Real Estate Investing

An investor I know recently entered into a contract for a bank-owned property.  It almost seemed too good to be true - gorgeous hardwood floors, all-brick, in-ground swimming pool.  The only quickly identified flaw was the smell of some animal that didn’t appear to be house trained.

Yet the investor was urged to get an inspection.   Get. An. Inspection.   INSPECT IT!

Upon inspection, the foundation needed major repair work.  Not only was there a crack that ran from the ground all the way up the side - separating the brick from the window frame - but in another part of the house the bricks were actually broken … usually a bad bad sign.  But that wasn’t all.  The chimney was falling away from the house by at least an inch due the foundation problems.

To top it off, the “wood destroying organism” (aka termite) inspector found mold underneath due partly to the absence of a vapor barrier.

Remember, this is a bank-owned house so there are additional problems and items that need repair including new paint, pool liner and possible pump, the jacuzzi has handles missing, all the light fixtures need updating, the floor in the kitchen is majorly messed up, there had been a leak upstairs so stains in the downstairs ceiling.

The investor now has the option to walk away from the property if they believe these repairs are just too much.

I don’t know what the buyer will decide to do, but this again emphasizes why sometimes things that are too good to be true really could be too good to be true!

Sometimes home inspection findings are kind of funny, though.  This Old House (click on the link to see more crazy inspection pictures) has photos and this one reminds me of a home I once saw that had vines growing from the electrical outlets.

Another inspection:  Duck!

Always always get a home inspection.

I have been working with a particular buyer for about four months now.  We started - I believe - in March.  We have written four offers and have been disappointed three times.  Deeply disappointed.

The first house seemed just perfect.  It had an amazing covered carport in the back, fully fenced backyard, and felt great.  Unfortunately the home inspection revealed problems so significant and expensive that the seller couldn’t afford to make repairs and the buyer wasn’t about to inherit those problems at closing.  For example, the old galvanized pipe plumbing in the old house had so much build-up in them that when the shower was on, there wasn’t enough pressure to run water in the kitchen sink. 

My buyer wrote two other offers: one was a multiple offer situation and the seller picked another buyer; the other one was a stunning failure because a former buyer who couldn’t get a loan suddenly came through with a clear to close on the day of the offer.

With that history, you can imagine our nervousness at the inspection today on her FOURTH offer.  There were a couple of minor problems - things that didn’t feel like deal breakers.  However, there was fungi under the house in the crawl space and that’s something that will definitely have to be addressed.  We’re having a “termite” inspector out.  Ironically, they are officially inspecting for “wood destroying insects or organisms” which definitely includes fungi, mold, mildew. 

You know, I try very hard to maintain a positive relationship with the inspectors who work with my buyers.  I’ve only been upset one time and that was because an inspector overstepped the scope of his work by noting that the carpet was dirty and needed to be stretched.  These should have been considered cosmetic and, in fact, we had asked for them to be cleaned and stretched in the contract.

Otherwise, inspectors are there to do a job - protect the buyer or find problems on behalf of the seller.  That’s why I was just stunned to read the nastiness that inspector Russel Ray of San Diego, California endured at a recent inspection.  For example,

• “My inspector would never make someone pay before doing the job.” (He runs his company as he sees fit, and I run mine as I see fit.)
• “My inspector would only have charged $400.” (He probably doesn’t have 43 years of experience in real estate.)
• “Would you give my Clients a discount of a couple hundred dollars?” (No, but since I am a former Realtor, I understand that you are a negotiator, always trying to get a better price. But my time and knowledge are all I have to sell, and I know my expenses, so I know what I have to charge.)

Meanwhile, my buyer and I will definitely ask the seller to address the fungi / mold problem.  It must be done.