- The Washington Times - Thursday, November 3, 2005

During the past few years of the Washington-area’s seller-driven real estate market, buyers often felt forced to offer contracts for homes without the benefit of a home inspection. Competition for homes was so fierce that a purchase offer contingent on a home inspection would often be rejected in favor of an offer without any contingencies at all.

For the past two to three months, though, the market has shifted into more balance, with fewer situations in which buyers are competing against multiple offers for the same home.

As this transition has taken place, home inspectors in the Washington area are beginning to see a return to the safer home-buying process that includes a home inspection. Buyers can void a sales contract if an inspection uncovers significant defects in the home.

In addition to market cool-down, home inspectors believe that an increasing number of home inspection requests is part of a backlash.

Joseph Walker, president of Claxton Walker and Associates in Annapolis, says, “As the market slows down we’re doing more and more inspections, but now that everyone has moved into these homes they bought without an inspection, we’re seeing everyone suing each other … .”

Mr. Walker says that while most buyers are frustrated by the minor defects they discover after move-in, the lawsuits he’s speaking of focus on structural issues or flooding, including rotted conditions in hidden crawl spaces.

“We’re starting to feel better about the market,” says Arthur Lazerow, president of Alban Home Inspections in Bethesda, who also is co-host of the radio program Real Estate Today on Saturdays at 10 a.m. on WMET, 1160 AM.

“Our business was down by 30 percent earlier this year, and some companies were down by 60 percent,” Mr. Lazerow says. “The consensus around town is that the market is better balanced in favor of buyers.”

During the last week of October, he says, “we’ve had the best few days we’ve had in six months.”

“Home buyers are really well-informed, and they can see what is happening to people who bought homes without an inspection,” says Brian Koepf, a home inspector with Brian Koepf & Associates Inc., LuxRE Inspections in Reston.

“Now that buyers have moved into homes that have not been inspected, they are finding more problems in the homes,” Mr. Koepf says. “We are getting calls for what we call secondary inspections from buyers who are having problems with moisture in the home they moved into and want to find out other problems so they can be prepared for them.”

“An unusually large number of buyers didn’t have an inspection when they made an offer and didn’t have one later, either,” says Mr. Lazerow. “Some of those buyers discovered significant problems later, and some Realtors are being sued because of this situation. A larger number of people tried to get into the house for a noncontingent or a pre-offer inspection to get some protection.”

Some buyers opt for a noncontingent home inspection as part of the contract, which allows them to have a professional inspection for informational purposes only.

Mr. Koepf points out that these noncontingent inspections are still somewhat common in some of the sought-after neighborhoods of Bethesda and Chevy Chase but are less prevalent than they were a few months ago.

“Noncontingent home inspections are usually done after a contract is accepted but before settlement,” says Mr. Walker. “These inspections are done strictly for the information for the buyer, so they know what they will need to fix right away and know what they need to be prepared for in the future.”

“A noncontingent inspection can be helpful so that buyers can decide to make a lower down payment or perhaps borrow more in the beginning to make repairs,” he says. “The more buyers know, the better off they are. One home I inspected was exhibited as if it was in perfect condition, selling for $4,500,000. But that property needed $500,000 worth of repairs. The buyers were able to pay for that, but it was important to know it from the beginning.”

Another option for a home inspection is to hire an inspector for what one company calls a “walk-and-talk.”

“We can do a modified inspection, which we call a ‘walk-and-talk‘ before you make an offer on a property,” says Mr. Walker. “This type of inspection costs about half of what a full inspection costs, last about an hour or so and doesn’t include a full written report. Usually this would cost about $300 or $350 compared with a $600 or $700 fee for a full inspection.

“We don’t really recommend this over a full inspection because you can’t get the complete details in such a short time,” he says, “but this does give buyers an idea of whether they will need to replace the furnace or the roof and whether there is visible water damage in the house.”

Mr. Lazerow’s company also offers pre-offer inspections, commonly providing a two-page summary report to the potential buyers.

“A pre-offer inspection, available at a discounted fee, covers the major systems and provides information for buyers,” says Mr. Lazerow. “Sometimes buyers would choose not to make an offer after this type of inspection because they don’t want to have to make repairs.”

Sellers in the Washington area are required to complete a property condition disclaimer or disclosure form, either selling the home “as-is” or disclosing defects.

As of Oct. 1, all sellers in Maryland are required to disclose knowledge of “latent defects,” or problems in the property that could lead to health or safety issues.

But buyers relying on the seller disclosure and disclaimer forms may find that they still lack protection from buying a home with defects.

“Material defects must be disclosed even if you are selling your home ‘as-is‘” says Mr. Koepf. “Material defects are things like water penetration or rot which could cause major structural damage to a home. The problem is that after someone purchases a home and discovers these problems, it can be hard to prove that the seller knew about it.”

Mr. Lazerow points out that a home inspection tends to help both the buyer and seller by finding problems before the transaction has gone to settlement.

“Many times, I’ve found deficiencies that aren’t obvious to the casual buyer or to the casual seller,” says Mr. Lazerow. “If both the buyer and seller can read the home inspection report, they can negotiate how to handle a problem before it has to turn into a lawsuit.”

Sometimes having a home inspection can be a protection for the buyer even if a defect in the property is not found during the inspection.

“In some jurisdictions you lose your right to legal recourse if you don’t have a home inspection and find problems with the property at a later date,” says Mr. Koepf. “It could be considered contributory negligence if you choose not to have an inspection. This is another motivation for buyers to have that inspection done.”

Now that the local real estate market is simmering down, buyers can protect themselves with a home inspection without the concern that the request will cost them the sale.

“A home inspection is the only way to protect home buyers,” says Mr. Koepf. “Home warranties and insurance policies can help, but they won’t give the owners the knowledge of what they are buying.”

“A home inspection is meant to help owners find out what they need to know about maintaining their home,” he says. “If they don’t know how to take care of a property or what to look for, what gets hurt is their health, the habitability of the house and, ultimately, their pocketbook.”



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