Preferred Inspectors: Selecting & Hiring an Independent Home Inspector

During the last segment of this Preferred Inspectors topic, we discussed the facts, reasoning, and implications of buyers choosing and hiring their agent’s “preferred inspector.” In case you missed the first segment, check it out here. 

Choosing an Independent Inspector

Moving forward, now that you’re cautious about choosing a “preferred inspector” and decide to hire your own independent inspector, where do you start?

• First of all, many buyers feel reluctant to decline their agent’s preferred inspector or additional recommendations. Some may feel as if selecting the preferred or recommended inspector(s) is convenient and one less step in the lengthy process of choosing, buying, and closing on a home.  In addition, many buyers feel as though choosing their own inspector is disrespectful to the agent or are uncomfortable in voicing their desire to choose an independent inspector for obligatory reasoning. 

• Understand that you as the buyer are already helping your agent earn their income with your desire to purchase a home with the commission percentage they’re in line to receive. Let’s quickly assume you’re purchasing a $200,000 home (and one of the biggest investments of your life). At a standard 3% commission, your agent is making $6,000 off this single transaction (give or take with association dues, fees, paperwork, etc.). They need you more than you need them.

• After informing your agent that you’ll be choosing an independent inspector, be sure to obtain the recommendation(s) from your agent/realtor to cross-reference with the research you’re about to conduct. 

• Start your internet or phone book search by identifying 10 home inspection companies in your local area.

• Contact each company and inquire about their background, experience, licensing, bonding, insurance, warranties, report turnaround time, and scheduling flexibility. (Understand the requirements of your specific state as well to cross-reference responses with).

• In addition, ask standard questions such as what is included/inspected during the process, whether or not they allow you to attend, any pre-inspection documentation or special clauses, and approximately how long the inspection will take. Any reputable inspection company will be more than happy to answer these questions and clarify any questions your may have. 

• Cross off any company that does not have licensing, insurance, or bondage as well as any that do not explain what is included through the inspection process, do not allow you to attend, cannot provide any estimated time of how long the inspection will take (3-5 hours for a standard residential home around 1,200 square feet), and do not utilize any pre-inspection agreement(s). 

• Most companies have no problem turning around a report (with photos) within 24 hours of the inspection, which is important to know as most buy-and-sell agreements contain clauses regarding when the inspection must be conducted and completed by. Companies such as Home Fax Inspections include a 100% Satisfaction Guarantee, and 24 hour guaranteed turnaround time, or your money back. 

• Next, view each example report from the companies remaining from your research. It’s important for you to get a feel for how each inspection company reports their findings and observations. If you can’t understand the example report or it does not include photos or explanations, move on to another. 

• This isn’t a process you should look at as one inspection and report, the end. Any reputable inspector is going to provide valuable information for you to use throughout the duration of your home purchase. This should be treated as a long-term reference document and education on your home for your benefit, not just another step to move the transaction along.

• If you need to pull more companies due to the information you find, do not be afraid to do so. 

Main Goal

Although there are other examples and information that should be taken into consideration during this process, the main point that you should understand and strive to obtain is: 

Which professional inspector is most capable of providing you with the most accurate, understandable information that will help you obtain the best purchase price possible now, while helping you become as fully informed as possible regarding the long and short-term condition, maintenance, defects, systems and components, and expected lifespans of the home you’re purchasing? 

Now that you understand the implications of selecting a “preferred inspector,” and are aware of how to initiate the process of choosing your own independent inspector, stay tuned for the next segment where we will look at hiring an inspector from the information you obtained. See how else Home Fax Inspections works for YOU, the buyer, at www.HomeFaxInspect.com

See you next time!

Preferred Inspectors: Buyers Beware

Preferred Inspectors

As a licensed home inspector, our goals at Home Fax Inspections are often similar to other inspection companies in Michigan and throughout the nation. One of the important goals involves becoming the "preferred inspector" for as many real estate agents, Realtors, agencies, and lending institutions as possible throughout our local and non-local coverage areas. Inspectors strive for "preferred inspector" status, often investing months if not years, of time, commitment, money and resources to achieve this goal. From an inspectors standpoint, there are many advantages to becoming a "preferred inspector", but why is this important for you to know and understand as a buyer?

 

Choosing your agents recommended inspector

Recently we've spoken with several buyers who have chosen their buyers agents (or dual agents) "inspector recommendation." As a result of some recent information obtained from these buyers, it is important for anyone looking to purchase a home, now or in the future, to understand the implications and background on "preferred inspectors" (or "recommended inspectors" as buyer and seller agents like to describe it as). 

 

Buyer Beware 

Some of our competitors may describe the following as futile, but at Home Fax Inspections our primary goal is for you to be informed and Know the Home Before You Buy, not for us to become preferred inspectors: 

• Although a "preferred inspector" is technically working for you as the buyer, the time, money, commitment, and marketing resources vested in obtaining "preferred inspector" status leaves a less likely chance that areas will be thoroughly inspected and reported upon to you as the buyer. 
• What does this mean? The inspectors risk of losing their "preferred inspector" status with your agent is not worth the cost (to many inspectors) of informing you of defects, or systems and components that may be near the end of their service life.
• Why? Buyers and sellers agents earn their income based on commission from the sale price (generally 3% to the buyers agent and 3% to the sellers agent). The more thoroughly a home is inspected, and defects are reported upon, the more leverage you have as a buyer to request or require components be replaced, fixed, or upgraded by the seller prior to closing. Often times, in exchange for not completing these updates, sellers may decide to cut the purchase price for the buyer to make up the difference. 
• As a result of a decreased purchase price, the buyer and sellers agent earn less commission. Therefore, if a buyer believes that the agents "recommended inspector" is one that is known to weigh heavy on defects or observations noted within the report, they're frankly naive.
• Often times, agents and realtors may even identify 2-4 inspection companies with one "recommended inspector." Even these individuals have an established relationship with your agent, and as they're also attempting to gain "preferred inspector status," ask yourself who these inspectors are truly working for...You as the buyer (who they'll probably never see again) or the agent that they've vested their time, money, and commitment in?

Although there are many other points that could be noted regarding preferred inspectors and relationships to buyers and agents, we'll take a look at how to effectively hire your own independent inspector during the next segment of this Preferred Inspectors topic. See how else Home Fax Inspections works for YOU, the buyer, at www.HomeFaxInspect.com See you next time!

Investment Properties: A steal or a scam?

Technically, every home on or off the market is a potential investment property, no matter what use or purpose you have in investing.  But, what about the deals that look too good to be true, are those properties a great deal or the next scam? It could be the case for either, and much should be taken into consideration before deciding whether or not to invest.

As described by USNews.com, “A generation buried in debt must be careful when purchasing a home.” With a Home Fax Report from Nationwide Home Fax, you can always Know the Home Before You Buy, as due diligent research and investigative techniques should always be exercised in cheap investment properties.

Take this example for instance, a home recently posted on eBay.com.  Here is how it was found and, in brief, what to consider through a potential purchase similar to this: 

eBay Property Description: 3 bed 1 bath valued at $50k

Posting Content: Auction Format Starting at $1,200

 

1     

1.    Note the top portion: “Seller assumes all responsibility for this listing.” When purchasing properties on eBay, their terms and conditions do not protect buyers from their purchase (like normal listings for most products) as transactions are handled outside of eBay (ex: no PayPal payments). Most sellers will expect cash, money order, or certified check.

2.    Take into consideration and read how they accept payment for the property and the process the seller follows. In this case the seller states:

“Deed preparation and processing fee included with the winning bid. Deeds will be prepared and transferred as soon as possible after receipt of total funds and your vesting deed information. Seller will submit the buyer's deed to be filed through the appropriate county recorded office. Due to several non-performing bids, a 150.00 processing and listing fee is being added to the final bid price. Remember, bidding is a commitment to purchase the property!”

3.    Before actually researching the property, research the seller. This seller had 8 total feedback ratings (all for properties sold, most of which were sold to buyers with 0 feedback), and their seller rating was 83.3% positive (that’s horrible on eBay, FYI). After using some brief search engine keywords, no noticeable scams associated to this seller were found.

4.    Find the current owner and ensure no liens exist against the property by locating the county tax assessor records. In this case, records showed that $7,190.26 in delinquent taxes were currently owed on the property. 

5.    After identifying the owner of the property, and finding any discrepancy with the tax records, contact the seller and the county to verify whether or not they still exist as a lien on the property. 

6.    Upon contacting the seller we inquired about the current liens, asked for the sellers name and, or company, and provided our phone number to be contacted directly.  We received a response (to a rather descriptive inquiry) which stated, “I’m a private owner. The tax bill has already been negotiated with (the) County. I’m a wholesaler that buys properties in lots of 5 and 10.” 

7.    Next, contact the county assessor and determine in the liens have been cleared or not. (In this case, the county office was not open and we continued our research before declining to even contact the assessor).

8.    Locating the deed. After identifying the seller, we located the deed which currently listed the seller as the most recent grantee of the property, but the information did not corroborate with the current eBay seller or his business, which we found through additional eBay.com listings and further research. However, remember that the seller stated he was a private owner. This did not appear to be the case, and the seller wouldn’t identify his name, nevertheless which was listed on tax records as public information.  

9.    After additional research, we found the eBay seller to have other properties associated to a business that owned many deeds in the same county for similar properties. The seller wanted to transfer the title on a quit claim deed, not a warranty deed, and as the seller’s information did not corroborate with the current owner and deed holder, we declined to purchase the property.  Note: we are not saying this seller is fraudulent, nor is every cheap property listed a scam, but rather the totality of the circumstances did not warrant further investigative research due to the findings to that point. 

This is a very brief example of how to identify and research cheap investment properties. If no issues would have been discovered, or very few pertaining to the actual acquisition, here’s a few other brief examples of research to be completed or what you can do to ensure you’re dealing with an honest seller who truly owns the home:  

• Drive by the home and compare current condition to the provided photos
• Contact previous buyers and ask for their feedback regarding working with the seller
• Many sellers who do purchase in bulk have not seen the property. Find photos of the inside of the home (or attempt to view the inside when driving by the property). With a quit claim deed, there is no guarantee that the property is in livable condition, let alone a wise investment.
• Contact the county assessor and deed record office to confirm the liens, current owner, deed holder, and verify the property is actually for sale.
• Contact people who have been involved with any other previous property transfers with the same company (find pre-existing deed transfer records for other properties in the same area).
• Contact the seller listed on the tax record by phone to speak with them directly. 
• Contact the business owner (if any) and confirm that they are currently selling the property.
•  Speak with neighbors near the potential home and gather their thoughts on neighborhood activity, vacancy rates, and safety (for example).
• Contact a real estate agent or appraisal office to determine potential value. 
• Follow up accordingly based on your findings through supplemental research. 
• Establish an action plan of what you will do with the property. Are you going to fix and flip, straight flip, rent out, or live in the home yourself?
• Have your cash or payment lined up for yourself after detailed communication with the selling property.  

That’s all for this post. Hopefully these tips will help you along the way in your next potential property investment purchase.  Remember to always Know the Home BeforeYou Buy with a Home Fax Report from Nationwide Home Fax! See how we can help you in your next purchase, investment, or rental property today.