When reading an article on ActiveRain, What is the Realtors Job in a Home Inspection, I was impressed by one inspector’s comment. He said when inspecting the exterior of the home, after doing a thorough review walking in one direction, you need to visually inspect the home from the opposite direction to catch things only visible from one angle. That type of experience is why you hire a professional.

In selecting a home inspector, buyers should understand that not all states require home inspectors to be licensed. When hiring any home professional, you should look for someone  committed to their profession through membership in an organization like one of those listed here. A good home inspector should also be familiar with local (town) building codes and may also have a general contractor’s license.

• American Society of Home Inspectors, ASHI
• National Association of Home Inspectors, NAHI
• International Association of Certified Home Inspectors, InterNACHI

Buyers Should Attend Their Home Inspection

The first lesson I learned is that buyers should participate in their home inspection which I’ve seldom done, but certainly agree with after owning a handyman business for several years. Here are hints and tips about who should participate in your home inspection and the role each person plays.

Inspector

• Arrive early and when the seller is home, introduce yourself before starting the inspection. If the buyer will participate, get ladders set up ahead of time to lessen time spent by buyer.
• Some inspectors will provide verbal commentary to the buyer(s) during the inspection while others prefer to focus on the inspection, followed by a review with the buyer, who can then ask questions at the end.
• Provide a written report including photos of all defects, which may be provided on site or often a few days later so the inspector can research things like stoves and/or appliances.

Realtor

• Provide recommendations on home inspection companies but the final choice must be the buyers. The realtor schedules the home inspection as that requires coordination with the seller.
• Attend inspection and review ground rules with buyer(s) and inspector. Some realtors advise buyers “to watch, take notes and be quiet during the inspection and NOT distract the inspector while working. … Others recommend buyers arrive at the end of the inspection so the inspector can do a walkthrough with them”. The inspector can explain “any shortcomings from minor flaws and imperfections to items that will require immediate attention, . . . and everything in between.”
• Help your buyers understand which concerns are important to focus on, when they otherwise might get overwhelmed with the amount of information being communicated.
• Negotiate resolution of defects with sellers to reach best solution for buyers.

Buyer and Sellers who get an inspection prior to listing their home

• Participate in the home inspection to gain first hand insight into potential problems.

Now there’s a new tax credit you may be eligible for. The bill passed in November 2009 creates new tax credits for many home owners, to try and get the cycle of buying and selling real estate moving again. That’s because the construction and real estate industries have a big affect on the economy!

The new bill is called the Worker, Homeownership and Business Assistance Act of 2009. The new tax credit is worth of up to $6,500 for qualified move-up or repeat home buyers … which means existing home owners! If you purchase a principal residence after November 6, 2009 and on/before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010), you may be eligible for this tax credit.

Here are a few quick qualifications (details at the National Home Builders web site):

• Home owners who have lived in their homes for at least 5 consecutive years during the prior 8 years, can use this tax credit.
• Income limits range from $125,000 for single taxpayers up to $225,000 for married taxpayers.
• Purchase price for eligible homes up to $800,000 purchase price.

So if  you’re considering buying a home, start your research now and see how this tax credit might benefit you. You can claim the tax credit in 2009 even if you don’t purchase the new house until 2010.

The appraisal is key to determining how large a mortgage a home owner can get to finance their home. While you may get your mortgage through a bank, these mortgages are packaged up and ultimately purchased by Fannie Mae and Freddie Mac. The Home Valuation Code of Conduct (HVCC) has established a new set of uniform appraisal guidelines to govern all loans sold to these agencies, i.e. all conventional loans (does not apply to FHA, VA or USDA loans).

The industry is in an uproar because these guidelines will create many new problems while trying to solve existing ones. The bottom line is the bank controls the appraiser assigned to each transaction and there is to be no communication between the appraiser and other parties involved in the transaction. This is scary because you have little insight into what is happening or why.

Who Pays & Who Controls the Appraisal

My last home purchase involved a national lender who promised to close in 30 days. Three (3) days before the closing they told me this wouldn’t be possible because I had five (5) outstanding  conditions. It turned out 2 of these conditions were due to the bank’s loan officer falsifying my application. I resolved my legitimate conditions and was able to switch to GMAC and close two (2) days later. I did receive a partial credit from Wells Fargo after sending a letter to their CEO but still don’t have a copy of the appraisal I paid for and have yet to see.

People are nervous that these changes will drive prices down more. Let’s hope they don’t have too big an impact as the market is starting to show signs of life after a tough year. Here’s a quick recap of the new rules from Harry D’Elia, a Realtor in Phoenix, AZ (shared by Harry on ActiveRain).

• All appraisals will be ordered by the Lender via their approved Appraisal Management Companies (AMC’s) and will be prepared in the name of the Lender.
• Borrowers are required to provide credit card information during the application process and appraisal fee will be charged to the Borrower.
• Brokers and Loan Officers are NOT permitted to pay for the appraisal.
• Brokers and Loan Officers are NOT permitted to have any contact with the appraisers (all communications are facilitated through the Lender or AMC).

To give you some insight into the new problems that these changes will create, here’s what another Realtor shared on Active Rain.

“The problem here is we are in a small rural area. We have a good group of local appraisers BUT when the banks order the appraisals, if they’re not a LOCAL bank, they tend to have appraiser lists from the CITY.

This past week I had 2 appraisals ordered with appraisers that are outside our local area and don’t know our market. One appraiser called and asked me to pull his comps and go to the courthouse for him, as he’s 2 hours away! No way. That’s his job. But this is what we’re going to see more and more of. The city appraisers list us as part of their territory but they don’t belong to our MLS and don’t have access to the info they need.”