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Observations of a Home Inspector, Part 2

LIVEVALUATION , May 2010 Issue.  Submitted by Michael Connolly, CI  Smart Move Inspections, Inc.

Last month’s installment touched on how a home inspector might address sections of the Uniform Residential Appraisal Report (URAR).  Having already addressed the Subject Property, we will continue on into the Contract and Neighborhood sections of the form in this installment.

Contract

In a perfect world and from a home inspectors view, it is advisable to review the purchase contract.  However, it goes without saying, the real estate transaction world is not a perfect one, so it is not surprising that it is uncommon for the home inspector to obtain a copy of the purchase contract.  It is even uncommon for the inspector to know the contract price of the home.  However, it is important that the inspector know some details, which are relevant to the inspection.  Sellers sometimes agree to complete repairs based on disclosed defects as a part of the purchase agreement.  For instance, the seller may agree to repair a crack in the basement wall or replace an old roof.  The presence of any deed restrictions on the property may also provide valuable information to the inspector.  For example, neighbors may have a maintenance agreement on a shared driveway.  Some properties may also have sewage ejection stations to pump sewage up to a main public sewer.  While many of these items would be excluded from a typical home inspection, it is necessary to list these items in the inspection report as limitations (items not evaluated during the inspection).

Seller concessions listed in the purchase agreement may include items relating to the inspection.  Sometimes Sellers agree to pay for the home inspection, WDI (wood destroying insect inspection), Radon testing, etc.  It is important that the inspector clearly define the client (usually the buyer) and should stay away from accepting payment from anyone other than the client.  You cannot serve two masters!

Neighborhood & Site Sections

Neighborhood Characteristics
Urban properties, generally speaking, are required to comply with local zoning and building codes.  They can span a wide spectrum related to condition, with some homes displaying deferred maintenance, usage changes over the years, and structural failures and/or repairs, while others are well maintained and professionally remodeled in the more desirable neighborhoods.  For this reason, it is difficult for an inspector to anticipate conditions in urban neighborhoods.

Suburban homes are usually more uniform in building design, construction, age and condition, and as such are the easier properties to inspect.  Often these are grouped in subdivisions consisting of homes of comparable age, size and quality of construction.

Rural Properties can be (and often are) a wild card because they are less likely to conform to zoning and building codes.  In my service area, some counties have not adopted building codes, and if they do have them, they are not compliant and there is no enforcement thereof.  In these areas, the quality of construction will vary.  Rural properties may also have hidden issues such as underground fuel oil storage tanks and private waste disposal systems.

The characteristics of the neighborhood can provide clues about the age and condition of the subject property.

In some urban areas and in many suburban subdivisions, the homes are of similar age, price range and may have even been built by the same builder.  When driving into the subject property’s neighborhood, I observe closely.  Are the neighboring houses in good general condition or displaying deferred maintenance?  Are there any promotional signs in the yards from contractors (siding, windows, roof, remodeling)?  If many of the houses in the neighborhood have newer looking roofs, perhaps the subject property will have a new roof or will need one soon.  It is not uncommon for a neighborhood to have suffered a weather event such as hail or high winds, which warranted widespread replacement or repair of the other roofs.

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Observations of a Home Inspector, Part 1

LIVEVALUATION , May 2010 Issue.  Submitted by Michael Connolly, CI  Smart Move Inspections, Inc.

In a prior life, I spent ten years working for a prominent Midwest appraisal firm.  Between this experience and running my own home inspection business for the last 16 years, I have found that inspectors and appraisers share some common issues. I have acquired a special appreciation for the similarities and differences between them.  Mostly, our professions are related through the real estate process (perhaps cousins, twice removed)—we both visit the house and ascertain the general condition of the property.

I read Steve Papin’s article in the April edition of LiveValuation, entitled “Joe Appraiser”, and chuckled at his descriptions of inspecting the property and avoiding “Fido’s droppings”.  Inspections and appraisals share the pitfalls of evaluating a property.  For example, after setting off an alarm in a home, I once spent 30 minutes in the back of a police cruiser until the police were able to confirm that I had permission to enter the home.

Most people believe that a home inspector just evaluates the home and report its condition to our clients—but not many people realize the true purpose the inspection serves in the real estate process.  It provides affirmation.  Yes, affirmation. Hypothetically, if a buyer has contractually agreed to purchase a home, they are most likely in love with it and the surrounding neighborhood.  They want the house!  They hire a home inspector to uncover any issues, but hope there are none.  The client wants to be prudent and protect their personal interest, thus they are happiest when their inspector tells them the home is in good condition with limited deficiencies.  Ultimately, they want the inspector to shake their hand and congratulate them on their purchase: affirmation.  Of course, in order to satisfy our client, we, as inspectors, must be diligent in our evaluation of the home.  We must use all resources available to provide a thorough analysis of the property.

Home inspectors fill out a variety of inspection forms to report their findings.  Unlike the appraisal industry, there are no national standard inspection forms.  It may be interesting to see how an inspector addresses sections of the appraisal form URAR 1004.  In this article, I will use the URAR as a general outline of points in order to demonstrate some of the tricks and techniques used by a home inspector during the inspection process.

Section 1: SUBJECT

Property Address:

I often “Google” the address of the subject property to see what shows up.  I once found that the subject property I was searching had suffered a fire in the previous year.  (Many fire departments now publish fire reports and any emergency runs to a specific address.)  Of course, there was no mention of this in the property disclosure form that, by state regulation, the home owners had to fill out.  Internet searches may also reveal listings of the property, both active and prior, that have valuable information concerning the age of major systems such as roofs and furnaces.

Assessor’s Parcel Number:

In my market, it is easy to look up a property tax record and description from the county auditor.  Besides the usual information on square footage, there can be some valuable information gleaned from the records.  For instance, a tax card might list a family room addition to the rear of the property, which was built in 2001.  From this I can assume the addition was completed with the benefit of a municipal inspection and therefore probably met the local building codes at the time of construction.  At the property, if I notice the roof on this addition is in the same shape (condition, color, style) as the roof on the main house, I could conclude the age of the roofs are 9 years old.  Knowing an asphalt shingled roof in my area lasts approximately 20 years, this roof probably has 11 remaining years of service life.  If the main house roof does not match and appears to be older, then it may have a lower remaining service life.  But, if I arrive at the home only to find there is an addition which was not listed on the tax card, then I can assume it was built without a permit and inspections from code officials.  I would then closely evaluate this addition and disclose to the client that it may have been built without a permit.

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