Is Your Inspector a “Butt-Kicker”?
Do you know anyone that was kicked out of their real estate deal at the last minute even though they had a signed sales contract and a committed seller? Well there is clear insider information about why this happens which may be a bit different than what interested parties have tried to convince you occurred. Some of this information is a rehash of earlier Blogs, yet it is good to put it all in one place. Don’t forget to keep the following points in mind.
• If your inspector is a butt kicker, the agents envision the hours of negotiation and lost money from their own commission to hold the deal together. They simply don’t want to do the work. Some agents become impossible to reach for a showing or unavailable for any possible inspection time other than after the sun goes down or before the sun comes up. Some agents pull the inspector aside and tell them there is no roof access. This practice leaves the naive inspector without access to the roof, which usually has some leaks, which then become his liability or obligation. With condominium purchases, inspectors are almost never granted access to roof and other common areas without a fight. The Illinois home inspector licensing law states that we must find all significant deficiencies, not just those in the condominium. Good inspectors will fight for you, and they will win!
• It is routine for some agents to challenge the inspectors opinion during the inspection or to down play the significant deficiencies disclosed in front of the inspector while they routinely expect the inspector to go climb in a hole and withdraw their disclosure. National statistics illustrate that some place between 60 and 80 of all home inspections come out of the roll-a-dex or contact sheets prepared by the broker, owners, or agents in each real estate office. After reviewing more than 100 competitor’s inspection reports while Chair of the Ethical Practices Committee of a national home inspection trade association, I realized that many of my remodeling/ contractor friends suddenly became deaf, dumb, and blind when asked for a simple budget to repair or replace a furnace or an air conditioner that was broken. Remember the inspector gets his work from the agent and glib experienced inspectors loose all of their real estate agent referrals when they become too verbal.
• Confused and naive buyers are the bread and butter of some unscrupulous agents. During one home inspection, I met with a polite single mom buying a house in Chicago. I could see the buyer becoming confused and disoriented as the four (yes four) real estate agents were sent over to the inspection to keep her focused on them and not the disclosure. I had to literally, take her hand, then her arm, and pull her away from the group of hounds who were committed to keep her confused. The Post and Beam foundation with major termite infestation did not kill the deal, but probably should have.
The Fly on the Wall- Negotiate Commission
Welcome to The Fly On The Wall- An informative blog designed to help buyers and sellers in the real estate transaction process. Today’s tip: Negotiate commission to cut your costs and sell your property faster!
Chances are good that if you’re working with a real estate agent their commission fees are negotiable. That’s right, they’re not written in stone and just because it says 6% in your real estate contract doesn’t mean its law or that you should be polite and accept it. Fee based percentages of the transaction are regularly negotiated as properties are listed or sold. The more motivated real estate agents and firms will work to get your business and provide the kind of personal service that the internet cannot offer.
At Tomacor, many of our smartest buyers inspect property before they go under contract. Under these terms and conditions, buyers come in with no contingency deals, no nit picking the seller over minor deficiencies that are blown out of proportion, and with less money given the real estate agents in the transaction. The smarter real estate companies such as Redfin, Trulia, Roost, and Zillow are emerging into the market place threatening more established real estate firms with cheaper fee structures and more access to critical components you want to asses in your purchase decision. Our founder, Tom Corbett, has seen commission fees negotiated during the inspection process on many inspections. After all, 1% of 1 million dollars is better than 6% of nothing. Don’t be bashful.
In some cases, major reductions in fees are available if you negotiate with the same agent to sell your home and help you buy another one, or if you are in a uniquely desirable neighborhood that will bring a lot of traffic, the broker will be able to use the house to help represent the high quality image they are selling to potential buyers or sellers of real property.
At a modest home sale of $350,000 a drop in fee from 3% to 2% nets you a savings of over $3,500.
Don’t pay attention to what insiders are telling you about the market rebounding in February or March of this year. Of course the market rebounds every year in early spring because that’s the nature of the market. The overriding understanding to stay focused on is that the market is adjusting and it is adjusting down. We are in a real estate recession and we are in the lowest sales portion of the yearly cycle, winter and early spring. Don’t be bashful.
Fly On The Wall: Line Up Behind Multiple Offers
Legally, the broker you hire to sell your home is obliged to tell you about all offers that come in. Tomacor actually found a reference to this while training potential home inspectors in the Illinois Human Rights Act (775 ILCS 5). If your agent doesn’t present every offer to you, it is a violation of your human right in Illinois. In reality, there is a limited amount of time between the point at which the agent is given a signed contract for purchase and the seller signs the contract making it legal. Tomacor has seen this period extended out to a week or more as the agent who was holding the contract scourers her list of known buyers trying to talk them into a higher price (and a bigger commission for her) than the signed real estate contract she holds.
Agents know that most buyers are naïve and willing to accept the notion that it takes a week or more to get your contract to the seller. What’s really going on is that the perceived desirability of a house with a contract on it is significantly higher than one with no activity and the agent can play the trump card claiming that you can’t negotiate latent defects because there is another contract pending on the premises. In fact its not pending at all, it’s in their pocket. In this way, a higher purchase price and commission can be squeezed out of the deal by the agent who wishes to manipulate the process.
A separate but equally likely scenario is that your broker may be holding your contract while hustling all the actual or potential buyers in his office so that he can get both the buyers and sellers commission. After all, why should he split the commission with anyone else if he can get the full seven percent?
Sellers must be clear with their brokers that you want to be informed of all offers or you may be leaving your broker to make decisions that you should be making. The obligation to disclose all offers should be explicitly stated in the real estate contract.
The Fly on the Wall- The Truth About Open Houses
Tomacor would like to introduce you to The Fly on the Wall, a regularly occurring blog designed to assist in reestablishing solid ground and relationships for those buying and selling real estate. Years of experience has gone into producing these regularly featured articles. Enjoy!
After the disastrous failure of the real estate market and the anemic attempts by some to convince the populous that prices are again rising and stabilizing, Tomacor is committed to pointing out the real estate practices that MUST change in order for the real estate community to adequately, efficiently, and ethically serve consumers. Our recommendations are designed to help foster solid business practices while providing clear ethical practices for real estate agents and others.
*Avoid an Open House like the plague!
25 plus years in the business and we have attended dozens of open houses. They are often lavish and full of inebriated real estate agents, mortgage hustlers, and office help from local real estate offices. Tomacor used to get a lot of its business from these open houses as we spent time “smoozing” the real estate agents who had too much to drink. Who pays for this? You do, and in today’s market, its not worth it!
Often times your real estate agent won’t tell you, but the open house is nothing more than a party for them. If your agent knows how to hustle, work the internet, and perform tirelessly for you, they’ll get buyers to come through your home. Open houses are promoted as a great way of finding a buyer but even the National Association of Realtors© found that the success rate of these open houses is someplace below 5%. So save the money that you’d spend on red wine and cold cuts and invest in internet advertising.
*Please Note: This Blog was inspired by an article in Smart Money
Maitenance Inspection
“Hello Tom -
You did the maintenance-oriented house inspection for my unbelieving elderly mom in Aurora some time back. And she’s been having no choice but to replace some of the things that you told her were going to break down, because, guess what, they’re breaking down!”
Surviving A Chicago Winter
Christmas has come and gone and there are only 90 plus warming days until the springtime warmth and festivities that we are all eagerly awaiting. In the mean time, let’s be safe and stay warm despite the low temperatures. In our continued efforts to relate building science to anatomy and physiology, we offer the following tips for the winter months:
• When you go out in the cold weather you wear a scarf, jacket, boots, and maybe thermal underwear and wool socks. Your home would appreciate the same concern for its health and well being. It’s never too late to insulate the pipes or the attic in order to keep the home warm and the pipes from freezing. The good news is that the President of the United States is willing to help pay for the extra layers of clothing that your house wants. Go For It!
• Over working and becoming stressed out is bad for the body and its an experience that many people are familiar with during the holiday season and winter months. Over extending your electrical circuits with portable space heaters that can overheat the wiring, stresses out your building and can lead to fire. I know Chicagoans have the best firemen in the world, but why go there? Avoid the use of multiple extension cords and don’t place them under carpets where they will generate more heat or possibly spark. If you have to use electric space heaters, avoid long extension cords and plug them into outlets that don’t get hot or cause the lights to dim when the space heater is turned on.
• Keep doors and windows locked and tightly closed and consider rope caulk along the inside of the windows and other drafty areas. It is too cold for regular caulk. Rope caulk is purchased in a big wheel and looks a little like clay. This can be used to effectively stop the drafts.
• Never use your oven to heat the home! My first case as an expert witness involved a family that was heating their home with the oven to full tilt with all of the burners on and a pot of water on the stove to maintain the humidity. When the six year old daughter stepped on the open oven door to see what was going on with the water, the pot and its boiling contents fell on her and created burns that she will have to deal with for the rest of her life. The City of Chicago remains interested and committed to helping tenets make their landlords turn on the heat. Simply call 311 for the service and tell them what’s going on. Finally, the produced Carbon Monoxide from the stove could be enough to kill a family.
Humpty Dumpty
The Children’s rhyme Humpty Dumpty carries unique significance for the current real estate market. Humpty was a fat cat who sat on a wall, oblivious to what was happening around him. Other people’s problems evoked smirks and laughter. But if you remember what happened to old Humpty, he fell off of that wall and nobody could put his pieces together again. Humpty is a representation of the real estate market, which has fallen off its “wall” with the fall of the economy. Today, there are thousands in the real estate market scrambling to put all of the pieces of humpty together. I believe the new humpty will be much different than the older one. Some of the changes will include:
1. The successful real estate agents will be those committed to the buyer rather than to the deal. As new standards are developed by national associations and states as well as local boards. Real estate conflicts of interest (providing the mortgage broker, the appraiser, the home inspector, the attorney, and the property) will be a thing of the past. After this crash, buyers will be aggressive, demanding, and interested in purchasing real estate only when it makes sense.
2. Lenders, appraisers, attorneys, and inspectors will seek out new means of marketing rather than following after the real estate brokers and picking up their crumbs. Buyer advocacy will have new meaning in the marketplace.
3. Tougher standards requiring transparent ethics will take hold in the real estate market. These will either come from state or federal laws, which is a shame, or the professional societies involved will police themselves, demanding accountability and high ethics from their members.
4. There will be better quality housing stock. For years, many of us have witnessed the use of real estate agents as sometimes nothing more than agents of distraction focused on prohibiting buyers from learning the truth about their purchase. As their roles change, the buildings will become easier to read and property owners will provide needed maintenance and upgrades if they want to sell.
The Three Little Pigs: A Masonry Fairy Tale
It’s funny how much truth there is in fairy tales. One of my favorite fairy tales, The Three Little Pigs, holds a lot of truth for homebuyers today. Recent green building standards have encouraged people to build home out of straw bails, yet wood frame homes compose the vast majority of the buildings that we inspect. But were the three little pigs right in choosing to live in the brick (masonry) home? I say No! Today’s brick homes would scare the life out of the three little pigs, causing them to run back to the wood buildings or even the straw bale homes.
The construction standard in Europe, where the originated, was that stone and brick or masonry homes were a foot or more thicker, allowing them to stand up to strong winds and heavy rains. Buildings are still built that way throughout Europe. Brick buildings, in the Chicagoland area, however, have given way to wood frame buildings with brick attached to the outside like a siding. The problem is the brick has become a rain screen, not a structural component. Most new brick homes include one layer of brick and it’s a layer that architects and home inspectors expect to leak, but where does the water go?
With proper flashing detailing, the water goes back to the outside. Yet, like the little piggy that was in a hurry to build his house, contractors are under tremendous time pressure to complete the construction of new buildings. This usually results in poor quality construction detailing and water on the floor of your home. The Big Bad Wolf, otherwise known as mold, is right there, on the other side of your poorly built brick wall.
The solution for the consumer is simple: quality control, good design, and supervision. This is the lesson the third little pig taught us while relaxing in his brick home against the huffs and puffs of the Big Bad Wolf. Let’s take the third little pig’s advice and look at our new homes and planned home purchases with a critical eye. Well built, high quality, masonry homes are out there and the price is cheaper than I have seen in a decade. When building a new home, hire a responsible architect that will hold your hand throughout the process and a tough, picky, and knowledgeable inspector to represent your interests.
Sincerely,
Tomacor, Buyer Advocacy.
Love those closing credits!
Hey Tom, hopefully you recall doing an home inspection for 1234 ABC street a little over a month ago. To refresh your memory, my wife Jane and I were attempting to buy a 4 bedroom townhome in a Belgravia development c1995 just west of Sheffield, across from Jonquil Park. Anyway, we did buy it and I’d like to take you up on your offer to review the remodeling quote we have received. Perhaps you’ll have some insight for us?
We appreciate your services and it was money well spent. We ended up receiving a $4250 credit at closing on account of your findings. 
Looking forward to hearing from you,
John and Jane Doe
Flashing and Weep Hole HORRORS!!!
In the last week I have inspected four more buildings with huge problems related to the mistakes in masonry and construction detailing while the building was being built. In every case, the required flashing and weep holes were missing over windows and doors or they were poorly installed, sending water into the building.
It makes no difference what you’ve paid for the property or if you have had it custom built. Yesterday’s home was 4 million dollars over looking Lake Michigan, last week was a $200,000 condo, and even the town homes across the street from where live are without flashing and weep holes and they’re 15 years old. In this industry you’ve either got flashing and weep holes or your wet, it’s just a matter of time.
New construction standards allow water to get behind the masonry walls of a building where it is then managed and sent back to the building’s exterior through flashing and weep holes. Simply stated, the building gets built and after a while it settles and the brick cracks which allows water behind the brick where it drops down to a large plastic skirt above windows and doors and above the joint between the foundation wall and the brick above.
The metaphor we use to explain this stuff is simple. In the old days, people picking apples would climb a ladder and throw the apples down to a person with a very large skirt at the bottom of the tree. The apples were then sorted and sold. Flashing and weep holes exist at every point in the masonry wall where water gets thrown down from a crack or opening above. The flashing then sends the water to the building exterior keeping the inside dry. Most of the new construction homes we look at are without the skirts to catch the water and apples and the water goes into the building where it creates mold, mildew, panic, and hundreds of people struggling to find $30,000 to repair their condominium unit or single family home. 
Get it?! There is not quality control in the masonry business in the Chicagoland area today. Get real and get your building inspected. Don’t get wet and moldy!!
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