PM #17
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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Shoshana, no matter what climate---house that are left unheated and un-ventilated can develop problems

Jay, sometimes I have agents ask me to word things more harshly too:)

Irene, oil tanks are for sure a good thing to identify

Jan 29, 2010 01:25 AM #18
Rainer
36,367
Jason Aldrich
Aldrich's Home Inspections, Inc. - Sequim, WA
Sequim, WA Home Inspector

Charles, I couldn't agree with you more. In my neck of the woods I estimate about two out of three houses I inspect right now are foreclosures or short sales. As you mentioned, some prior owners beat up these houses pretty good before leaving. I have seen everything from cabinets, doors, and light fixtures stripped out of the house to rotting fish in the attic. Just the other day I inspected a house where the gas generator had been "removed" without turning the gas off or capping the gas line. Needless to say, you could smell the gas from fifteen or so feet away. Spooky!

On a similar note, I recently read an article in the Seattle Times that stated "about one in five pending sales contingent on inspection falls through now... Not long ago... the ratio was more like 1 in 20." The article can be found here: http://seattletimes.nwsource.com/html/businesstechnology/2010896889_homes27.html.

Ultimately, I think it is worth noting that home inspections are only one of many things that could kill a deal. If anything, the inspection report could be the final nail in the coffin for some folks only after having lending issues, buyers remorse, finding another house they like better, and so on.

Jan 29, 2010 02:57 AM #19
Rainmaker
1,431,497
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

As agents we need to prep our clients before the inspection.  I tell them right up front if the inspector does not find problems the inspector is not doing a good job.  I tell them to stay focused on safety issues and hidden issues with a big price tag.

Jan 29, 2010 03:52 AM #20
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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Jason, seems like we just have to grin and bear it sometimes:)

Gene, a lot of these forclosure buyers could use considerable education when getting involved with these purchases.

Jan 29, 2010 05:20 AM #21
Rainmaker
420,748
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

Charles, 

I like the way you explain an inspectors role to write the story of a home.  Folks have asked me many times if I would ever spend $400-$500 on a home inspection?  I say any day of the week, I would run and be thankful I only lost that much.  

A lot of emotion goes into buying a home for buyers.  A home inspection is a good opportunity to take a non-emotional look at the house and what state it is in.  It's a guidebook if you will. 

All the best, Michelle

PS I think this PERFECT storm will be around for quite awhile:-)

Jan 29, 2010 08:13 AM #22
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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Michelle, thanks----the story we write down about some houses is War and Peace---others are more like the Little Prince:)

Jan 29, 2010 11:01 AM #23
Rainmaker
690,288
James Quarello
JRV Home Inspection Services, LLC - Wallingford, CT
Connecticut Home Inspector

I see my share of these stormed properties. You are right on all counts and it all boils down to lack of maintenance.

Jan 30, 2010 06:27 AM #24
Rainer
334,224
Paul Gapski
Berkshire Hathaway / Prudential Ca Realty - El Cajon, CA
619-504-8999,#1 Resource SD Relo
 

yes they look so nice but Foreclosures are such tough on to stomach.

Sep 23, 2011 05:34 PM #25
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