Tuesday, October 18, 2016

The three most common home inspection Misses By Richard Montgomery

The three most common home inspection misses
Richard Montgomery 10:56 a.m. CDT October 13, 2016
Published in the Green Bay  Press-Gazette

Reader Question: We are preparing to sell our home to downsize. We hear stories about what home inspectors miss. We will soon be dealing with two inspections. What items do home inspectors most often overlook? — Harold W.

Monty’s Answer: This question requires some background to explain efficiently. There are three facts centered around home inspections often overlooked by home buyers and sellers alike:
» The inspection is not a guarantee. 
» An inspection is a visual observation only. 
» The examination covers a single point in time.

A true story
A month after taking possession of their new home, the buyer decided to make some changes to fit their lifestyle and tastes. One of the changes was to replace a wood floor in a lower-level recreation room.
Immediately after commencing work, the contractor discovered mold under the wooden floor. The buyer’s inspection did not detect the fungi, and the buyer suspected the seller had hidden it under the flooring. The ensuing investigation revealed the seller, who had lived in the home for just over three years, inherited the wood floor from a previous owner. Further, the inspection at the time of the current seller’s purchase also did not discover the mold.
This example demonstrates the importance of understanding all three of the inspection points above; visual, a single point in time, and no guarantee. Did both inspectors miss the mold because it was encapsulated under a floor and not visible? No matter what the inspection costs, there are risks even the most qualified home inspection cannot eliminate. The main point here is that some of the stories you might hear, while factual to some degree, might not fully recognize the limitations of a home inspection.
This example was not stated to absolve every inspector from responsibility to do a good job. While one assumes all inspectors do their best, even the best inspectors will miss an item that was not visible during the inspection. Not all home inspectors are created equal. Buyers and sellers should be diligent in selecting a home inspector and take the same steps they take in hiring any other service professional. There is an article at https://dearmonty.com/home-inspections/ with more information about home inspections.

What home inspectors most often miss
1. When clues are rendered unobservable, we minimized the chances to discover defects. Be cautious when an inspector does not walk the roof, enter the attic, or enter a crawl space under a home. If a home is basementless, determine whether it has a crawl space or is on a concrete slab.
Also, when drafting an “offer to purchase,” require obstacles blocking a visual inspection, such as a basement wall not visible due to boxes stacked to the ceiling, be moved for an examination. Do not be shy about requiring the seller to make spaces accessible for inspection. Inspectors are not responsible for moving large boxes and furniture to inspect a home. Consider including a provision for testing or removing a paneled wall if the home inspector has any indication (such as water stains, pet odors or a negative exterior grade) the paneling or flooring could be hiding a defect. If you hire a contractor to look at a wall, you have an obligation to repair the intrusion to the original condition.
2. Negative grades around a home’s foundation. It is not uncommon for contractor error, improper rain gutter installation or maintenance, or soil settlement around a foundation to create an environment for water penetration. Water can damage a home in many different ways. Some insects are attracted to water, certain materials will rot or discolor over time, mold develops and personal belongings can be damaged or destroyed. Fences, patios, shrubbery and bushes, particularly when overgrown, can hide settlement. Fallen leaves or snow during fall and winter months are also red flags to watch. The best time to look at a home is after it has been raining steadily for a couple of hours.
3. Heating and cooling equipment. When inspections occur in cold weather, the cooling condenser is not activated. In sweltering weather the effectiveness of the heating element might be difficult to judge or not activated. HVAC equipment also contains many elements and electronic components that are susceptible to wear and tear.  

The understanding of a home's condition is a fundamental part of determining value, and an inspection helps give you that important understanding.

Richard Montgomery offers real estate advice to readers. He is a real estate industry veteran who has championed industry reform for more than a quarter century. You can ask him questions at DearMonty.com.

Monday, October 3, 2016

What are the costs involved in a home inspection?

How Much Does a Home Inspection Cost?
Excerpts from article published at Homeadvisor.com

*NOTE: This is a general information article. I will be happy to discuss my prices, policies and process as they apply to the items mentioned here. Terry - Your Commendable Home Inspector. 

Average Home Inspection Costs & Fees

The average home inspection costs around $315, with condos and small homes under 1,000 sq ft. costing as little as $200. Larger homes over 2,000 sq ft. will run $400 or more. Radon or mold testing will cost extra, but will typically cost less if you purchase them with a home inspection.
"How much do you charge?" is normally the first question asked of a home inspector. You should be asking about qualifications, experience, and how they get most of their business! Nonetheless, here is a breakdown of what you need to know so you can anticipate what you should expect to pay for a home inspection:
   There is no set standard for how the overall inspection price is calculated, so you should ask your inspector up front to find out how you will be charged.

   Inspectors quote inspection fees using different methods. Some charge a flat rate by the square footage of living area, square footage of area under the roof, or the amount of time spent on the inspection.

   If the inspector charges based on the amount of time spent, the larger your house is, the more you should expect to pay.

   The age of homes can affect the cost as well. Some newer homes can be inspected in 2 to 3 hours while older homes can take 4 or more hours. This is due to repairs, additions and simply how the house has developed eccentricities over the years that require a closer look.

   Some inspection reports might take an hour or two to complete, while others might take 4 hours or more. This varies by inspector and how they compile reports.

   As with most things, paying the lowest cost for a home inspection isn't always in your best interest. Inspectors aren't regulated by HUD (The U.S. Department of Housing and Development), so inspectors who charge the least might be cutting corners.

What All Should Be Included in a Home Inspection?

As stated above, all home inspectors are not created equal. They cover different areas in their inspection, so you should always find out ahead of time what exactly will be covered and what will not. At the end of the inspection, your inspector should present you with a report listing the problem areas that were found, including photos. Make sure the following areas are covered to avoid future hassles and maintenance repairs:
   Electrical system
   HVAC system
   The general interior & exterior
Some additional areas that might be covered by your home inspector include:

These additional areas generally require specialized certification, so if you want them checked out, you should call around to find a qualified inspector. They may come at an additional cost.

Home inspections should be non-invasive, meaning it should not include making holes in the walls, damaging fixtures, prying up shingles, or otherwise affecting the structure of the home. In some cases more invasive examinations are required, but they should be completed only with the written consent of the homeowner. Because of this, it is in your best interest to be present during the inspection.

A home inspection is not required, and some people decide to save themselves a few hundred dollars by trusting their own eyes. This often becomes a very costly mistake. Without the training and experience of a home inspector, or without knowledge of what certain problems can lead to, saving a few hundred dollars now can cost you several thousand dollars just a short time away.

Questions to Ask Your Home Inspector

Here is a breakdown of major questions you need to ask your inspector before going through with the home inspection:

What exactly does the inspection cover?
The inspection should cover the items listed in section 2. In addition, your inspector should be able to prove the inspection and report will meet all applicable state guidelines along with complying with a standard code of ethics. You can request a copy of all the areas that will be included in the inspection upfront so that you can ask questions as well as identify any additional areas that you want covered.

What is your experience with home inspections?
No, it isn't rude to ask a home inspector to provide proof of his/her qualifications. In fact, it's just good practice. Your inspector should be able to provide you with references and/or proof of experience upon your asking.

Is your expertise in residential inspections?
Some people who have experience in construction or commercial inspection might claim that they can perform a home inspection, but it is best to choose an inspector who has been specifically trained to inspect residential spaces.

If the inspection shows that repairs are warranted, are you certified to perform the repairs?
Some state regulations and home inspector associations allow inspectors to perform repairs upon inspection, while others strictly forbid repairs due to a conflict of interest.

How long will the inspection take?
Larger homes (2,000 square feet or more) will take longer than smaller homes, but some inspectors just take longer than others no matter what size the home is. On average, you should anticipate the inspection to take 2-3 hours for a single-family home.

How much is this going to cost?
See section 1 for average cost information. This question is important because you should have an accurate quote up front and it is worthwhile to shop around and get a few quotes.

What does the report look like and how soon after the inspection will I see it?
Ask for samples of previous reports the inspector has done to get a feel for his/her reporting style and to make sure you can make sense out of the report itself. In general, you should expect to see the report no more than 24 hours after the inspection has been completed.

Can I attend the inspection?
If the inspector answers no to this question, it's probably time to move on to another inspector. It's a pretty big red flag not to allow the homebuyer to attend.

Which home inspector association are you a member of?
There are a few different home inspector associations in the country and, really, it doesn't matter which association the inspector belongs to as long as s/he belongs to one. An inspector who doesn't belong to a professional association likely doesn't take the job seriously and might not be as qualified as other available candidates.

How do you keep your expertise up to date?
It's important to stay on top of education and training in most fields, and home inspection is no exception. A reputable home inspector will take advantage of training courses to stay current and hone skills. This question is especially important for homebuyers who are interested in an older home that requires additional skills/expertise for specific problems.

Licensing & Regulation

(NOTE: The State of Florida Licenses and regulates inspectors in Florida - Associations merely provide training and community - slightly misstated below in the article) 

The two main associations that license and regulate home inspectors are NACHI (National Association of Certified Home Inspectors) and NAHI (National Association of Home Inspectors). These associations hold their members to a high standard of quality, and any home inspector who belongs to one of these will need to adhere to their guidelines. Inspectors need to pass an application process to be accepted, and anyone who veers from the guidelines will have his/her membership revoked. The associations' websites can provide a good starting point for finding a licensed inspector in your area.

A Final Note on Paying for a Home Inspection

Based on all the added expenses that you might end up paying without a home inspection such as fixing a broken water heater, plumbing issues, and foundation problems, the minimal cost of $200-$600 is definitely worth it. Homebuyers are often stressed out about money and think that they can save a few dollars by skipping a home inspection. In reality, an inspection can be the best investment you make in your home and it can give you peace of mind when you finally decide to buy.

Monday, July 18, 2016

Sound fundamentals may sell the home as much or more than that snazzy new kitchen

When trying to sell their homes, many homeowners consider undertaking a renovation or other home improvement as a way to boost resale value and minimize time on the market. However, not all home improvements deliver a strong enough return on investment to justify the time and money spent.

As eye-catching as some renovations may be, basic maintenance generally adds more value to a home's marketability. Remodeled kitchens and baths showcasing the latest design trends will not garner an impressive sales price if the home's fundamental systems or elements, such as the roof or foundation, are in disrepair. In deciding how to allocate their renovation budgets, sellers must also ensure that the yard and the exterior of the home are well-maintained and inviting, as buyers may be deterred from even entering the home if it lacks curb appeal.

If your home is already in sound condition and you are considering a home improvement that will help yield a swift and lucrative sale, which projects are worthwhile? The 2015 Remodeling Impact Report, a recent study conducted by the National Association of Realtors® and the National Association of the Remodeling Industry, examined the responses of over 4,000 homeowners and realtors to determine which home improvements carry the greatest value. While the study supported the commonly held belief that kitchen and bath remodels are the most beneficial for resale purposes, it also highlighted the strong return on investment of more overlooked improvements. Specifically, the study's findings included: 
  • 57 percent of realtors had suggested that sellers remodel their kitchens before listing, and 25 percent believed that an upgraded kitchen had recently helped them close a sale. On average, homeowners recovered 67 percent of their expenditures on kitchen remodels.

  • 45 percent of realtors had recommended bathroom remodels, and sellers recovered an average of 58 percent of the cost of such remodels.

  • Insulation upgrades, which homeowners most commonly performed in order to improve energy efficiency, delivered an average cost recovery of 95 percent.

  • 39 percent of realtors had suggested hardwood floor refinishing, and homeowners recovered, on average, 100 percent of the cost.

  • Among upgrades to the home's exterior, realtors believed that new roofing, new vinyl windows, and new garage doors carried the greatest appeal for buyers. However, new roofing offered the strongest ROI, with sellers enjoying an average cost recovery of 105 percent. Thirty-two percent of realtors also believed that a new roof had recently helped them close a sale.
While the Remodeling Impact Report provides quantifiable insight into which home improvements are the most worthwhile for resale purposes, the value of any project depends upon the specific property and the neighborhood in which it is located. For example, the study found that homeowners only recovered an average of 52 percent of the cost of adding a new bathroom, but an older home that has multiple bedrooms sharing one or two bathrooms may experience a surge in value from such an addition. Sellers should also have a realistic understanding of property values in their neighborhoods, as installing top-of-the-line upgrades in a relatively inexpensive home will not deliver a proportionate return on the home's sale price.