Can You Sue An Inspector After A Report Filled With Errors Kills A Deal?

Dear Dave,
We have our home under contract and the buyers ordered a home inspection.  The home inspection report contains four substantial errors in the areas of heating, cooling, plumbing and sewer system.  The inspector misidentified a sprinkler valve as a sewer service cap and reported a possible "active sewer leak" in that area which is nowhere near the sewer line.  The inspector may have scared the buyers out of this purchase through these errors, time will tell.  I was surprised to find that home inspectors are not licensed through the state of Colorado which seems ridiculous considering one unlicensed man's opinion can derail a deal for the seller's agent, buyer’s agent, sellers and buyers.  Do inspectors typically buy Errors &Omissions insurance and what has your experience been with sellers suing the inspector after a report filled with errors  kills a deal?

Thanks,
Shawn,  Loma

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Shawn,

Ugh…I hate this for you!   I hate it when things like this happen to unsuspecting and undeserving people.  The picture you are painting here is certainly an ugly one, however a painting that I have seen far too often on varying levels.  First, I am sorry about your circumstances and I truly do feel for you and your family.  It is likely that your first question was “how is this possible?” and after that answer settled in, feelings of total frustration, disbelief and outrage!  Let me start by saying that inspectors are people too and mistakes are just part of being human!  That being said, it certainly does not excuse them or make them any more forgivable when the errors appear to be as egregious as these might have been.

Home inspectors are not licensed by the state and are not governed by the state or required to have any amount of standardized or required training.  Colorado is one of 20 states that has not adopted ANY licensing requirements.  I must admit that most of the local home inspectors do a great job, but I believe they often lose sight of what they are really doing and why they are really there.  Believe me, I feel your pain… I personally believe that where home inspectors get themselves in trouble is the same with all of us…… they speak before they stop and think something through.   Often times they provide an answer or draw a conclusion without really knowing and that is where big problems can start. 

There is a life lesson in this and that is that if you don’t know something, don’t say something that may or may not be true.  Explain that you don’t know, but will find out!  Sometimes you run across things that you don’t know or are not sure of, and instead of blurting out an answer, you should dig a little deeper to gain full understanding before speaking or drawing a conclusion. We all know that it’s hard to take back words or correct an incorrect report.  When it gets to that point, many times the damage has been done.  An even bigger issue involved here is trust!

Home buyers trust their home inspectors and trust is a very powerful thing!  When you said that the inspector may have scared the buyers off, unfortunately I am confident the home inspector is clueless about his unknown super power…. Trust.  Listen, when a home inspector says it, it MUST be true, at least in the eyes of the buyer.  Many times, especially in young home buyers, what an inspector says is treated like the gospel.  I believe most home inspectors do not have any idea how much home buyer’s trust what they say and when it is wrong, it can have cataclysmic consequences on a home purchase and everybody suffers.   

I do not believe most, if any, home inspectors carry E & O insurance and, in fact, I believe it is a common practice that the maximum amount of liability for most home inspection contracts is the price of the home inspection.  That means that if you paid $400 for the home inspection, the home inspector’s maximum liability would be $400! Lastly, I do not have any experience with sellers suing a home inspector for a faulty report, although I have had many who wanted to.    Unfortunately, sometimes mistakes are made and from time to time it can have a significant negative impact that can cause a deal to crumble.

Shawn, I am sorry about your situation and I am hopeful things will work out.  Remember, things really do work out for a reason, even if you don’t know the reason.  Control what you can control and trust that the rest is meant to be! : )  I know, easier said than done! 

Dave Kimbrough

The Kimbrough Team

Should I Convert My Garage Into Living Space?

Dear Dave,

I own an older home, built in the 1980’s. I’m doing some upgrades this spring and am considering adding on to it. I recently saw a home that was a similar age and when they remodeled they turned the two car garage into a living room and opened up the adjoining wall into the house. Something like this might suit our needs perfectly. What are your thoughts on this? Is it good for potential resale or would I be better off leaving it as a small garage and not adding living space.  Thanks. I would appreciate the advice.

John - Grand Junction, CO

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John,

This one is a tough one. If you need extra living space, it does not get any more convenient or inexpensive than to convert the garage to a new living room or couple of bedrooms. Keep in mind that the conversion does come at the expense of valuable resale space, the garage. I am one of those who believe the garage is sacred space!  Where would one put his duck decoys, bikes (motor or pedal), ATV’s, kayaks, canoes, dog kennels, gun safes, hunting gear, tool boxes, work bench, etc.? I am sure you see my point. A garage, especially here in Western Colorado, is valuable space and hard to replace. Oh, and I nearly forgot, you might even have enough room to park your car!

For resale purposes I am of the belief that the conversion will generally cost you money and not increase your value. That being said, if you convert and add two bedrooms and go from a 3-bedroom home to a 5-bedroom home, you might find someone who has a large or blended family that has a specific need for the extra bedrooms. In this specific scenario I could see the possibilities of the conversion adding value. Outside of this specific situation I think the loss of the garage outweighs in cost and function the addition of added living space.

The last thing to consider is to go ahead and make the conversion, but do so in such a way that you will be able to easily convert it back when/if you sell in the future. By doing this you will have a cost effective addition and keep the flexibility to convert it back easily. This is a common practice and is easy to remedy when the time comes to sell.

As you can see, I am a fan of garages and believe that having a garage is an important and valuable feature. I will close with this, if a conversion will fit the needs of your family perfectly, then go ahead and do it and enjoy living there with the added living space. Converting and then converting back in the future will surely be less expensive than selling and buying. If the rest of the house fits your needs, just convert and do so in a way that leaves you the flexibility to easily convert back if needed. Hope this helps! 

Dave Kimbrough

The Kimbrough Team

Should We Shop Around For A Lender?

Dave,

Simple question: should I shop around for a lender? I’ve heard it’s good to interview a few different real estate agents before starting the home buying process. Is it the same thought for lenders or are they all pretty much the same across the board because of regulations, etc.?

Thanks man!
Gregg, Fruita

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Gregg,

Clearly you have read my column and realize I can be pretty verbose, but in this instance I think I can keep it fairly short! It is really pretty simple, no two lenders are the same and it is in your best interest to shop around and I am not necessarily talking about shopping around for the best interest rate!

Just like in real estate or any other profession, you want to find someone who works in lending full time! They should have years of experience and knowledge. Most importantly he or she should be up on all the latest lending requirements and programs and know what it will take for you to get a loan approved. I know everyone is human and can make mistakes, however it still amazes me at the sloppiness/last minute rush that some mortgage lenders put their clients through when it comes down to crunch time. I understand there is a load of paperwork that is required from the buyer when obtaining a loan and getting all that paperwork processed is a time consuming process that requires systems and processes to ensure proper handling. As with anything you have to ask questions! 

Some simple questions to find out more about your prospective lender might be:

• 1. What kind of experience do you and your team have? If they don’t have a team working with them, move on….There are too many details that can get overlooked.

• 2. Can I get references? If they don’t readily hand them over, move on.

• 3.How much time do you need to fund? If they hesitate or say more than 45-60 days, move on (30 -45 days is typical).

• 4.Can you guarantee an on time close? Most should not hesitate to give you a firm closing date. Remember you MUST be timely in document submission. Many times, it is not the lender, it’s the buyer who is dragging their feet and that causes a loan to either not close or delay closing.

• 5.What are my estimated closing costs and are there any other fees or costs I should know about? They should be able to provide you a good faith estimate of all your costs right up front.

Clearly you should find out about the interest rate and the closing costs each lender will charge. However, I will drop this little nugget on you…you will not care or be worried about your interest rate and closing costs if your loan hits a major snag 4 days prior to closing and you lose your dream home. Imagine having to scurry about looking for a short term rental or ponder moving in with the in-laws for a few months while you sort out your homelessness. NO THANK YOU! Experience matters! I know cost is always part of the equation, however knowledge, experience, track record and reputation are more important. Trust me, when a deal starts to go bad, you will throw cost out the window in trade for someone who knows their way around a difficult deal and can find a way to get it closed. Even more important is to find a lender that never lets you get near a situation like I described above. 

Like everything else, do your homework on your lender. No two lenders are created equal and some are better than others. That being said, we have some wonderful lenders in this town who do an excellent job and are really quality people! Another good way to evaluate a lender is by reading online reviews. 

So much for keeping it short! I guess there’s always next time. I hope this helped.

Dave Kimbrough
The Kimbrough Team

Did We Sell Our House Too Cheap?

Dave,

We listed our home for sale about three weeks ago and it sold in the first week for what we were asking. I was elated, but my husband keeps saying “we sold it too cheap.” I keep telling him it was just the right buyer, but he says it was underpriced. If our home sold in the first week, does that mean that it was underpriced? Just curious of how you view this, as I am sure you have run across this very situation. 

Jackie, Grand Junction

P.S. I am happy we sold it quickly, even if we could have gotten a little more.

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Jackie,

I have run across this many times over the years and this is one of the real estate questions that is almost always debatable. There is no doubt that every time we sell something quickly that I ask myself the question, “Did we price it too cheap?” I am here to tell you that sometimes the answer is yes, sometimes the answer is no and sometimes the answer is impossible to know. I can absolutely tell you that just because it sold quickly, does NOT necessarily mean that you sold it too cheap. 

There are times that we have sold a property within the first few days with multiple offers and in that case the answer would be, more than likely, yes. If something sells that quickly, with multiple offers then you probably could have gotten more money for it, because there are multiple people vying for the same product. The good news is that most of the time in multiple offer situations, we are able to get more than the asking price. It usually works out to be about the same as it would have brought if priced higher originally. I really do believe that most of the time you are correct, it is just the right buyer and not because it was underpriced.  

I don’t think a day goes by that I don’t tell one of my customers, “There’s a butt for every saddle, we just have to find the right butt!” A little talked about fact, which I might point out is underappreciated, is that there is always a school of buyers in the market and they are circling, just like fish in a pond. When new bait is thrown in, they all swim over to check it out and either take it or wait for something better. In our current market, there are more buyers than one would think. They are circling and waiting for just the right bait. When they see it, they will strike, but only if the price is right. Today’s buyers are not dumb, anything but. They are very smart and well educated on the market. When a property of interest comes up but is not priced appropriately, it will sit.  

I say it all the time, houses are like any other good to be sold. At a certain price all homes will sell and sell quickly, but the tricky part is establishing the market value for each one when no two are the same. That makes establishing a top of market value much more difficult than one might think. It is much easier to establish a market value for a particular item when there are thousands to be sold and they are all identical. In that case, it is simply the law of supply and demand, but when EVERY item is different with its own characteristics, good and bad, it becomes much more difficult. Even the same house in the same neighborhood has a different lot, view, finishes, condition etc. As you can see every house is different.

Honestly, sometimes I get it just right, sometimes I set the price too high and sometimes too low, but every time it is based on comparable sales in the area and my professional assessment of the unique values the property offers and I am sure your agent did the same. It really is as much art as it is science and you do not get them all right. If your home had not sold in the first week and been 60 days and no offer, your husband would have said it was priced too high. My best advice would be to be thankful it is sold, remind him that he agreed to the sales price and be thankful you can avoid the countless showings and constant cleaning! The bottom line is, it is sold and that is a good thing. 

Dave Kimbrough
The Kimbrough Team

What Is The Advantage Of Aluminium Deck vs Composite?

Dave,

What is advantage of aluminum deck vs composite?

Collette, Grand Junction

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Collette,

I can break this down pretty easily, I think.  Another question that requires a good bit of research, but here we go……Aluminum decking is the best for longevity and durability without question, but it is also MUCH more expensive (as much as 3X as expensive as composites) and can be slippery with winter/cold weather as it has the least amount of grip and appears to generally be more “slippery” when cold or subjected to freezing temperatures.  It is the best performer if you are going to have it subjected to water, like around a pool etc, and is quite popular in heavy rain climates because of its ability to stand up to moisture. It also does not expand or contract due to heat and cold which is nice, but color choices are quite limited and the sound under you feet appears to be something of and acquired taste. It appears to be the “Cadillac” of decking material.

Composite decking can vary significantly in pricing from quite expensive (within ballpark range of aluminum) to significantly less expensive.  It comes in a wide variety of colors and comes in capped and uncapped (the ends) versions that add to the life expectancy.  Capped vs. uncapped also has an impact on the pricing as capped is the more expensive route, but is the better product as the ends are protected from the elements.  Typical warranties will be 25-50 years for some of the top-performing brands, which is excellent.  It looks and feels more like wood than the aluminum and is generally weather-resistant with only mild concerns with mold and mildew of the uncapped versions.  In our climate, I would not think mold and mildew would be a significant concern unless you are using it as some sort of pool decking.  I have a composite decking material and have been VERY pleased with it thus far.   We installed it 5 years ago and it looks about like it did when we installed it and has proven very easy to clean and seems to hold up to the elements quite well.  I do shovel snow off of it, like my concrete, when it snows to prevent any freeze/thaw cycles that may negatively impact the condition over time, but other than that it has proven durable and aesthetically-pleasing thus far!    

It think ultimately it comes down to personal preference and budget!  It is rare, almost never, that I see some kind of aluminum decking here.  It appears that the big advantage is life expectancy and durability, but honestly who needs a deck that will last 50-75 years when the average time people live in a house before moving is 8 years!  The big question in my mind is, do I really need to spend the money for bombproof decking material when the odds are I will be moving in less than 10…. Maybe 15 years?  If you want the best material and money is not in the equation then go aluminum… if cost enters the equation I think you would likely be very happy with a composite material.  Best of luck and my bet is you will be happy with either product as I believe both are excellent!  Good luck and Happy Decking!!

Dave Kimbrough

The Kimbrough Team.

P.s.   Happy Fathers Day to all the Dads out there!  

How Long Do I Have To Keep My Closing Documents???

Hello Dave,

When can I shred the documents from homes I have bought and sold over the years? Is there ever a need to hang on to closing documents, etc, past 2 years or so?

I would like to shred them. Please tell me if there is anything I need to keep. Thanks!

Have a great day,
Diana, Grand Junction

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Diana,

What a great question!   Wow…. It amazes me how many great questions I get and how relevant they are to everyday life! I never really think about some of these things because I know my wife will! LOL! She is the paperwork person in our house and Lord knows I could not get along without her help on all the things she does behind the scenes that keeps the ball moving forward.  I joke all the time that her job is MUCH harder than mine, plus I would be horrible at it!  I would never want her job!!  Moving on to your question. 

From my research, it does not appear under any circumstances that 2 years is long enough!  , When you purchase a home you should hold all your purchase contracts, closing documents, and loan documents for as long as you own the property.  If you refinance and close out a loan It appears to be good practice to keep the records of your closed loan for at least 3 tax return years….assuming that you filed your tax returns each of the 3 years.  After year 3 you should be able to shred a closed loan.  As long as you have a loan that is open or “active” you should keep all documents and payment history on record.

When you sell a property, it is a good practice to keep your documentation for seven years after the home sale.  This appears to be based on the IRS’s timeline for audits.  Apparently, the IRS has 3 years to audit your tax returns if good-faith errors are in question and six years if they suspect you underreported income.  If you sold a home more than 7 years ago I would believe that you are safe to have a shredding party! 

I hope this helps you gain some clarity!  I very much appreciate the question as I had to do some research and thus learned a lot in the process.  Please keep in mind that I am not an attorney or an accountant and before you shred, you might consider asking one or both if the data here jives with their recommendation.  On questions like these, I always get follow up comments that are different than my recommendations so I will preface all this by saying that this is to be used as a guide.  With that disclaimer, thanks again and happy shredding!!

Dave Kimbrough

The Kimbrough Team

Help, A Home We Want To Purchase Smells Awful!

Dear Dave,

After months of house hunting,  we have found one that is within our budget and which perfectly suits our needs.  The problem is house odors.  The sellers are an older couple who both smoke and who have a dog and two cats that stay indoors most of the time.  We have mentioned our concern to the sellers, but they don't share our concern.  We assume that by replacing all the carpets and completely repainting, we could eliminate the odors. Two questions.  First, do you have any experience resolving odor problems and second, how could we include expenses like these in our mortgage that will be incurred after the closing? 

Julie, location withheld

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Julie,

It is exciting that you finally found the perfect house, but with less than perfect odors I am sure you are feeling a bit disappointed!  I will admit that odors, especially smoke and pet, are powerful value killers and there is little that saps the value right out of a property more than if a cat or dog have been acting as though the carpet was indoor grass or the home smells like an ashtray.  The purchase of a new home very much involves the senses and if the odor is offensive, it is an immediate turn off, but often times the people who live there have no idea how bad it really is.

The seller does not share your concern because, One, they are no longer going to live there and it really won’t be their problem, once the new buyer moves in.  Two, they do not have the funds to correct the problem and thus they deny there is a problem because they financially can’t admit to it or afford to correct it. Three, they really do not care if they sell or not, thus only taking an offer from someone who is willing to either fix the problem on their dime or learn to live with the odor!  Most of these are not options that buyers want to hear, but at times they are the reality.  Fortunately there are a couple of options.

First, the option of replacing all the carpet and having the interior completely repainted will typically do the trick, depending on how bad the odors are.  You must also consider if the pet odors are significant, you may have to paint the floors with Kilz or some kind of seal coat to cover up or seal any pet stains that have soaked into the sub floor underneath the carpet and pad, Yikes!!  It sounds worse than it is, but remember this may need to be done.  If you are dealing with primarily smoke odors (as they do not work well on pet odors), an ozonator air purifier may work.   I have seen it do wonders with odors caused by smoking.  Generally speaking, Ozone Ionizers work at a molecular level and can remove smoke odors from homes, cars, boats etc...  I will admit that I am no molecular scientist and thus have no “real” working knowledge of how they work, but I know from experience they can do an amazing job at removing smoke smells from a home or car.  You MUST remove all living organisms, i.e. people, cats, dogs, fish, plant etc..(anything you want to remain alive), while the unit is in use and then you can all return home after the treatment and the home has been opened back up.   I would highly recommend a professional be hired to help with their use but you can also pick one up online for a few hundred dollars.

Lastly you can do what is called a 203K loan which would allow you to escrow the funds for the needed repairs after closing.  These loans can be more difficult to manage, so finding a lender who has experience with them will make things run much smoother during the purchase process and after close you will have the funds to make the needed repairs to the property.  Keep in mind that the repair costs can’t push the loan value needed over the appraised value.  Ask your lending professional if they have experience working with 203k loans and their success rate.  This can be a very viable option for repairs needed, even if the repairs or changes are just for taste and by this I mean, the carpet does not have to be stained to qualify for a 203K loan, you may just want a different color.

I hope these suggestions help and I am hopeful that you will find a solution. 

Dave Kimbrough

The Kimbrough Team

How Do We Create An Outdoor Space With Great Resale Value?

Dear Dave,

My wife and I have been in our new home for about a year now. We are considering putting in a hot tub.

We have a couple of different options to locate the hot tub and wanted your advice. One idea would be to put the hot tub on the small patio that is off our master bedroom. However, that would be the only access and we aren’t sure that is a good idea. The other option is to put it on our patio off the dining room - which would definitely be a more central location, but not as secluded.

Do you think it makes a difference for future resale potential? And if so, what do you think is best? Thanks for your feedback!

Joe and Sydney, Grand Junction

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Joe and Sydney,

Making improvements on your outdoor living space is always a smart move! For resale it is hard to beat the bang for your buck of outdoor home improvements.  Outdoor living spaces are very in vogue and there is little that lights the fire of a home buyer like a really well done outdoor living area. One thing to keep in mind is that hot tubs are a bit like pools, people either really like them or they really don’t and there generally is not much in between. If you simply add a hot tub to an existing deck or patio your financial return will likely be quite underwhelming, however creating a truly amazing outdoor space will add real money and end up being a real selling point when and if you ever decide to sell. All that being said, there are a couple of things you can do to maximize the space and the improvement.

First, concentrate on making the space not just a hot tub space. Make the effort and spend the time to create a space that provides not only a home for your hot tub, but a space that creates an atmosphere and ambiance of a true outdoor living area. Marry your hot tub with a multi-purpose area that serves as an entertaining or sitting area and see the impact soar. I am not sure it matters if you situate the hot tub off the master bedroom or off the dining area if you really create something wonderful. Both locations will have their appeal, if you go off the master you probably want something a bit more intimate and private and if you decide to locate off the dining area you want to shoot for making it conducive to entertaining. 

On another note, make sure to add the extra element of lighting to your area. Lighting is far too often overlooked as a very inexpensive item that provides high impact and is essential when trying to create a mood and ambiance. If you go the extra mile and enhance your landscaping to accentuate the new hot tub/entertaining area you will be well on your way to creating a space that many hot tub lovers and even those who are not will covet!

Dave Kimbrough

The Kimbrough Team

RE/MAX 4000, Inc.