In down market, minor home inspection problems become major headaches

The National Association of Realtors (NAR) recently found that homes are now spending an average of 111 days on the market, which represents a 9.8 percent drop from January figures. Still, there are still a number of factors that can hold up a home sale, including problems related to the appraisal, financing and underlying problems with the property.

These problems have contributed to 33 percent of NAR members reporting they experienced a contract failure in December 2011. One reason for these failures – a failed home inspection – should convince sellers that they need to find issues with their property early on in the sales process in order to determine whether they or the buyer will pay for related repairs. 

Some sellers are so concerned about a buyer canceling a deal due to a minor hang-up that they are likely more willing to address problems themselves. When the housing market exhibits more strength, homeowners know that there will also be other people to sell to should a deal fall apart. Desperation to close a deal places the onus on the seller to make sure the property is in peak condition.

"Say a buyer notices some missing caulk around a vent and wants it fixed," real estate expert Dean Moss told The Chicago Tribune. "In a stronger market, a seller would say, 'Caulk your own vent.' [But] you don't want to lose a deal because someone wants some caulk replaced."

To prevent minor issues from holding up or undermining a home sale, sellers may even consider hiring their own Washington, D.C. home inspector to look over a property before a buyer even enters a property. Sellers who are transparent with any problems to the home are more likely to establish a mutually agreeable price and make it less likely that a buyer will discover defects during their own home inspection.

Many of the improvements a homeowner can institute to boost the value of his or her home before putting it on the market, listed by the National Association of Realtors (NAR), might also lead to energy-efficient homes.

Several of the projects listed by the news source, including replacing windows, substituting wood doors for steel doors and upgrading exterior siding, all eventually provide homeowners with at least 69 percent of the money that they originally invested in those particular improvements.

"This year's [report] shows the value of putting your home's best facade forward, so to speak," NAR president Moe Veissi told CBS News. "Inexpensive exterior replacement projects are not only crucial to a home's regular upkeep, but are also expected to recoup close to 70 percent of costs."

In addition to these improvements, all of which may also help reduce energy costs anyway, homeowners should consider enhancements that are specifically intended to slash energy bills, including installing high-quality heating and insulation, LED and CFL bulbs and fixing roofs that may have been compromised by years of weathering. 

Industry blog Green and Save provides a reference table on its website for consumers who are interested in comparing the costs of energy-efficient products and renovations. The table features information related to the return-on-investment involved with tenets of energy-efficient homes, including up-front costs, how much time will be needed to pay back the initial investment and savings generated over both one- and 10-year periods.

Using that resource and information from a home inspection service unique to an owner's property, consumers can assess which investments are worth paying for. These costs, coupled with the cost of a home inspection, can be easily justified if a homeowner is able to achieve long-term energy efficiency and reduced utility bills.

When prospective buyers are ready to close on a home sale, they hire a home inspection service to ensure all elements of the home are in working condition and to record any areas that may need to be addressed before the sale is completed. Even then, buyers should seriously consider bringing back their Washington, D.C. home inspector for another walk-through closer to the date of sale.

A lot can change between an initial home inspection and the date a settlement agreement is signed. A weather event could have damaged a home's roof, mold testing could be necessary if water damage occurred or a disgruntled owner of a foreclosed property could have vandalized the property. Once a buyer signs a settlement agreement, the buyer has no recourse to hold the seller responsible for the cost of any repairs.

Experts suggest that homebuyers take several hours in the days leading up to the sale date to inspect the property again for themselves. During the process, the buyer should test outlets and appliances, and give the entire property a once-over just in case.

"You should allow at least 30 minutes or longer for a house walk-through," says Irene Gianos, a New Jersey real estate broker, told Indiana news source The Republic. "You need to go through the house with a fine-tooth comb and be as detailed as a home inspector."

In some instances, homebuyers even go as far as to hire a familiar home inspection company to look through the property again. Some companies will charge clients a percentage of whatever they charged for the initial inspection, so staying in touch with your home inspection professional may be wise. If a homebuyer is unwilling to pay that cost, the company may even be willing to advise them before the day of sale.

Foreclosed properties, although they may need mold testing and significant repairs before they are livable again, can prove to be a boon for investors that are willing to channel resources and time into these homes.

One such investor, Minneapolis-area resident Dave Grohs, relishes these properties, because he is able to spin them off at a profit. According to NPR, Grohs makes about $100,000 annually in the 30 years he has been in the property investment business. While Grohs does benefit personally, he may also be helping other homeowners in the area.

In neighborhoods that have been plagued by high foreclosure rates, investors like Grohs could be providing a valuable service. Communities with an abundance of foreclosed properties are likely to be viewed negatively by potential buyers.

"Any time you can take a house that's boarded, vacant, and/or condemned, fix it up nice, and then it's occupied, I just believe that it has to stabilize and improve the neighborhood," Grohs told the news source.

According to The Houston Chronicle, Grohs' belief is backed by a 2008 study by the Georgia Institute of Technology and the Woodstock Institute which found that a property's value drops 0.9 percent for every other property that is foreclosed within one block.

Reduced property values, coupled with an expected 6.7 percent increase in crime when at least 2.8 homes are foreclosed for every 100 properties, suggests that foreclosed properties can have significant negative effects on a community.

Before purchasing foreclosed properties, prospective buyers should always hire a home inspection service to reveal just how much work will need to be done before the property can be resold for a profit. A buyer must know what exactly they need to repair or they could find themselves facing an unexpected cost burden.

When it comes to energy-efficient homes, an overwhelming majority of residents who live in these properties are thrilled with the lower energy bills that result from using CFL bulbs and other green products. Still, this satisfaction has not translated to homebuyers actively seeking out these tenets of energy efficiency when they look to purchase a new home.

The NHBC Foundation has found that most homeowners, instead of reinvesting money saved through energy-efficient products into additional green enhancements, prefer to use those savings to go on a family vacation or purchase some other product that would not directly improve home energy use.

The survey also suggests that homeowners are not being properly educated as to the full benefits of embracing energy efficiency. Even though 96 percent of respondents claimed they cared about the cost of their energy use, many were unclear as to how exactly they can go about achieving energy efficiency.

"The research suggests that parts of the new home supply chain could be making the topic of energy efficiency too complicated, from the range of terminologies used, to the technologies themselves," NHBC Foundation director Neil Jefferson told to GreenWise.

The NHBC suggests in its findings that homebuilders must be more proactive in promoting green qualities of energy-efficient homes. Homeowners need to be educated as to what specific improvements can best help them to slash their energy bills significantly.

Homeowners can also receive this information from a qualified home inspection service in the Tri-State area. This Washington, D.C. home inspection service can be hired to conduct an energy audit in order to reveal potential savings areas for heads-of-household. This professional can also suggest potential remedies for energy waste and set a homeowner on a path toward smarter energy use.

Homeowners who are trying to cut corners during a sales process should look elsewhere than waiving a home inspection, even if the broker says that doing so will allow the deal to be consummated sooner. The stakes are simply too high for potential damages to go undiscovered, particularly in foreclosed properties, where deliberate vandalism is more common.

Foreclosed home sales in Maryland can be quite profitable to buyers, as the average foreclosed property sold for about $177,000 – 43 percent lower than the average sales price in the state. Per RealtyTrac, Maryland foreclosures were down about 66 percent in 2011. Still, the highest foreclosure rates in the state were found in Prince George's County, Montgomery County, Baltimore City and Baltimore County.

Homeowners interested in purchasing properties in these areas must be aware of just how common vandalism by previous owners has been across the country. Many current owners cease maintenance of properties and in some cases blatantly destroy part of homes, often out of spite for a lender. Sometimes damages are so substantial that homes are difficult to revitalize at all, such as cement being poured down toilets, as reported by real estate tracker Zillow.com.

"In many cases, it costs so much to rehabilitate these houses, it's just not cost-effective," mortgage industry analyst Thomas Popik told CNN in 2009. "And the properties are eventually going to be bulldozed."

To determine whether a property is damaged beyond the point of no repair, prospective buyers should contact a Washington, D.C. home inspector to uncover potential problem areas of a home. Often, damaged parts can be repaired in advance of a sale, and the cost of home inspection will likely be lower than the cost of repairs would be.

Homebuyers in the Tri-State area may be even more dependent upon a home inspection in 2012, as new rules regarding real estate sales took effect at the start of this year. Buyers will no longer be legally protected if they discover problems with the home after a sale has been completed.

Homebuyers in Maryland, Washington, D.C. and some counties in Northern Virginia should make themselves familiar with new real estate sale contract forms produced by the Greater Capital Area Association of Realtors (GCAAR). Some real estate estate professionals think that new procedures could leave buyers exposed to problems in their new homes if they do not hire a professional Washington, D.C. home inspector to survey the property before the ink is dry on a purchase agreement.

Sellers will no longer be held viable for undiscovered structural damage to the property, and their only obligation is to clear the property of any obvious debris that was not present when the house was sold or when it was last formally inspected.

Under the terms of the new contract, both parties in a sale can agree upon one of two different options that involve a home inspection service investigating the property before sale.

The first option – the Home Inspection Contingency – allows buyers to mandate that sellers fix any problems a home inspection service turns up before the sale date. Or, if the seller is not willing to conduct such repairs, that individual could instead provide the buyer with a credit to fix the problem.

Alternatively, buyers and sellers can agree to the General Inspection Contingency, which allows for a home inspection to take place strictly for informational purposes, but it does not allow the buyer to force the seller to make repairs.

If you are considering purchasing a home in Maryland, Pennsylvania, Virginia or Washington, D.C., you may consider contacting a local home inspection service to survey your investment.

When making last-minute alterations to a home to increase its value, homeowners should try to focus on making long-term improvements, such as developing energy-efficient homes, instead of incremental changes, like painting walls.

Owners who are selling their homes should contact a home inspection company early on in the sales process if they want to determine what repairs could be made to increase the value of their home. While different improvements may have varied effects depending on the location of the home and what features buyers desire, there are some tenets that hold generally true.

Experts think that superficial alterations, like a fresh coat of paint, may not do much to increase the value of a home. Unless you are removing lead paint from an older home, it shouldn't make much of a difference. Besides, fresh paint, along with new appliances and other aesthetic changes, may be something that buyers prefer to implement on their own.

Instead, homeowners should consider making their properties more energy efficient. These improvements – airtight doors and windows, CFL bulbs, enhanced insulation and HVAC system repairs – come at a relatively low cost and should elevate the value of your home significantly. Furthermore, as more Americans become more conscious of exorbitant energy use, some may be reluctant to even consider buying a home that is not energy efficient.

These energy improvements are not just for those individuals planning on selling their homes in the near future. Green houses provide owners will immediate energy savings. Why not reap those benefits throughout your time in a home, instead of waiting until you put it on the market? A certified home inspection service can conduct an energy audit on your home and suggest long-term improvements that can be made at a low cost.

A Colorado homebuyer may have committed a $1,200 mistake that could have been prevented had he sought out a qualified home inspection service sooner.

Bruff Shea recently put down $1,287 to purchase a $120,000 foreclosed home from the U.S. Department of Housing and Urban Development (HUD), according to a report from KMGH-TV, Denver's ABC affiliate. As with every HUD sale, the government agency inspected the property during the sales process. Its inspector found no significant problems beyond some missing appliances and normal wear.

However, Shea's independent inspection service later identified mold in the home's attic and in a utility closet. Many homeowners, Shea included, do not want to deal with mold because of the high cost of cleanup and its known negative health effects on home residents.

As such, Shea backed out of the deal. Unfortunately, part of his signed agreement dictates that, "The purchaser will forfeit 100 percent of the earnest money deposit for failure to close, regardless of the reason."

A HUD spokeswoman told the station that HUD homes are sold as-is. Because testing for mold and conducting other more involved inspection processes are not part of HUD's services, the agency recommends that homebuyers enlist their own home inspection service to conduct a more detailed assessment of the property.

But even though Shea did exactly what HUD recommended, he still may be out some money. The legal process is still ongoing, as Shea has found a provision in his agreement that allows for a refund due to "special circumstances."

To avoid situations like Shea's, homebuyers should conduct their own home inspection before any finances are exchanged. Shea's mistake seems to be that he committed to a payment before inspecting that home thoroughly. Still, the hands of some homebuyers may be tied because some Realtors require of payment before an inspector will be allowed in the home.

Realtors across the nation are struggling to help prospective homebuyers realize the advantages of purchasing energy-efficient homes, despite years of familiarity with green technology.

Paul Stone, a real estate expert in Connecticut, said that most green homes in his market cost about $800 per year to cool and heat. This represents a significant value, considering that Stone typically sees energy-efficient homes sell for about $400,000. Of course, energy-efficient aspects of green homes can reduce long-term maintenance costs, which offsets the higher upfront payment.

Still, some green homes in the Griswold, Connecticut, area are selling for much cheaper. One, which was named the "House of the Year" by the Builders Association of Eastern Connecticut, recently sold for $220,000. Its features include super-insulated walls, water-saving toilets and bamboo flooring.

"We wanted to prove that sustainable homes aren't limited to the high end," Andrew Gil, whose Mystic River Building Company constructed the home, told The New York Times. "For entry-level housing, it is more than doable."

Considering that the median price for homes sold in Griswold from August 2011 through October was $99,000, according to Trulia.com, some real estate agents may struggle to convince homebuyers that the extra short-term cost of a home with green technology is worth it.

An experienced home inspection service can also help prospective sellers who want to make energy improvements to their home before putting them on the market. With the real estate market still performing so poorly for sellers, current homeowners planning to move should do whatever they can to boost the value of their home. A Washington, D.C. home inspector can suggest cost-effective energy improvements that will help potential buyers realize long-term cost benefits stimulated by lower energy bills.