I just realized that it is already close to the start of the 3rd quarter! That is a good thing!

Thank you as I am honored. It would be a great pleasure to meet you as well and I assure you it is on my to-do list! As of right now I do not plan on attending though I would love too, but because of workload and season I do not see my self freed up until… I am hoping the forth quarter of 08 or first quarter of 09! I am hoping to visit the west coast then. In the mean time please know that you are always welcome to contact me at anytime if you like or need to.

Are you going to Inman Connect in San Francisco in July? I’d love to meet you.

This is a great post! I have to agree with Ardell. I would think that there is great reason for full disclosure. What buyers may want to consider is that “critical” and “cosmetic” may affect value in the eyes of a typical buyer. There are always questions in defects or what appraisers call deferred maintenance, for H.U.D. it is often called compliance. If I understand credits properly, or I should note, as far as H.U.D. goes, credits are usually reserved for weather or seasonal allowances (winter for scraping of peeling paint and repainting to be done in allowable temperatures etc). “Subject to” is used mostly for new construction and bridge loans. Also what type of credit is required to be reported for FHA and/or on the H.U.D. sheet and/or appraisal (old CIR addendum). There are several appraisers that would like access to the home inspection however then they would have to report “cost to cures” and underwriters would prefer that there are no cost to cures as it affects the typical buyer value. Home inspections are best reserved for home inspectors and properly licensed contractors.

In regards to Cathy’s comment, I do not think that appraisers being third parties would work, as appraisers are not allowed to have any vested interest in a property including out come of the loan. If an appraiser became a third party they may be inclined to miss or fail to report truth/without bias in fear of liability or other kinds of repercussions. For cost to cures or defects that Cathy is talking about a licensed contractor/controller in construction is required. While appraisers may note market reaction to condition of a property Ardell is right, appraisers are not home inspectors.

The best thing to do if a homeowner is selling is to get a home inspection before listing and repair the property before or while it is on the market. If I was the guy making the loan I would want to know what my money was going for, disclosure is the right way to go.

Thanks for the post was really good!

Personally, I think an inspection is a critically important detail to have on a home you are buying, and I don’t think you should be forced to use a company that your lender insists upon.

The way it is now, works well. The banks representative is the appraiser. The appraiser is most certainly trained to look for certain things, and can require them to be further inspected, and/or repaired/replaced prior to closing.

To change the rules the banks have basically made up in the first place means a whole lot of disruption in a working process.

First of all there is a contractural relationship between the inspection company and the buyer. That report is for the buyers benefit only, not the lenders, not the sellers and not the agents. The inspectors
E & O only covers the buyer, not anyone else. Yes, we often use the inspection re[orts to negotiate, but it says right on most of them that the report is not to be given to any third party, nor used by any third party. The bank is indeed a third party.

Secondly, if lenders agreed with our lovely WA legislators, they would already have come up with a different plan, probably one that would require a prospective buyer to use an ‘approved’ home inspector and name the lender as additionally covered for the report. Hmmmm, that doesn’t seem too likely to me, and fraught with so many, many legal problems.

Thirdly, I do expect lenders appraisers to become more intent on requiring work orders that must be completed prior to closing. Remember, we’re all going to see “going back to basics” being critical to successful transactions. Some things that were ignored in past years are going to be more important now. Wet crawl spaces, old roofs at the end of life, dry rotted decks and steps, health and saftey issues, things like that.

Many years ago one of my buyers was asked by her lender’s processor to send over her inspection report. The loan officer got it back (by mail, this was before faxes or (horrors!) email) highlighted with a yellow highlighter by the underwriter … what a nightmare that was. The underwriter literally highlighted every single comment made by the inspector and said it all needed to get done by closing. The loan officer was fabulous, and went to work on getting the entire problem deleted, since it never should have happened that way.

Underwriters who have never seen the particular property in question should not be the ones reading, reviewing an inspection report. The banks have appraisers to do their ‘eyes & detail work’, and all they need to do is decide on what basics we all need to adhere too.

Too many legislative fingers in the transaction makes things too expensive … and not just in real estate transactions.

So now we would have both the appraiser and underwriter interpreting what defects may materially affect the value of the property. I think allowing two more third parties into the inspection process is not a good idea unless there is a compelling reason… like safety & health issues…. leaking roof, failing septics, debris, broken stairs and deckrails, water stains which an appraiser will note on a report thus triggering the need for an providing a copy of the inspection report to both parties and a reinspection (442) to insure those matters have been repaired.

If an inspection report becomes part of our routine paperwork,
I can see Underwriters asking for kitchen sink leaks to be repaired, exterior paint, replacing broken tiles, etc. before closing. We don’t want to go there.

I think the appraiser SHOULD have the inspection report, or at least the Major Defects Summary page. Disclosure should include the lender and appraiser as “parties of interest”.

I think this is what got us to the distressed property law applying to agents, and the reason we won’t ever get a blanket exception (but again, I don’t think attorneys should be given a blanket exception either).

Also, it’s sort of disheartening that the response of the NWMLS through its forms was basically to perpetuate such a system. The forms are largely broker protection, and offer little agent protection or consumer protection.