There are times during home inspections where I end up speaking extensively to homeowners, and one theme weaves through practically every conversation: we spent time or money on improving the looks of our home. That is great. We all want to live in a nice home. However, I also know from experience that many updates that we do for looks, like a new floor, can be unpopular with home buyers. This is “eye of the beholder” reasoning. On occasion, a homeowner will mention upgrades to the structure or vital systems of the home. This talk does not happen often enough. This habit could be costing homeowner’s money.
    Party conversations do not revolve around I just put in new plumbing; the conversation will develop about a new kitchen counter top. If you notice, you will hear people speak about energy efficiency and how that led to equipment upgrades. With energy prices increasing, a homeowner can easily see their electric bill going higher. They do not always tie it to the mechanical systems though. One person did realize that their older air conditioning system and water heater as culprits, and they researched efficient units, which they installed. This family then took the extra step of changing habits to reduce energy usage. The most interesting to me was turning off the power to their water heater for most of the day, because they only use the hot water in the morning. I am not sure that I would advocate this method, but it does work for them. When asked, the family did admit that they were not having their appliances serviced on a regular basis. Energy efficiency drove the upgrade, not awareness of the state of those appliances.
    Before I move onto to my thesis, I want to point out a story form another person. This man is upset with his neighbor for making an unconventional update to his home. The homeowner was reacting to a situation that was developing with his home, but not necessary at this time.  I do not want to go into the nature of the update, since I want to focus on the neighbor. He has worked on one energy efficiency issue, and he has worked on the look of the home, but I would not want to live in it. Walking around the exterior of the home, I see several issues with the structure that would lead to problems with many aspects of the home. The most disturbing finding is a dead tree in the front yard. We are in hurricane season, and this tree can damage the home. Here we have a typical homeowner. Possible damage is not current damage. The home is “working” in the fact that the building serves its purpose, therefore change is not needed. The concept is based upon reacting to situations, rather than being proactive.
    Being proactive is the gist of my argument. I was asked to perform a roof inspection on this home. Other people who had seen the roof only walked on the roof. For me, you have to check in the attic to fully inspect the roof. In this home, a large duct was cut in half. Consider, if this homeowner was having a regular check of his HVAC system, this would have been caught sooner. What I frequently find on home inspections is a concern about new techniques that could be applied to a home that would help the life of the house. For example, my home built fifty years ago has its original duct work. These were insulated, but two concerns arise: insulation does need updating over time; and a greater R value can help. The original insulation was probably about an R3, where most technicians would suggest an R6 or R8. My R3 was greatly reduced over the years. Moreover, leaks occur with the failure of joints and tape. I updated my ductwork even though there was no problem. I knew that problems would develop. The system was working, but I did not want to wait. I controlled the expense by taking action early. This has saved me money on my electric bill, but it has also saved me dealing with a problem when I am not prepared for it.
    I am all in favor of maintaining equipment. I think it is better to not have more equipment thrown into a junkyard. However, there comes a point in time that updating equipment to a newer style could improve safety or efficiency. I know that my service panel is afire hazard. I have never had a problem with it though. By replacing it, I can do more than eliminate a fire hazard; I can add other safety features, like AFCI breakers. By planning for this upgrade, I can prevent a possible expense from a fire or with upgrades to my electrical system that may be needed with new equipment. This is a major expense. Paying a technician $50 or $75 to check on my air conditioning or roof or whatever may really save me much more down the line. If you are not checking up on the condition of your home, you would be wise to be proactive to hire someone to do it for you.

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Getting things out of the way: if you are coming to this post looking for a guide on do it yourself home inspections, you will want to read through the posts in the  real estate investors category. That would be your best guide, but there are other posts on the site which can help. The real reason for this post is a “in defense of home inspection” post. You know them. Every home inspector has one on his or her site. It has been years since I have written one. Mainly because I have not encountered much of a reason to express my thoughts on the matter. Well, I guess many posts here skirt around the topic though.
    I encountered a few things in this last week which have prompted me to share some of these thoughts. While going over my analytics, I discovered that some variation of “self guided home inspection” phrase was showing up as a reason for people to come to this blog. That is fine with me. I hope to demystify some aspects of the industry, while demonstrating that some knowledge may not be gained through a self guided course. When you think about it, any field requires practice, learning, and ability to master. This may be a sign of the economic uncertainty of our current market. Buyers want to make the right decision, but they wish to save money. Home inspections are not a requirement to buy a home, but they are possibly a value. I say possibly, because I know some of you may not be convinced. Hey, I want to save money as well, so I can relate.
     I want to address some things that I have heard/read lately:
“Home inspectors are deal killers”  I imagine if a home inspector was overly trying to impress upon his clients that his findings are serious, then yes they could be killing the deal. I always like Realtors who state that most home inspectors are deal killers, except the one that they suggest. What I find is that there are many factors causing the deal to be killed.  As an example, let me mention a sale that fell through last year. I was not the home inspector, but I had a second row seat. The inspector did his job, but I did have problems with his report. One issue was the placing of prices for repairs. He included items which he thought might need to be repaired, but he was not sure, since he did not properly view it. The buyers had offered $20,000 less than the asking price. The sellers had accepted to make a quick sale. With report in hand, the buyers demanded a $30,000 price reduction. The sellers refused. The sellers began making repairs on their own (spending under $1000 to complete half the list, which according to the inspector would have cost in the area of $15,000). The home inspector played his part, but we also have the buyer, who wanted the best deal. We have the buyer’s Realtor, who did not try to make her client see reason. The seller’s Realtor went back to say that some repairs were needed, and the sellers had already come to the same conclusion. On top of the $1000, they spent an additional $2000, which completed most of the remainder of the repairs.
    “Do not trust a home inspector, hire a real expert” Some variation of this line has been going around. I have noticed Realtors making it more. If you have not figured it out, a home inspector is an expert. We go through training, and we have have continuing education classes. We also keep abreast of the latest trends and findings. We must to do our job. I wish that I could let everyone listen in on my phone conversations. I am always clear as to my abilities and how I will perform my job. About a quarter of my business calls are requesting a service that I do not perform, and I tell them so. There are times when a home inspector is the expert you need, and there are times when another expert will be better for you. Home inspectors that I know are honest about their services, because it is bad business not to be.
    “I do not really see a need to have a home inspection” There is no requirement that you have a home inspection. As for need, maybe you do not need a home inspection. If you are quite knowledgeable about residential construction, and you are going to check out every aspect of the home before purchasing the house, then you might not need it. To let you know, one of my recent clients was a gentleman who builds homes, so if a home builder is using a home inspector, shouldn’t you? I imagine that it comes down to a question of value, and I already wrote about that topic. Be aware that a seller cannot know everything about their home, and so they will not place everything down on the seller’s disclosure form.
    I realize that a home inspection may not be in everyone’s budget. That is a more honest statement, and if you need a do it yourself home inspection, then hopefully this site will be of assistance.

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Forgive this home inspector for stepping into the realm of economics; however, I was asked why are there frequent mentions about the housing market in relation to the recovery. Is it because the housing bubble began the crisis? That may be one reason certainly. I think that there are other factors which become obvious when we take the time to look at how housing effects our economy.
    Of course, many people work in the industry, and we have experienced job losses. You have builders, real estate agent firms, appraisers, inspectors, surveyors, and others. Then we have the related industry which services the loans, insurance, and so on. With a home purchase being such a large part of our financial lives, you will find an increasing number of industries involved in the process. Having everyone in the industry working does increase the pool of consumers, so that could become a minor argument towards improving the economy. Minor? When you take a closer look at these industries, you will find that people leaving this line of work may not be bad. For example, I came across a statistic that only 50% of Realtors are involved in home sales in a given year. Many Realtors, home inspectors, and others do this work as a second job, which they may not provide extra income.

Consumerism Begins at Home

    The real benefit of the housing market in the economy comes in the form of consumption. Newly built homes require new appliances. Companies producing dishwashers, microwaves, and air conditioning need new homes to be built for their own bottom line. Newly built homes are not the only generator of new equipment sales. Wear and tare on older items are tolerated by existing homeowners, but when sold, the new owners often replace equipment. This means that the sale of older homes holds an importance to manufacturers. Whether newly built or an older home, we begin our lives in those homes by remodeling, buying new furniture, and adding new smaller appliances. Look around and you will find many websites dedicated to these aspects of the home. (I have been blog surfing many of them latley).
    Once we move beyond these material items, we find that service providers come into play. Lawn care, pool care, and pest control are a few businesses which you may hire. Taking a moment, you may hire an interior designer, a landscape design firm, or an energy rater. The web of industries spreading from the fact of homeownership grows. Service continues with utility, telephone, internet, cable/dish providers. With the recession, the home entertainment industry is growing. Sure this is not reliant upon homes; we do have apartments, but I think that homeowners do spend more on these services.

The Economic Way Forward

   Go over your own budget. How many items are tied in with the owning of a home. You really have to go back to when you purchased your home. You may recall how much you were spending to make your house a home. Well, I have my wife who always wants to redo our home, so she is doing her part for the economy. Maybe even hug your local real estate investor today? They are probably doing their part parts in this consumer web. There are signs that the housing market is stabilizing. I hope this is true. Bank of America’s announcement of forgiving part of the mortgage payment is an indicator that one lender is recognizing that they need to take further steps to ensure smart growth. (I am glad that I have been buying their stock, and as a shareholder can I say well done).Prices have apparently bottomed out. We will see.
    Maybe we should be looking at consumer confidence and the jobless rate. Until we feel confident, and people are secure in their work, we will not see the housing numbers improve. Too many strings begin to spin from this web, but we will get there.

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I wanted a quick post to really point to this link. I hope that this would obtain some news coverage, but it may not in Houston. Frequently mortgage fraud involves appraisers. The basic idea in many of these schemes is to inflate the value of a property to create a fake higher value that can be accessed in some way. Appraisers are often involved, since they are setting the home’s value. New rules are helping to prevent pressures on appraisers to falsify their reports; however, these will not stop the bad seeds from attempting to take advantage of the system. The Texas Appraiser Licensing and Certification Board (TALCB) was involved in the investigation into dishonest appraisers. I am glad to know that they are on the job. Here is the press release about this investigation..
    Wow, a short post from me feels unnatural. May I take this moment to state that the appraisers which I have met are conscientious individuals, and you have the right to choose your own appraiser.

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Lately, I have experienced some problems with my bank, that I feel is a mark of poor customer service. Some issues may be that the bank is trying to increase their earnings. Like many people, I guess that I am on edge about my finances , and I am concerned about the economy. When I obtained a bill for a mortgage payment that I had already made, I was wondering what happened to my payment. Was I going to have to pay again? What would happen if the original payment was then cashed?
    I discovered that my original payment was taken out of my account on the first of the month. I had never received a bill like this previously, so I was thrown from my normal. Did the mortgage company intend for me to feel this way? I could have rushed out another check. I mentioned this to a friend, and he related an issue that arose with his own mortgage. He really did fall behind by a month, and he was under pressure to pay. He worked out a payment option where he would pay an extra three hundred dollars per month to pay the missing payment. After a while, he found that he could not pay this extra payment, so he called the lender to see what the ramifications would be. Nothing, he had already paid back the missing payment; the lender kept adding the extra payment though. He worked out that it should be removed, but this did not happen until he called.
    I had the situation where I incurred an overdraft charge on my account. The problem: my account had not been short of funds, so why would I be charged? When I called the bank, the representative immediately agreed that the charge should not be there, but my call is the reason for the charge being removed. My point to you, dear reader, is not that lenders are big bad businesses. Rather that your financial health is in your own hands. You have to monitor your accounts and question that which you do not understand. I think most of these charges from lenders/banks are done by automatic programs when they are triggered. No one is really monitoring if the charge is necessary.
   The basics of financial knowledge are not hard, but maybe we are not teaching them anymore. I remember once when the computer system went down nation wide at a firm where I was working, I was the only manager in the entire country to turn in my inventory report. No one else knew how to do a manual inventory. The process was not hard; it was out of the norm. I feel that this is happening to many homeowners when dealing with their own finances. If you see something that you do not understand, ask why. Sure, there could be a bank representative who will give you a hard time (try using online chat to resolve a problem- that never works for me), but in general, they will help.

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In my last post, I was discussing neighborhoods, but yesterday found me in two very different parts of the greater Houston area. I drove along Eldridge Parkway from I10 to a little beyond West Airport, then I headed for downtown Houston. Instead of considering the value within a neighborhood to look at the larger surrounding area. I came to the conclusion that defining value depends upon what you may want, but what you may also wish to obtain.
    In downtown, you will have an easier time walking than driving, and their is a host of public transportation means at your disposal. On the far western reaches of Houston, walking may not be ideal, and there are few public transportation methods available. I hope that most of us could agree that having an option besides the car may be helpful at times. On the other hand, living along the far edges of the city may give you more peace and a better family environment. The value will be defined by the people who are buying into the area. The fact that public transportation was lacking bothered me though.
    Most affordable homes are found along the outskirts of the city. This means that the house price may be closer to what most families can afford, but then these families may experience increased costs (like in transportation). I would argue that these affordable homes do not have value. We could look at other factors, like stores, to determine value. This may add value to some homeowners in the far reaches of the city. I could then admit that some value is added. This could go back and forth to refine the definition of value.
    What does this mean to the home buyer? You have to think about value beyond the home that you wish to buy. The greater area plays its part. However, you do have an option to guide the area you choose into one that has great value: your participation. Being involved in community associations or voting for a candidate who will deliver that value to you. To make Houston affordable, home owners should become involved to encourage Metro to bring transportation systems to their neighborhoods, watch what city council members are doing to improve their quality of life, and speak up at events to let their concerns be known. Do not be satisfied with the value that you have; strive for the value that you should have.

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What do you look at when buying a home? Most of us inspect different houses, and we may obtain some community facts. For us parents, school information is at the top of the list. However, to make a house a real home, would you consider other aspects of a neighborhood, such as the park? If home buyers will be looking for value, this means considering more than the value of the home and the  services provided, when purchasing a house. Home buyers may want to examine the community as closely as the home that they are purchasing.
    This past weekend I was taking my family out, when my teenage son announced that he would be spending the remainder of the day with friends. We were at the farmer’s market at Rice University, and he wanted me to take home to Highway 6 and Westheimer. It was lunch time, and the girls wanted to be at a park. I drove home to his destination, and then told my wife of a park nearby in the Energy Corridor area. Across from the park was a new shopping center with one of these tea houses that sell teas, smoothies, and sandwiches (the place was called Smoothie Queen, and it was pretty good for a lunch). We then headed over to Ray Miller Park, which is on Eldridge Parkway close to Briar Forest. Although a windy day, we did have a nice picnic.
    Looking around the park, and spending a good four hours there, gave me a view of the neighborhood in the area. I have had quite a few home inspections in the 77077 area, so I knew the homes, but I had not stopped to think about the community in the neighborhood. In one corner of the park, we had a group of Indians playing cricket. There were two playground areas for the children. A path for those who wished to walk or run. There were some berms as well, from which the children tumbled down. This park was being used. Parents chatted while the kids played. Families were having picnics, and groups gathered for out door fun. I would not say that this park offers everything that I want in a park, like a little natural area, but the community which congregated there caused me to think about the neighborhoods.
   I love my home, and I get along with most of my neighbors. Since many people have moved in recent years, I have felt a change in community interaction. The neighborhood park is not much used by us. There is no community gathering place that really draws everyone. I think that if I was planning to move, I would add the idea of community as one of my factors, and I would study the neighborhood for what I would consider as adding value. Stopping by the neighborhood park would be a first step. I might also consider the layout of the neighborhood with its traffic patterns. Moving on, I would consider the quality of the care that homeowners give to their homes. Then I may look at some facts and figures about the schools or other data.
    In the end, a community does not exists unless you want it to be there. If I do not go out to meet my neighbors, then I will never have someone to turn to when in need. How do you determine value? Does your home, or perspective home, fit that model?

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What title insurance company will you use? Have you checked into the costs? If you are like most people, you will follow the pattern that I took; go with the company your Realtor suggested. Hopefully your Realtor did their research on which title insurance is best for you, but they may not have. I picked title insurance, because this is one of the expenses you will have when closing on your new home, and because the topic has been studied already.
    In 2007, I and many others saw a new world opening up for the real estate industry with how the internet was being used by home buyers. More real estate search engines were coming online, and ratings of service providers was quickly making headway. New style brokerages, such as Redfin, were getting a lot of press. What some real estate professionals realized was that home buyers could pick and choose from products that they wanted and the service providers that they would hire. This boded well for reducing the costs of buying a home. At that time, the Government Accounting Office (GAO) did a study of one aspect of home closings: title insurance. The hope was that buyers would start choosing which insurance to buy, creating more competition and lower closing costs.
    By 2008, we were in the housing crisis, so we were not focused on this quest to allow buyers have a choice. We were focused on getting buyers. In some recent articles on Realtor marketing, there has been a renewed commitment to the idea that your Realtor should be a knowledge base instead of a gate keeper. The idea is that your Realtor is there to help you with their knowledge, but you make the decisions. Realtors would not hire the service providers or arrange for specific title insurance, they would let you make the arrangements, so you can find what is right for you. Is this happening? No, or not always. By opening this field up, you may find that brokerages are charging you for items that you do not need (stress may, each brokerage is different).
    If you ask me to recommend a Realtor, my first inclination is to pull up a list of Realtors that I know personally. From that list, I will probably pick someone who fits your needs( I think), or who I like. This may not be the best for you though. Realtors would do the same. They will set up the home inspector that they like, or any other service that they prefer. This is normal in all of our business lives. Of course, as consumer begin to take charge of their own destinies, the internet will be even more of a resource, allowing them to pick more wisely. Realtors who can show that they are a resource by their websites will do better. This applies to all real estate professionals.
    Getting back to title insurance, I want to direct you to the summary page for this document. Most of you my not want to read the report, but the summary page may be enlightening. As stated, the report is from 2007, but there was an evaluation of the recommendations done in 2009. What we can see is that we consumers may not be getting all of the information that we need (the dreams of 2007 are still on hold). If you look over this summary, I am sure that you will be a wiser consumer, but I hope that you will question the steps in your own path to purchasing a home leading up to the closing. You may save yourself a good deal of money. Here is the the Title Insurance Report Summary. 

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My home inspector completely missed that problem, so can I sue him? Is the inspector legally responsible for missing an issue with my home in his report? I had a bad home inspection, so what can I do about it? Valid questions, which do bring visitors to this blog. After being asked about a home inspector’s liability in a comment, I remembered a recent inspection, and how it could have gone bad.
    Inspections are defined as being visual inspections in state codes, because inspectors cannot take the building apart. Even x-rays or infra-red detection devices do not tell the entire story. Visual in this case does not limit the inspector to simply walking around the home. In states where codes exist, an inspector is required to access areas which should be examined. Equipment with panels that can be removed, should be removed. For example, an outlet cover can be removed; the panel to a gas furnace can be removed; and the interior panel to a breaker box (service entrance panel) can be removed. The next step would be a question of safety. If I remove this panel, could I be harmed? Many inspectors will not remove the interior panel of an FPE breaker box, because these units are known to be dangerous. The next step after safety would be other access concerns. Often a home is inspected when the homeowner is moving out. Garages are used as storage space for their already packed goods. This may prevent an inspector from reaching a piece of equipment. In this case, most inspectors take the view that if the items can be easily removed and replaced, then they will do so to inspect the home.
    I was faced with an unusual situation during a recent home inspection which will provide us with a real world scenario to examine. I knew the home had hot water. Since this was a stand alone home, I knew that the hot water was produced  at the home. I mention this, because a condo complex could have its hot water produced at a central location. Typically places where a hot water heater can be stored: attic; garage; and a closet. The problem: I did not spot the water heater during my walk through. I went back through the house twice, but I could not find it.
    I have read home inspection reports where an inspector stated that an item which should be inspected could not be found. The item will be marked as deficient or non-compliant as if the problem lies with the home. I decided that if I could not inspect the water heater, I would at least do my best to find its location.  I started in the attic looking for clues. I went to each closet and wall to see if there was a space hidden away (I had found a water heater behind a sealed wall cavity in one home). I ended my search in the garage. Along one garage wall was a series of shelves, while the other walls were bare. When I thought about the layout of the home, I realized there may be a space behind those shelves. Removing boxes from the top of the shelving units, I found a gap behind one unit, and I could see the flue pipe for the water heater. At this point, I could have stopped. I could tell my client that the unit was not accessible. Here is the question for you: would I have met my legal obligations at that point? If I had stopped, I would have noted the situation on my report, and I would have offered to inspect it, once the shelves had been removed.
    What I did on the inspection? I emptied the shelves. I began to see if I could pull the shelves away without breaking anything. Once I had a gap that I could squeeze through, I went into the water heater space. I inspected the unit. Afterwards, I moved everything back into position.
   I think that I could have been faulted (held liable) if I had not made a determination of where the water heater is located. I have read inspection reports where inspectors did not bother to do a little bit of extra research, and I did not care for that habit. As for moving the shelving unit, I think that we have a gray area. If a home inspector had to spend his time moving furniture, boxes, or other objects, a home inspection could last for an entire day. However, there should be times when an inspector can move obstructions without a problem. Also, we have to consider the ability of the inspector. Does his/her physical condition prevent them from moving the shelves? I feel that this reasoning is used by inspectors when they do not want to walk a roof. Whether this is right or wrong will be a determination of the client. This is where also local regulations may help define reasonable. If moving the shelf might cause the unit or items near it to break, then the situation would be unreasonable to move the shelves. If the shelving unit was not heavy, and there was no chance of breaking anything, then it would be reasonable to expect me to move it. Another aspect for defining reasonable in the inspection process would be codes stating how an inspection is to be performed. If your state regulates home inspectors, then there will be codes regulating aspects of their job. For example, in Texas an inspector only has to carry a ladder that can reach the roof of a one story house. Although walking a roof of a two story house may be done by one inspector, legally it could be argued that it is not reasonable to expect all inspectors to walk a roof of a two story roof (I am the fool who always attempts to walk every roof).  What do you consider reasonable?

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I decided to take several different reports to create a home inspection report for consumers to view. The report is meant to indicate what could be placed under the standard sections of a home inspector’s findings when he is seeing something wrong. Warning: it is a long page, and the html did not quite work they way that I wanted, so I am correcting it, but I thought that readers may want to see this anyway. Here is the home inspection report.

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