For those of us who have been in the real estate services business for a decade or better, we remember the glory days when we would show up for the home inspection with the prospective buyer. The house would be spotless, all the proper accent lighting would be on, the thermostats would be set at the most comfortable setting, music would be playing in the background and the smell of something good would be coming from the kitchen. This inspector remembers several occasions when a plate of fresh baked cookies was left on the kitchen sideboard with a note saying to enjoy. Whoa, what happened?
Today, the inspection date and time can change because there is a problem getting the utilities turned on. Many times when arriving at the home, the utilities in fact have not been turned on. The property is usually vacant and in many cases has been empty for several years. Closed up houses without utilities can be problematic. If the house was winterized, have the pipes burst? If only some of the utilities have been turned on what unanswered questions does that leave for the buyer? Almost always there is deferred maintenance. The exterior needs work, there is probably some damage to the house, thieves may have taken copper pipe or wiring, stolen the air conditioning unit, there may be mold growth on the interior; the former owners may have stripped the place before they were removed; and, depending on the neighborhood, there could be unwanted guests living in the house.
What has happened is the rocking and rolling housing boom that lasted until the last few years has been followed by a housing bust. The result is a real estate market flooded with foreclosed properties. The new homes that drove market sales in the Atlanta area for so long have been replaced by homes that have been foreclosed. This market dynamic has changed the real estate environment, the buyers and the property inventory. Many real estate agents have also been brought into this environment where they have little or no experience.
One of the dynamics of this market has been that more agents are recommending home inspections to their clients looking to purchase foreclosed properties. When, on the surface, this may appear to be sound advice, too many times the inspection process simply adds frustration and confusion to the buyer’s decision- making process. Since many new buyers are taking advantage of lower real estate prices, first-time buyer assistance and low mortgage rates, they may be unsophisticated in the home-buying process.
The home inspection should be an educational process for the buyers so they can learn the difference between a major defect and simply deferred maintenance that the typical home owner is expected to take care of. Mold, for example, can be a deal breaker in many real estate transactions. In reality, the “fix” for mold in a house can be simple and inexpensive. A knowledgeable inspector can get past the media hype and present reasonable alternatives to the buyer. If the property is being “sold as is”, the inspector should be able to advise the buyer on those projects that should be tackled first and what the approximate cost might be.
How experienced is the buyer in doing his/her own home repairs? Where do their talents stop and when do they have to call in qualified contractors to do the work? The experienced home inspector can assist in this process to help identify those projects the buyer thinks he/she can tackle and which ones are going to require outside help. With this done, costs can be better identified so the buyer can understand how much money he/she will have to put into the home after the sale. If the buyer thinks they are getting a bargain on the home, they should have a good understanding of their costs after the inspection. “Is it really a good deal”?
Home inspectors who have worked with investors buying distressed properties have particular experience in dealing with foreclosures. An investor/rehabber can look past all the problems and visualize what the property will look like after the work is done and what the cost will be. Some investors are buying property here in the Atlanta market sight unseen and solely relying on the reports of their home inspector.
We know that the average home buyer does not have the same level of sophistication as the investor, but they can still have access to the same level of home inspector competence to help guide them through the home-buying process.
The foreclosure market is yet another variable, “opportunity” in the real estate industry and will remain a viable sector until inventories are worked down. Let us all make hay while this opportunity is available.