Thread: And the agents accuse me of killing deals...

Just got off the phone with a client that I performed an inspection for last week. Minor issues throughout the 40 year old home, very little was major. There were some foundation repairs done 3 years ago by a reputable company with a national presence. The seller had all the paperwork in hand, repairs were designed by and were stamped by a professional engineer (Structural) and repairs were approved by a second engineer when the work was completed. The sellers paperwork stated that there was a lifetime, transferable warranty on the repairs.

My inspection of the crawlspace did not reveal any ongoing issues and I did extensively photograph the completed repairs and the entire crawlspace. The exterior of the home had one step crack in the brick veneer where the crawlspace access was located. The crack had been repaired at the time of the foundation repair, and while it was noticeable, it did not appear to have shown any sign of movement since the repair.

The clients call today was to let me know that the appraiser was raising serious questions concerning my inspection and was requesting another inspection by "his" inspector and by an engineer. His request was based on a 30 minute site visit and the presence of the step crack, which was less than 1/4" in width and only extended about 4 feet. We have expansive soils in the area and this type of crack is very common. I asked the client to call her mortgage company and inquire if the report from two engineers and my report would not be enough to satisfy their concerns.

I had a somewhat similar thing happen last month. An appraiser saw a cracked tile in a bathroom and asked for a structural engineer to sign off on the foundation.

Originally Posted by Alton Darty

The clients call today was to let me know that the appraiser was raising serious questions concerning my inspection and was requesting another inspection by "his" inspector ...

Does anyone else hear that echoing in the background "CONFLICT OF INTEREST" ... "CONFLICT OF INTEREST" ... "CONFLICT OF INTEREST" ... "conflict of interest" ...

Would the 'appraiser' be for a V.A. mortgage by any chance? Did you mention the step-crack in your report or consider it not worth mentioning?

Originally Posted by Ian Page

Would the 'appraiser' be for a V.A. mortgage by any chance? Did you mention the step-crack in your report or consider it not worth mentioning?

I don't think this is a VA mortgage, it could be but I normally don't get involved in that side of things. The step crack was mentioned in the report, and photographed, as were the foundation repairs that had been performed. I am told that the crack only became an issue when the appraiser found mention of it in my report.
In response to Jerry Peck, My thoughts exactly.

Wow! You mean there are really parts of the country where appraisers actually get out of their automobiles to do an appraisal? Last one done for me in NM took the guy probably less than 5 minutes, and he admitted to not getting out of his car to perform the appraisal. "Everything I needed was in our file on the property, including the selling price" was his explanation for doing his windshield inspection when I questioned him on it. Not a bad way to pick up 5 or 6 hundred bucks. I had called his office after calling my realtor to get his contact info, and was surprised when told the appraisal had been done and came in at the selling price. I had taken the entire day off of work to be there, and he never rang the doorbell or even walk around the exterior of the house.

I've also seen a lot of what Bridgeman talks about (and I'm in the same state) but lately I've also had a lot of odd requests from buyers/agents after the appraisal.

From talking to various mortgage brokers and similar folks, the lending world is still trying to catch their breath from the financial meltdown of a few years back. I think the appraisers are likely just pinballs being thrown every different direction (somehow I know how they feel).

As a side note typing "the financial meltdown from a few years back" is the most enjoyable thing I've typed in a while. It sure is nice to have those few years in the rearview mirror rather than the windshield ahead!!!

Originally Posted by Alton Darty

I don't think this is a VA mortgage, it could be but I normally don't get involved in that side of things. The step crack was mentioned in the report, and photographed, as were the foundation repairs that had been performed. I am told that the crack only became an issue when the appraiser found mention of it in my report.
In response to Jerry Peck, My thoughts exactly.

Having bought and sold a number of properties in the last couple of years, I have found that appraisers for properties being purchased with a V.A. loan are significantly more 'picky' than with non-V.A. transactions. It seems they have a different protocol to follow and rarely do they do a drive-by or desk-top appraisal. Primarily because the purchasers are putting very little, if any, of their own money down.

I've been seeing mortgage companies and insurance companies requiring repairs after the appraisers and adjusters go through the home. Most of the time it has nothing to do with the inspection report I wrote. And these are on conventional mortgages.

If you want to see a real fiasco, do an inspection for someone who is getting an American Dream mortgage. They're required to turn over the inspection report to the underwriter who then sits behind their desk and requires every deficiency on the report to be corrected. Everything from worn or peeling paint on the house to worn shingles on the detached garage, cracked glass, loose bathroom tiles, staining of foundation walls....everything.

The last inspection I did for someone with an American Dream mortgage I ended up doing 4 follow up inspections. The seller ended up tearing out and rebuilding the garage foundation, reroofing the garage and part of the home, installed basement window wells, redug two egress window wells, replaced two windows in the house, rerouted the water heater vent, insulated and vapor barriered the crawlspace, added attic insulation and ventilation added return air ducts to the finished portion of the basement plus a few other things I can't remember off the top of my head. Most sellers would have walked away from the deal, but this one didn't.

Originally Posted by Ken Rowe

I've been seeing mortgage companies and insurance companies requiring repairs after the appraisers and adjusters go through the home. Most of the time it has nothing to do with the inspection report I wrote. And these are on conventional mortgages.

If you want to see a real fiasco, do an inspection for someone who is getting an American Dream mortgage. They're required to turn over the inspection report to the underwriter who then sits behind their desk and requires every deficiency on the report to be corrected. Everything from worn or peeling paint on the house to worn shingles on the detached garage, cracked glass, loose bathroom tiles, staining of foundation walls....everything.

This appraiser has often demanded a copy of the inspection report. No other appraisers in the area do this to my knowledge. This is an older fellow who has literally been appraising for the last 60-65 years. Normally I know when he has done an appraisal on a home I inspected because sellers & buyers end up calling for inspections of repairs. The appraiser & the real estate agents will also tell the clients that I am not legally allowed to charge for a reinspect...Thats a whole nother topic for another day...
Recently (the past 4-5 months) this appraiser has been telling clients that I and a couple of other area inspectors do shoddy work, and that he recommends that the client call "his" inspector if they want the inspection to be done right...

I haven't done any inspections where American Dream was the mortgage company, but I have done several Rural Development loans through the USDA. Late 2012 RD (the local office anyway) started to require that any deficiency listed in the home inspectors report be corrected. These loans are all "no money out of pocket" loans for the buyer and "pay at closing" is the norm on this type loan. When the changes were made requiring repairs to all issues identified the sellers started backing out of sales. Since the loans fell through I now have several buyers that I haven't been able to collect from or who are now sending me $10 per month to pay their inspection fee... Needless to say, I don't do inspections when Rural Development is involved any longer.

Originally Posted by BridgeMan

Wow! You mean there are really parts of the country where appraisers actually get out of their automobiles to do an appraisal? Last one done for me in NM took the guy probably less than 5 minutes, and he admitted to not getting out of his car to perform the appraisal. "Everything I needed was in our file on the property, including the selling price" was his explanation for doing his windshield inspection when I questioned him on it. Not a bad way to pick up 5 or 6 hundred bucks. I had called his office after calling my realtor to get his contact info, and was surprised when told the appraisal had been done and came in at the selling price. I had taken the entire day off of work to be there, and he never rang the doorbell or even walk around the exterior of the house.

The level of appraisal is dependent on the lender. If you are getting a loan with a low LTR the lender just wants to know a ball park estimate and may order a driveby appraisal.

I use to be an appraiser but got out of it several years ago because of the corrupt lenders. I think currently appraisers are under a lot of scrutiny. As an appraiser he should ask for inspections outside of his area of expertise. The problem lies with the lender not clearing it when they have access to an engineers report and home inspection....assuming this information is passed to the underwriter.

Originally Posted by Alton Darty

...........

I haven't done any inspections where American Dream was the mortgage company, but I have done several Rural Development loans through the USDA. Late 2012 RD (the local office anyway) started to require that any deficiency listed in the home inspectors report be corrected. These loans are all "no money out of pocket" loans for the buyer and "pay at closing" is the norm on this type loan. When the changes were made requiring repairs to all issues identified the sellers started backing out of sales. Since the loans fell through I now have several buyers that I haven't been able to collect from or who are now sending me $10 per month to pay their inspection fee... Needless to say, I don't do inspections when Rural Development is involved any longer.

I did one inspection for a client who was going through Rural Development too. Same deal for her. They were calling for every defect I noted in my report to be fixed. The buyer had her dad with her at the inspection and they were very happy with my picking the house apart. After Rural Development told the buyer what she needed to do, suddenly she wasn't happy with me even though I had nothing to do with what RD was requiring.

These things suck for the buyer but really have no bearing on us. We still gotta do what we gotta do.

Originally Posted by Nick Ostrowski

I did one inspection for a client who was going through Rural Development too. Same deal for her. They were calling for every defect I noted in my report to be fixed. The buyer had her dad with her at the inspection and they were very happy with my picking the house apart. After Rural Development told the buyer what she needed to do, suddenly she wasn't happy with me even though I had nothing to do with what RD was requiring.

These things suck for the buyer but really have no bearing on us. We still gotta do what we gotta do.

I have this problem with USDA loans. The lender takes issue with the value added information I provide. The lenders uses my report as a punch list. They want everything fixed before closing. Most often seller refuses and the deal falls through. Once they insisted exterior paint and caulk maintenance completed mid-winter. They want furnaces, water heaters, roofs etc. replaced just because I mentioned they're aging, no defects, just aging.

Now I make the client aware of the issues that may arise and recommend, if at all possible, withold the report from the lender. Request the lender do their own inspection. I know one client successful submitted the defects summary, not the entire report.

I hate going from hero to zero just for doing a thorough job. I'm not going to compromise my report to appease a lender.

Originally Posted by Kerry Staudt

I have this problem with USDA loans. The lender takes issue with the value added information I provide. The lenders uses my report as a punch list. They want everything fixed before closing. Most often seller refuses and the deal falls through. Once they insisted exterior paint and caulk maintenance completed mid-winter. They want furnaces, water heaters, roofs etc. replaced just because I mentioned they're aging, no defects, just aging.

Now I make the client aware of the issues that may arise and recommend, if at all possible, withold the report from the lender. Request the lender do their own inspection. I know one client successful submitted the defects summary, not the entire report.

I hate going from hero to zero just for doing a thorough job. I'm not going to compromise my report to appease a lender.

USDA and Rural Development are the same..... They are really looking out for the buyer but their tough requirements do keep many homes from closing. The real estate agents are the ones who need to educate their buyers about such programs and should not allow their clients to look at POS properties if the are going the USDA route.

Originally Posted by Scott Patterson

USDA and Rural Development are the same..... They are really looking out for the buyer but their tough requirements do keep many homes from closing. The real estate agents are the ones who need to educate their buyers about such programs and should not allow their clients to look at POS properties if the are going the USDA route.

The loan should have a component that handles these contingencies without holding up the sale, similar to a 203K loan, but faster. My experience the homes generally are not a POS they simply need TLC and maintenance. When the home is a POS, I don't feel bad, I've done my job. Realtors need to educate themselves about these programs, most overlooked the inspection contingency.

Realtors should not allow clients to look at POS properties, period. I know, that's not going to happen.

Part of the problem is that even a property that is not a POS can still have a small laundry list of lesser defects that when added altogether still make for a difficult closing. There really isn't anything we can do about that. Like Scott said, it's up to the buyer's agent to educate them as to what to expect and maybe steer them towards other properties that hopefully will require less work. But.....how many times have we looked at a house when we pulled up and expected things to be in decent shape only to have that expectation shattered by reality? Find multiple seal leaks on windows, sliding glass doors, and skylights and the dollar figures really start adding up.

It's all out of our hands though. We inspect, document what we find, and move along.

Originally Posted by Kerry Staudt

... POS they simply need TLC and maintenance.

The difference between a POS house and one which simply needs TLC and maintenance is ... the number of hours and the number of $$$$$ spent on that "TLC and maintenance" ... that and a POS house only needs "TLC and maintenance" when trying to please a real estate agent.

It's like the difference between "gaudy" and "tacky": it is "gaudy" if you think it looks good, otherwise it is just plain "tacky".