December 2, 2016
Joe Fairless

What You Are MISSING During a Home Inspection and Why You MUST Pay Attention

Adam Sedinger is a professional home inspector that has inspected over 7,000 homes, so he knows a thing or two about what it takes to successfully examine a property. In our recent conversation, he provide the “best ever” investigation technique that anyone can apply when conducting due diligence on a potential investment, or even a personal property.

The best trick Adam has come across during the past 10 years of home inspecting experience is to access as much public information as you can – that is why it is called “public” information. The best way to do so is to call the local city hall. You can ask for information on any type of renovation or update that has been made to all of the local existing properties.

While investigating a new property, for example, when you call city hall (or email or visit their website, depending on the location), you want to request information on permits. Adam finds that a common misconception many new home buyers have is that someone doesn’t need to pull a permit when making a major update to a home (i.e. replacing a water heater, installing an electrical panel, adding or replacing HVAC, etc.) However, whoever is doing the updates, whether it be an investor or a regular home owner, they are responsible for getting a permit from the city so that they can send out an official to, upon completion, come back and make sure the installation meets the current standards.

In a traditional real estate transaction, when a client discovers that there has been updates or upgrades made to a property, Adam recommends that they check into it, look up the information, and obtain the records for the property. In doing so, more often than not, his client will gain a little bit of leverage in the transaction. This is because if they check the property records, compare it to the actual property, and find discrepancies, they can use that as leverage during negotiation.

For example, let’s say you view a property and the current homeowners state that the property only had 2 bathrooms originally, but they added on a 3rd. Then, when you call into city hall for access to the property’s permits, you discover that there is no record of the bathroom update. Since the permits were not pulled, it is the current owners responsibility to pull those permits. When they go to the city to pull the permits, depending on what side of the bed the official woke up on, they can tell them to rip it out and put it back to how it used to be or make them update it to current standards. Or, even if the renovation is up to code, the city could issue some fines. Therefore, this is a card you can use to potentially purchase the property at a discount, since the current owner is going to want to avoid paying fines or making any additional updates, depending on their situation.

So, next time you are pursuing a property, pull the permits and compare the recorded updates to the property’s current conditions. If everything matches, great! However, if you discover that the property was updated and no permit was issued, that can be used leverage during negotiation, or more importantly, it can save you from purchasing a defective property!

Comment below – Whether you are a home inspector or experienced investor that has viewed many homes, what is a trick that you have used in order to uncover “sneaky or hidden” issues that the inexperienced eye would typically miss?

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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