Thread: $139 Home Inspection Proves Very Costly

A couple of first-time homebuyers were taken in by a scam perpetrated by a real estate agent appraiser and lender. A local $139 home inspector inspector inspected the home and did not report the significant structural problems. I hope some serious prison sentences are handed out his this case.

The only home inspector in my area that advertises home inspections for $139 advertises in the local Thrifty Nickel. I don't know for sure that he is the inspector that inspected this dump but I highly suspect that he is. Unfortunately his name is also Bruce. According to his web site he is a member of a national home inspector organization with "Certified" in their name.

I don't want to link to his web site but you can easily find him by Googling "home inspection" "colorado springs" $139 .

Living a homeowner's nightmare

News First has learned that complaints are being filed with state regulators against several people involved in a mortgage deal that's left a young family in a bad situation. Not only are they facing foreclosure, but it appears the Colorado Springs home they paid $284,000 for is crumbling beneath them.

The home is on Kinnikinnik Dr. It's the first home for Tim Archer and his wife Alicia. They admit they had no idea what they were getting into when they bought the home last year. "Very, very bad. I'd rather rent again. As of right now, I'd rather rent again," Tim Archer said as he described the situation to us.

In the living room, Archer shows how a bowling ball will roll on it's own toward the southern wall. The home was built in 1954 and appears to have very few upgrades. The original furnace and stove are in the home. There are cracks in the foundation, which the Archer's say showed up when water from their sprinklers washed away what were apparently recent patch jobs. There are tiles in the bathroom that broke right after they moved in and walked on them. And there are ants coming in through the floor of the basement bathroom.

"The vacuum cleaner, even though it doesn't have a lot of sucking pressure, made the wall crumble," Alicia said. She's talking about a section of the basement wall that has a wide crack in it. You can see two tree roots, each about a half inch in diameter, coming in through the wall from outside. It appears they'd been cut and plastered over before the Archer's moved in.

Outside the home, there's a split in the street that lines up with a large crack in the home's foundation. It also lines up with those roots in the basement.

Archer says he asked the previous owner for a report on the home's foundation before he bought it. "And she says don't worry we have it. I talked to our real estate agent and she says don't worry we'll get that engineer's report and we were promised the engineer's report that the foundation was ok," he said. But it now appears a report was never done.

We know the home sold on April 21, 2005 for $200,000. It then appraised on September 15, 2006 for $284,000. We went to Colorado Mortgage Fraud Task Force Member I.J. Hill. "We have inspected the property, we have reviewed the original appraisal, we have serious questions on that original appraisal, about the validity of it and the reliability of the concluded value," Hill said. Hill thinks the appraisal may be just a piece of a bigger problem for the Archer family.

News First backtracked through a dizzying trail of papers. From the 10.75% adjustable rate mortgage, to a $139 home inspection, in which the inspector spelled the street name wrong, to the loan application that shows Archer makes $7,500 a month. Archer says he told the mortgage broker he averages around $4,000 a month, and the $7,500 amount is only a high end that he makes a couple of months a year.

"It was our first house. We were excited we were getting approved for a house, no more renting," Archer said. So he signed all the papers he was given. But now, his house payments are up to $2,500 a month and rising. "We don't want to lose our home, but we might not have a choice because they might foreclose on us very soon."

Another broker told the Archer family they're upside down in the loan and can't refinance out. I.J. Hill is filing complaints on the Archer's behalf with state regulators.

We tried to track down everyone involved. Several said there's much more to the story and that the home buyers are at fault. They told us the Archer family wanted to get into a house fast and were warned about all the pitfalls. But no one would agree to an on camera interview with News First. The seller told us he'd have to talk to his attorney first, but never called us back. We'll keep you informed as the story develops.

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Let the buyer beware!

And let everyone being paid to give the buyer advice about what to beware of...also beware!

Unfortunately, this is going to happen more and more throuhout this year as alot of Adjustable Rate Mortages skyrocket to where the mortgage holders can no longer afford them. It then becomes get off a sinking ship and grab ahold of anything you can to stay afloat.

Those like the family in this case who want to get into a home no matter what and will take the ARM' s low-monthly-payments up-front are setting themselves up for a HUGE hit down the road. Guess what... now, they are "down-the-road" and the 'hit' is here.

ARM's are only for a few and not everyone. But then again, the account executives at the lending institutions don't tell them that. They get their commission as long as the loan is funded.

Are there probably issues this the report? Probably.... but there are going to be folks who get-in waaayy over their head when the ARM's jump (as they have and continue to do).


Rich

Richard,

ARMs and the risks associated with them are one thing. What we have in this case is a SCAM.

The lender set this couple up with an ARM at 10.75%. 30-year fixed-rate mortgages are currently at 6.3% or less. ARMs are typically lower than fixed-rate mortgages (with the risk of going higher). I have seen ARMs offered at 5.7%. An ARM today at 10.75% is a rip off.

These buyers obviously did not know anything about buying a house and trusted their real estate agent to guide them through the process. Unfortunately they fell right into the trap set by the RE agent, appraiser and lender. I hope these criminals spend a few years in prison for this crime.

This fellow was NOT a member of NACHI, but was using the logo to advance his business. He has been instructed by NACHI's counsel to remove them, immediately.

Originally Posted by Bruce Breedlove

Richard,

ARMs and the risks associated with them are one thing. What we have in this case is a SCAM.

The lender set this couple up with an ARM at 10.75%. 30-year fixed-rate mortgages are currently at 6.3% or less. ARMs are typically lower than fixed-rate mortgages (with the risk of going higher). I have seen ARMs offered at 5.7%. An ARM today at 10.75% is a rip off.

These buyers obviously did not know anything about buying a house and trusted their real estate agent to guide them through the process. Unfortunately they fell right into the trap set by the RE agent, appraiser and lender. I hope these criminals spend a few years in prison for this crime.

The lender may or may not have set them up. It all depends on their credit report. They may also be self employed or there may be other factors.

I agree with you that the greedy lenders are giving loans to people who can;t afford them. Of course, you would have to know exactly ow the mortgage business works to really understand things.

A hint: If you ever lose money as a mortgage broker, corespondent lender or lender, quit!

As for the home inspection, $139.00 for the most expensive item you will ever purchase? I don't leave my home for that amount!

Originally Posted by Harvey Hempelstern

This fellow was NOT a member of NACHI, but was using the logo to advance his business. He has been instructed by NACHI's counsel to remove them, immediately.

All of the home inspector organizations are forced to do this, it cost a great deal of money to protect ones logos and associated names. The kicker is when the advertising gets into print, like a phone book. Once this happens it is out for everyone to see and nothing can be done about it.

"I hope some serious prison sentences are handed out his this case."

Who would go to prison? Not the inspector I hope. It sounds like he could have done a better job but everything described that he missed seems to have been covered up by cheap band aid type repairs.

He should of course have stated the questionable repairs but he couldn't have been expected to see things like tree roots if they were covered.

Not that I'm defending a $139 inspector but It sounds like he got caught in the middle of some major deception.

It appears to me that the real estate agent, appraiser and lender were partners in crime. I am not implying the home inspector in this case committed a crime. My guess is that the real estate agent got the $139 home inspection knowing that nothing serious would be uncovered. (No one really expects a good home inspection for $139, do they?)

"No one really expects a good home inspection for $139, do they?"
No matter what someone pays, they always expect to receive at the least a standard service. A reduced price does not equal reduced service/ quality. Think about it; you buy a $500.00 moisture meter online for $150.00, it does not work well, you call seller, seller says " what do you expect for $150.00?" you say " I expect it to work". And you do expect it to work.

Originally Posted by Rick Cantrell

"No one really expects a good home inspection for $139, do they?"
No matter what someone pays, they always expect to receive at the least a standard service. A reduced price does not equal reduced service/ quality. Think about it; you buy a $500.00 moisture meter online for $150.00, it does not work well, you call seller, seller says " what do you expect for $150.00?" you say " I expect it to work". And you do expect it to work.

Reduced price absolutely does equal reduced service/quality. Otherwise, how could you justify not being one of the $1.39 guys? Going down to the standard service is a reduction in service/quality.

I do think that many people would equate licensed with "same knowledge and effort." It's been bred into us for a couple of generations. Most look at Inspections as a commodity, not a service. Toss in the Realtor who reinforces "they're all licensed" and many Clients do choose the inspection for $200 or more less than mine will cost.

Many more people shop a Walmart than anywhere else. They believe it's the same thing. They don't care about employee treatment, product knowledge, service level, or anything else. Walmart sells for less....always.

So those of us who take pride in what we do and charge accordingly accept that we will not get the persons who have internalized "everything is the same, so get the cheapest price possible." I used to resent the $1.39 guys. What a waste of energy. They have their markets, I have mine.

I have one in my area that I almost admire, at least from a business saavy standpoint. He's been in the business about the same amount of time as me. He usually charges somewhere around $200, spends about an hour, maybe a little less/more. But he has absolutely mastered minimalism. As a result, I'm convinced that if you took one of his reports that the chance of him getting snagged by an administrative snafu at TREC would be just about zero. It's the irony of working in Texas. It seems like the harder you try, the greater your chances of getting reprimanded or worse. I'm not being sarcastic. I think that in many ways, he's smarter than I am.

Then again, I chose my path and it seems to be working. Less jobs, more money each and every year.

I'm no economics expert but simple supply and demand comes to mind.
The service we provide can be measured by the quality of what we do.

If your not a very good inspector and the phone aint ringing you do it for $139.

You might work that cheap but not me.