Inspection Industry Threatened?

[Ken Amelin]

I just received a newsletter from FREA, a home inspection and appraiser insurance company inviting me to a webinar discussing proposed regulatory changes affecting appraisers (and our industry)

Quote: "Right now, governmentlenders are pushing for new regulations that would introduce a propertycondition assessment. Not only would these regulations threaten the HomeInspector industry, but if passed, they would also make it necessary for you asan Appraiser to do more work, opening you up to more legal risk, without anincrease in pay."

Does anyone know anything about this and how real it might be?

[Lon Henderson]

Here in Colorado, new for this year, buyers must give their lender a copy of the "Inspection Resolution". We are probably only a step from lenders getting to see the inspection report. On CHAFA loans and some other buyer assistance programs, the lenders already get to review the inspection report. This is compromising a seller's ability to negotiate with a buyer regarding the request for repairs.

Since we have a seller's market here, if the lender asks for something to be repaired that the buyer doesn't care about and the seller says "No," the transaction dies. The buyer looses a home they wanted. The seller is only inconvenienced because they'll have a new contract with another buyer the next day.

Sure, I get to do another inspection for the buyer on their next attempt, but things get a little weird and dicey when your client asks you not to write up any minor defects.

[Ken Amelin]

buyers must give their lender a copy of the "Inspection Resolution".

Lon,

Just what is this "inspection Resolution" that you are refering to. Haven't heard of that one.

[Lon Henderson]

Lon,

Just what is this "inspection Resolution" that you are refering to. Haven't heard of that one.
Here, we have three parts to the Colorado contract regarding home inspections. The actual Contract To Purchase has a preprinted clause regarding the buyer's right to have an inspection and dates, etc for that inspection.
Then there is a separate form called the "Inspection Objection" where the buyer lists a "Notification Of Unsatisfactory Physical Condition" items for the seller to "correct or resolve".
And then the "Inspection Resolution" which becomes an amendment to the Contract To Buy and Sell Real Estate. This document explains what the seller is actually agreeing to correct or resolve. This is the document that the lender gets to read.
An activist or ignorant underwriter may not like the terms of the agreed upon resolutions and make demands beyond what the buyer and seller agreed upon.

[Scott Patterson]

I just received a newsletter from FREA, a home inspection and appraiser insurance company inviting me to a webinar discussing proposed regulatory changes affecting appraisers (and our industry)

Quote: "Right now, governmentlenders are pushing for new regulations that would introduce a propertycondition assessment. Not only would these regulations threaten the HomeInspector industry, but if passed, they would also make it necessary for you asan Appraiser to do more work, opening you up to more legal risk, without anincrease in pay."

Does anyone know anything about this and how real it might be?




Ken, this is a big issue that is a real threat to our profession. It was talked about at InspectionWold this week by the ASHI lobbyist from DC.

I do know that ASHI is working(fighting) for its members on this issue and has a seat at the table. The summary of it is that the appraisers are going to be required to say everything is OK in the home or "blank" needs to be repaired; if this action gets passed.

[Ken Amelin]

Scott,

This does not sound good. It will certainly hurt our industry and add confusion and conflict to buyers and sellers involved in a real estate sale. I can see it all now. What a nightmare!!

Does anyone know where to get more info regarding this proposal and who to contact to voice an opinion? Just who or what agency is pushing for this regulation?

[Rick Ramirez]

Bought my home last year it was an FHA purchase. The FHA required that the appraiser do the inspection of the home. I asked the appraiser if he knew anything about the mechanics of the home other than valuation of the home. He admitted to me that he knew nothing about home inspections. I told the bank this but they would not honor any repairs on the home unless they were presented on the appraisal report. I did my own inspection gave my inspection results to the appraiser and asked that he insert the items into his report since he was expected to inspect the home. I suggested that if these items were not on the report he will be held liable for not finding these problems in the property. He submitted the items of concern, bank reluctantly repaired the items, escrow closed and I moved in. The problem is created by FHA and the banks expecting the appraiser to do the inspection. We as a whole we should present this to the FHA and banks that appraisers are not qualified to conduct inspection and that if they are requiring an inspection that they require that a trained inspector should perform the inspection not an appraiser. But I think this may be by design because if no one questions this and an appraiser does the inspection chances are he may miss few or several item to repair this bank not having to spend any money on repair. This will result in the buyer possibly having to spend a lot of money on repairs. Appraiser for valuations and home inspectors for home inspections.