Friday, June 16, 2017

Ten Most Common Homebuyer Mistakes

Are you a dreamer?  Maybe a bit over-optimistic?  Good home buyers are typically diligent and don't let their emotions get too involved in the home buying process.
I've assembled this arbitrary and non-scientific list of homebuyer mistakes in hopes that it will better prepare consumers for the home buying process. Enjoy! Matt
Ten Most Common Homebuyer Mistakes
1. Not getting a home inspection or hiring the wrong inspector. People often approach me after buying a home without having an inspection or after hiring an inspector referred by their agent and say, "I should've used you to do our inspection. I'll never buy another home without hiring you." I've never had anyone tell me a good inspection wasn't worth the cost, but I've had a lot of people tell me the money they thought they were saving cost them a lot more in the end.
2. Paying too much. Some buyers just don't have the discipline to save money to make payments or resources to pay for necessary repairs when there are problems, and if if someone pays more for a home than it's either worth or what they can afford, it creates a cycle of debt. Some consider a mortgage loan a safety net to the risk of paying too much, but if the lender approves the loan and the house appraises for the purchase price that doesn't mean a buyer didn't pay too much; the home could lose value or not actually be worth as much as was offered. Despite public perception lenders often take unusual risks and appraisers don't always protect the buyer. Sometimes an appraiser won't save a buyer from paying too much because an appraiser is going to attempt to justify the offering price, which is why appraisals are done after the offer is made, and also why appraisers know what the offer price is when the appraisal is being done.
3. Hiring the wrong agent. I once had an agent for a homebuyer tell me, "Don't screw up this deal, because if this house doesn't sell I'm not getting paid, and you won't be an inspector for very long." This isn't unusual. I'm given slightly more subtle variations of this threat regularly. If you could hear the things agents tell home inspectors behind their clients' backs you'd be appalled. An agent should go to bat for their clients and be an effective negotiator, both before and after the home inspection. Many agents lack the ability to negotiate effectively, which can have costly consequences for homebuyers. When you're looking for an agent ask a home inspector because inspectors usually know which agents are skilled negotiators and advocates for their clients, and which agents are driven by greed.
4. Falling in love with a house. Emotional attachment causes a loss in objectivity. Once homebuyers fall in love they start minimizing serious problems that affect a home's value or condition via rationalization, which makes me anxious because I've been through the cycle so many times before: 1) they'll ignore me, my report and the problems presented; 2) they'll buy the house as-is and avoid fixing the problems, and; 3) they'll blame me when the problems get worse because they'll claim I didn't do a good enough job warning them or explaining to them what the problems were while they were ignoring me and at the same time being enamored by their new love.
5. Chasing a dream. Buying a dream house is similar to falling in love with a house, but dreams are further disconnected from reality and lack any practicality, and they're rarely done on a whim as is often the case with falling in love. There are lots of examples of dream chasers, but the most common ones include the dream of buying and fixing up a big mansion or an old Victorian home, or buying a far away acreage or farmstead. Huge, old homes are difficult to maintain and expensive to heat and cool, and even after spending tens of thousands of dollars on improvements these homes still have cracking walls, wet basements, mouse problems, and just about the time you finally finish painting the house, it will need to be re-painted again. Another dream is the rural acreage, but the most affordable acreages are far away and often in need of numerous repairs. The dreamer thinks he or she won't mind the long daily commute, that people will come visit regularly, or that they'll enjoy the solitude and work of being in the country. Living the dream often means miles of muddy roads, being snowed in without power during blizzards, or having to deal with the weeds, bugs, critters, expenses, well water problems, septic systems, hillbilly neighbors, and other hassles. One cool thing about most dreamers though - no matter how miserable they are with their massive headache of a home, they'll usually stick to it, because as a friend told me about his dream / nightmare house project, "Failure isn't an option."
6. Buying a house to impress. There is an ebb / flow cycle of the trend towards people buying homes with the intent of entertaining and impressing others, and it's flowing right now with homes featuring towering foyers and tall cathedral ceilings, outdoor kitchens, large formal dining rooms for dinner parties, and basements / walkouts with bars and a large TV rooms for hanging out during the big football game. Problem is, most people are so busy working to pay for their impressive home neither they nor their working friends have ample opportunities to take advantage of the features, thus they're under-utilized. If you want to impress a home expert, find a place that is open (brings the outdoors in and is easy to navigate), efficient, comfortable, and maintenance-free - THAT'S impressive.
7. Under-estimating the problems. Many homebuyers think problems are something that can be handled by a simple call to a contractor. As I always say, "If the problems here were easy to fix, they'd already have been taken care of." Under-estimating the problems can also be categorized as being "overly optimistic" which isn't necessarily the biggest mistake a home buyer can make, but it's easily the most common.
8. Over-estimating their abilities. Home improvement stores and television shows have worked in tandem to get people to believe they can do their own home improvements. As I always say, "An inspector's worst nightmare is a do-it-yourselfer."
9. Being hasty. When people feel rushed they typically don't reason things out, and will overlook obvious problems out of haste. Here's an interesting statistic that's related to this phenomenon: More often than not, when a people pick a "bad" house out of haste and don't buy it because of the problems discovered during the home inspection, the next house they put an offer on will be equally as bad or problematic - typically if a client doesn't buy a house I inspect because there are significant problems there is an above average chance they won't buy the next house I inspect for the much same reason (too many problems), but usually the third house is the charm. I've been through this 3-house cycle of haste with about 10 different clients, and in each case it all worked out in the end, but it cost them a lot more than it would've had they been more diligent and patient to begin with.
10. Being too scared or apprehensive. In contrast to the first nine homebuyer mistakes, which mostly relate to people not being diligent or practical, there is such a thing as being over patient or a little too gun shy when it comes to purchasing a home. I've had a number of clients walk away from good houses for the wrong reasons. It's important a homebuyer understand up front that no home is perfect, so one must be prepared for a few issues here and there that will come up through the course of the home buying process.

Tuesday, June 13, 2017

"What is Your Biggest Challenge as a Home Inspector?"

What home buying problems are predictable? What problems are preventable? Where does a home inspector draw the line between prognosticator and fact finder?
People often ask me, "What is the most difficult part of your job?"
Being a home inspector is extraordinarily challenging because it requires so much discipline, knowledge and communication, all in conjunction with an almost infinite number of opportunities for mistakes.
A good inspector must: 1) be agile enough to enter attics and crawlspaces, and climb on roofs; 2) be able to work in extreme heat and cold; 3) stay on top of the industry standards, maintain knowledge of construction materials and have a broad understanding of building systems; 4) be able to work and communicate effectively with all types of people; 5) accept criticism graciously without being defensive; 6) maintain composure despite the hostility and anxiety of adversarial parties relative to the sale or purchase of a home, and; 7) share information and observations objectively and factually.
For years I've said the toughest part of my job was working with home sellers and/or real estate agents. Often adversarial parties to a transaction try to intimidate me, invalidate my conclusions, get offended by my findings, or minimize the problems I discovered. After 18 years as an inspector I've learned to let that type of stuff go so now that part of my job is easier to deal with, but another part of my job is causing me more anguish as time goes on...
As I've become more experienced I've witnessed numerous clients make bad decisions, most of which were avoidable. Consequently, the most difficult part of my job is maintaining my professional and ethical duty to keep personal thoughts and opinions to myself when I think someone is making a bad decision. Making matters worse for me personally is I feel responsible when another person's mistake leads to negative consequences that I might have been able to help them avoid had I intervened or communicated my opinions up front.
My cumulative life experience as a homeowner, restoration contractor, home inspector, property manager, and "adviser" to numerous friends and family members that are homeowners has provided me the background to predict the future fairly accurately, but my ethical and professional home inspector obligation as an objective fact-finder prohibits me from being able to share many of my premonitions. There are some predictions I'm obligated to share, like the life expectancy of a roof, when the furnace filter will next need to be changed, what times of year the gutters will most likely need to be cleaned to prevent them from getting clogged, or what locations on a roof ice damming is most likely, etc. However, there are many predictable outcomes I can't share with my clients, like the probability that a neighbor's unsupervised pets and children will drive them nuts; the likelihood home improvements will take twice as long and cost three times as much as hoped; the 100% chance that huge maple tree overhanging the house will fall at some point in time; or the inevitable disappointment that occurs when reality sets in after those drainage issues the inspector reported end up leading to water in the basement in addition to $20,000 of foundation repairs.
A home inspector should never tell someone they're making a bad decision or advise a person not to buy a home, despite the fact there are obvious signs the buyer or buyers are moving forward without considering the ramifications of their decisions in addition to ignoring or avoiding obvious pitfalls related to the property they've chosen to buy. If I did say, "Hey, what in the heck are you thinking?!?" it wouldn't solve anything, and would likely create some pushback or resentment from my clients for me not respecting their decision, so I bite my tongue (figuratively speaking). However, when I think someone is making a good home buying decision or I inspect what I consider to be an exceptionally well constructed home, I will often say something along the lines of, "I think you'll be happy in this house" or "I think you'll look back on your decision to buy this house as a good one" and as of this writing, no one that I've said those things to has ever come back to tell me I was wrong, but nonetheless I shouldn't say such things if it is influencing my clients' decisions.
The reason I and other home inspectors shouldn't share our opinions is because we're often wrong. No one can predict the future with certainty, and if I try to sway a person into either buying or not buying a home based on my opinions, then I've failed at my job.

A home inspector also can't predict or warn a buyer of every negative scenario possible because it would create too much fear.
I've discovered a tool that helps me help homebuyers consider the ramifications of their decisions, and also helps me conquer the frustration of not being able to speak out when I think obvious conflicts, problems or potential probelms are being ignored - I ask questions:
"Do you have contractors in mind to help you fix the problems?"
"Have you obtained estimates for planned repairs or modifications?"
"Will you move again if your employment situation changes?"
"What are your long-term plans?"
"What are the benefits of this home relative to your existing home?"
"Have you researched utility expenses, taxes, insurance, cost of maintenance and repairs, and loan interest?"
"Have you contacted an arborist to check out that tree overhanging the roof?"
Preparation is the key to success, and by helping people prepare I minimize the urge to share my own opinions.
In my next update I'm going to discuss what I consider the "10 Biggest Mistakes Homebuyers Make" in hopes that preventing people from making bad decisions up front will help me save them some grief and make my job easier.