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bank ever asked you for the inspection report?


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I had a bank call me yesterday and demand that I send them a copy of the inspection report. They said the buyer was getting the type of loan that "requires" an inspection be performed and reviewed by the bank. I refused, so over course they got heated. Has anyone ever been asked this? The buyer had told me they were getting a FHA loan if that makes a difference?

thanks

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For a buyer to get an FHA loan, the bank will demand a copy of the report and then will demand that the seller resolve every issue on the report before approving the loan.

I'm assuming you are serious on this since I don't see a smiley face, but haven't run into it yet.

I can't see how a person can resolve every issue on any report. I write up design flaws/ concerns, things to watch out for, dings in doors, etc. Might as well start out with a new house, and repair from there. If this is the case, nobody will get an FHA loan any more.

I've been getting more and more FHA loan inspections, they kind of fazed out for a few years there.

I have had some people besides my client call and ask for the report. I just tell them I can't legally give out the report to anyone but my client.......it's tough for them to push that one.

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Dead serious,

Saw one house where the buyer was willing to accept a sloppily-installed do-it-yourselfer new roof install. The FHA said no and wouldn't loan any money until they got another new roof installed. The client and the seller and a bunch of friends, plus a roofer buddy of theirs to act as the foreman, tore the entire roof off and replaced it on a weekend to get the deal to work.

On another job the water heater had an improperly plumbed TPR discharge pipe. The client was willing to accept it and deal with it himself but the bank refused to loan on the house until that and about half a dozen other things were taken care of by the seller.

I've heard it from agents lots of times; it's why they don't do a lot of FHA deals around here - to much of a friggin pain in the keester.

ONE TEAM - ONE FIGHT!!!

Mike

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Originally posted by hausdok

Dead serious,

I've heard it from agents lots of times; it's why they don't do a lot of FHA deals around here - to much of a friggin pain in the keester.

ONE TEAM - ONE FIGHT!!!

Mike

I don't think I ever did an FHA job. They're rare or extinct in Nashville. However, when we bought our first house here, FHA made us paint the exterior window trim. In February.

As for passing along reports, my contracts told customers that reports were confidential and were not to be passed on to banks or anybody else without my express written consent. The few times a bank or insurance company called asking for a report, I told the caller that I'd be glad to have him sign my contract (thus meeting my terms, limitations, etc.); then, I'd re-inspect the house for the full fee. None accepted my offer, and that suited me fine.

WJ

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I copyright my reports.

I generally tell the clients they are purchasing it for their use only, it's my copyrighted work product, and that they can only distribute it to their agent (and the seller if they need to) for the purposes of their transaction only and that it may never be transferred to anyone else interested in the property without my express permission.

I tell them that if they walk away from the home they may not sell it to another buyer to recoup their costs. I tell them they should make that very clear to the seller, if they provide the seller a copy, and I go so far as to say that if they do release it to a third party without my permission, and that third party later causes me to end up in court, that I'll consider it a breach of contract and will do what I need to in order to protect my interests. I can't remember anyone arguing about it and I've only been called about half a dozen times in more than a dozen years by someone trying to get a copy of a report they weren't entitled to.

I remember once being called by a listing agent who'd somehow gotten a copy of my report after the client walked. I told the agent that he was in possession of a pirated copyrighted product which he and his client had absolutely no right to and I ordered him to destroy it immediately. He began stammering about how my client had given it to his client. I cut him off and told him that he wasn't entitled to it, period, that his having it was a breach of contract and that if I were to sue my former client for breach of contract he and his client were going to end up in court as well.

The agent then wanted to know what it would cost to purchase the rights to the report. I told him that I don't re-sell my reports. I said that his client could hire me to come out and do another inspection; I'd go out, execute a contract with the new client, do another inspection, and write another report, and the client could pay me full price for my work product. His tone was incredulous - he seemed to think that others were entitled to have the report and that I should re-sell my product to someone else at a discounted price. I said, "Yeah? I suppose you redistribute or resell your software to others also." I told him to take it or leave it but warned him that I'd sue any agent for copyright infringement that allowed a client to rely on an unauthorized copy of my report for a purchase. He hung up on me and I've never heard from him again.

The funny thing is that though the agents seem to think they automatically have some kind of right to the report, most of my clientele, who are computer folks who make their living developing software that's constantly being pirated, understand the concept right away.

That said, I think the FHA thing is different. With the FHA thing, the bank who's loan is being underwritten by the government, has agreed to ensure certain conditions are met during a sale before they'll loan money to anyone making an FHA purchase. They are essentially on our side and are interested in protecting the rights of the buyer - our client - so they want to see a copy of the report and ensure that those things that the HUD rules require to be corrected are corrected by the seller before they'll agree to the loan. I don't think it hurts the client, or us, to provide the bank a copy of the report under those circumstances as long as the bank knows that it absolutely may not redistribute the report to anyone else. If we refuse to provide a copy of the report on an FHA loan, we are essentially crippling the very person who hired us to help him.

ONE TEAM - ONE FIGHT!!!

Mike

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Just dealt with this issue this week. Mortage company asked buyer for a copy of report. He provided it. They went thru it and determined that certain things had to be fixed AND reinspected before they'd close the loan. The mortgage company called me about the reinspection. I asked who would be paying. They said the buyer would. After confirming with the buyer it was scheduled.

2nd house (dream home time) for this buyer. First one I did for him was a few years ago. I would have loved to have it if I could get the wife back to the country. Mini horse farm, 16.860 acres, 4 fenced fields, 3 bedroom, 2 bath, ranch style home. 100x20 barn with stalls, 3 car garage, heated workshop.

Agent sent an "electrician" to fix it who called me to clarify. When will agents get it that handyman John can't always handle everything? After getting the okay from my client, I spoke with the "electrician".

He said this box would need to be replaced to fix the problem in the second picture (doubled neutrals) because there weren't enough holes in the bus bars. I asked him if he was a licensed electrician. He replied that he was the "electrician" fixing this issue.

I so felt like letting him tell everybody the box needed to be replaced but that wouldn't have served my client's interest because the foreclosure bank wasn't paying anything. Buyer had to pay the repair cost if he wanted the property.

Any way, buyer and I had a discussion. Box got fixed instead of replaced.

I did the reinspection. Buyer was there with me. Didn't bother writing a report at that time. Would have just confused the isse.

Agent picked up the tab for the second reinspection because the "electrician" she referred did miss a couple of things first time around.

BUT mortgage company was finally happy & the buyer's got the dream home they wanted.

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Originally posted by Erby

... I would have loved to have it if I could get the wife back to the country. Mini horse farm, 16.860 acres, 4 fenced fields, 3 bedroom, 2 bath, ranch style home. 100x20 barn with stalls, 3 car garage, heated workshop.

Erby,

The place sounds so nice, couldn't you have figured something out... maybe a girlfriend or something???[:-eyebrow

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A couple of years ago one of my client's was required to have a re- inspection. Before they could get the loan, they were required to have an interior hollow core door with a small hole in it replaced. Receipts, or a contractors invoice was unacceptable, I had to re- inspect for that one item.........

Maybe that was for an FHA loan, I can't remember. I know my re- inspection fee was more than the door replacement cost.

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Well I'll chime in, first the FHA/VA thing is totally inconsistent from one lender to another and one appraiser to another. There's no rhyme or reason to it.

10 years ago when everything I was doing was FHA, I use to flag items that were commonly considered FHA items to give a heads up to the parties in the transaction.

What typically would happen is the buyer would negotiate with the seller a certain set of repairs and then the VC (Value Conditions) sheet would come along from the appraiser a week a two later and require another set of repairs and mess everything up.

Some lenders will accept invoices, some will only accept the HI's quasi certification and some would only accept a report by a so called fee inspector.

Some will require that you address each and every VC condition while some will let you lump sum everything with a single statement that all things have been satisfactorily repaired.

Here in my area many agents will try and write their repair addendums absent of any reference to a home inspection report. If you do then more than likely the underwriter will request a copy.

Now the biggest headache of all is that the underwriters have no protocol or education on how to parse an inspection report. I have had them come back with "subject to a clear home inspection report". Well, what the hell is that?

I am rarely asked to send a copy of the inspection report to the lender. I can't even remember the last time that happened. Usually, the agent passes it along.

Chris, Oregon

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Originally posted by Brandon Whitmore

A couple of years ago one of my client's was required to have a re- inspection. Before they could get the loan, they were required to have an interior hollow core door with a small hole in it replaced. Receipts, or a contractors invoice was unacceptable, I had to re- inspect for that one item.........

Maybe that was for an FHA loan, I can't remember. I know my re- inspection fee was more than the door replacement cost.

I would have thunk you're story was Barbara Streisand if the exact thing didn't happen to me on a house I was selling. Buyer's FHA lender/inspector had to come back and see my new, not patched, interior door. What a maroon.

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Not really, John. It's common for banks and relocation companies to refuse to fix anything.

If:

1. It's an "as-is" deal.

2. The buyer REALLY wants the property.

3. The lender says "Gotta be fixed".

I've seen the buyer pay for the fixes BEFORE closing several times.

It's really all in the buyer's hands as to how bad they want the property and how many hoops are they willing to jump through.

By the way, Jerrry. I don't care what your momma told you, BS doesn't really stand for Barbara Streisand! [^][^][^]

Steven, I'm working on that girlfriend with a country place thing. But my standards are pretty high and the only one I found so far didn't quite make the cut!

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As a contract inspector for a local AHJ I "inherited" a subdivision full of half-to-3/4 built mac Mansions.

Prior authority was a do-it-all "Mayor" who suddenly passed away leaving everyone in the dark and no documentary record.

Now the builder has started giving the properties back to the bank, who is auctioning them off to other banks, who need to get CO's so they can unload them.

What a mess. Have one where the builder poured a front "stoop" right up over the hardiplank siding, which defect I pointed out, but which has been ignored by the fixit contractor, who now is crying a blues tune because he says he didn't agree to fix that.

Oh well. Maybe can post some pix.

On another property was e-mailed by a realtor who wanted to meet me on site to "discuss" my findings. I told him as a contractor I did not attend on site meetings for discussion, and that if he did not understand the corrections Ihad called for, to seek the help of a design professional.

In our area the banks are inheriting a lot of new homes as the builders go bust.

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Originally posted by John Dirks Jr

I did a job today for a person going for an FHA loan. In this case, the seller has said "as is" and will fix nothing. The agent tells me that the buyer will have to fix the stuff to get the loan. Weird huh?

John,

In that case, your client has the wrong loan. Their lender should be giving (requiring?) a 203k rehab loan. Basically, the "as is" loan and a "constuction" loan are funded simultaneously with the repairs agreed to and costs estimated prior to closing. The only bad part of this program is that, in NY at least, the inspection is done by an FHA Inspector, not an HI.

When I bought my house 10 years ago I went this route, and I want that gig. For $1000 or $1100, I forget, the inspector did a 45 minute "tour", wrote up the required repairs with costs, and agreed to "up to 5 draw inspections". He came out for 3 DI's and did the last two over the phone. Pretty lucrative, no?

Tom

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Hi Tom,

I'm not sure that the 203K would be appropriate for everyone interested in an FHA loan. The restrictions of the program - specifically the requirement to have the home fully completed within 180 days of closing - could be pretty difficult for some folks to meet.

Anyway, if you are interested, it's possible to become an FHA inspector or 203K consultant. Since there are so many foreclosures out there right now it might be a way to get some extra business. One does not have to have an FHA approved inspector inspect a home for a conventional FHA loan but they must use one for a 203K. Either way, I suspect that the feds push folks to use only those inspectors on their lists.

FWIW, I just spoke with a fellow who is a 203K consultant here in Washington State. He said that to become approved he didn't have to go through any formalized training, because his background meets the requirements set forth by the regulations, but he doesn't know if there is any additional training required for those who's background doesn't meet the standard. He says that he also had to invest about $800 in software that's designed specifically for the 203K program.

Here are some rules:

Rules for establishment of the FHA Inspector Roster

Application Form For FHA Inspector Roster

How To Become A 203K Consultant

ONE TEAM - ONE FIGHT!!!

Mike

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  • 2 months later...
Originally posted by hausdok

I copyright my reports.

I generally tell the clients they are purchasing it for their use only, it's my copyrighted work product, and that they can only distribute it to their agent (and the seller if they need to) for the purposes of their transaction only and that it may never be transferred to anyone else interested in the property without my express permission.

I tell them that if they walk away from the home they may not sell it to another buyer to recoup their costs. I tell them they should make that very clear to the seller, if they provide the seller a copy, and I go so far as to say that if they do release it to a third party without my permission, and that third party later causes me to end up in court, that I'll consider it a breach of contract and will do what I need to in order to protect my interests. I can't remember anyone arguing about it and I've only been called about half a dozen times in more than a dozen years by someone trying to get a copy of a report they weren't entitled to.

I remember once being called by a listing agent who'd somehow gotten a copy of my report after the client walked. I told the agent that he was in possession of a pirated copyrighted product which he and his client had absolutely no right to and I ordered him to destroy it immediately. He began stammering about how my client had given it to his client. I cut him off and told him that he wasn't entitled to it, period, that his having it was a breach of contract and that if I were to sue my former client for breach of contract he and his client were going to end up in court as well.

The agent then wanted to know what it would cost to purchase the rights to the report. I told him that I don't re-sell my reports. I said that his client could hire me to come out and do another inspection; I'd go out, execute a contract with the new client, do another inspection, and write another report, and the client could pay me full price for my work product. His tone was incredulous - he seemed to think that others were entitled to have the report and that I should re-sell my product to someone else at a discounted price. I said, "Yeah? I suppose you redistribute or resell your software to others also." I told him to take it or leave it but warned him that I'd sue any agent for copyright infringement that allowed a client to rely on an unauthorized copy of my report for a purchase. He hung up on me and I've never heard from him again.

The funny thing is that though the agents seem to think they automatically have some kind of right to the report, most of my clientele, who are computer folks who make their living developing software that's constantly being pirated, understand the concept right away.

That said, I think the FHA thing is different. With the FHA thing, the bank who's loan is being underwritten by the government, has agreed to ensure certain conditions are met during a sale before they'll loan money to anyone making an FHA purchase. They are essentially on our side and are interested in protecting the rights of the buyer - our client - so they want to see a copy of the report and ensure that those things that the HUD rules require to be corrected are corrected by the seller before they'll agree to the loan. I don't think it hurts the client, or us, to provide the bank a copy of the report under those circumstances as long as the bank knows that it absolutely may not redistribute the report to anyone else. If we refuse to provide a copy of the report on an FHA loan, we are essentially crippling the very person who hired us to help him.

ONE TEAM - ONE FIGHT!!!

Mike

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My 2 Cents.....

Depending on the type of inspection I use a suitable Scope and Limitations Clause to which I ALWAYS add a clause limiting use and distribution of the actual report and PROTECT MY WORK PRODUCT;

THIS REPORT MAY NOT BE CHANGED WITHOUT PREVIOUS WRITTEN PERMISSION OF THE PERFORMING INSPECTOR, AND THIS INSPECTION REPORT, INCLUDING SUBMITTED PICTURES, MAY NOT BE CONVEYED IN ANY MANNER, COPIED IN WHOLE OR IN PART FOR USE BEYOND THE SCOPE OF THE ORIGINAL ASSIGNMENT FOR ORIGINAL STATED CLIENT.

Yes its in CAPS in the report. Also consider this, Your report is a snapshot of the subject on the date of the report.

What is your liability (the original inspector) to a person (not the original client)who relies on your report that was passed onto him....days weeks months later, by someone other than you? I'm not a lawyer but having a clause on the report stating the Scope and Limitations as well as a PROTECTED WORK PRODUCT clause can be a huge saver.

Other things to consider;

With the above clause I have reasonably assured that the typical person who is a third party would understand that they, not being the original named client could not use this report. I have reduced my liability and protected my work product. All is good, but it could be better.

NOW lets say that this third party now wants to buy the right to use this report and rely on this data. Of course they would be best served by having a new full inspection performed (optimally at full price) but few people will want to pay you full price for repeating work recently performed. Well I have a captive client sort of, and it would be a shame from a business standpoint to loose the sale. Why say full price or forget it? Why negotiate a lower price for a repeat inspection? Why not RECERTIFY the first inspection report as being accurate as of the day of the inspection and grant this new client the right to use the same report with the same scope and limitations and restrictions on use and distribution. Charge a fee that is appropriate to your liability exposure and the time expended to answer any questions, remembering you have already been compensated once before for your liability. So for example:

4 hour job @ $400.00 4 hour job @ $400.00

20 minute recert @ $200.00 4 hour job @ $400.00

Ttl 4hrs. 20 min@$600.00 Ttl 8hrs @ $800.00

600/4.33= $138.56 per hour 800/8hrs = $100 per hour

The above recert model allows you to work another 4 hour job that day (I hope we are all that busy) and to carry that forward thats $1,000.00 at the end of the day.

Don't forget to include a clause in your contract with a good round dollar figure for costs should you have to travel to a court and testify regarding your findings based on some owner/buyer/agent/lawyer dispute. A charge in half day increments if you are located close to your courthouse and its not a busy place, anything else a charge for a full day for each day or part thereof required would be appropriate.

I hope this has helped.

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Les,

I'm sorry I worded my comment in a way that wasn't the easiest to understand. Let me state again, I'm not a lawyer and this isn't legal advice.

All I'm trying to say is to have a plan so that you don't loose a sale to what amounts to a "captive client" simply because you only want to sell a new inspection. What If Chevy decided it would only sell you a suburban, but all you want is malibu, "Sorry we will only sell a suburban" Lots of other dealers out there, right?

Half a loaf of bread is better than no bread at all, especially if your hungry.

Recertifications happen all the time in banking, ask any appraiser.

They appraised a house 20 days ago, They don't perform a new appraisal from start, there is a form to recertify the first report. Your legal liability MAY be double on this job, but that is only because you have a 2nd client. You would have just as much liability as if you performed a new inspection that day for a new client. You are now charging the 2nd client on this inspection and part of that charge is covering you exposure to liability. If it would make you feel better add a blurb stating the client was availed a new inspection and declined/refused the offer. Les, Let me know if you have any questions about this.

I don't understand what you reading the inspectors contract with a bias means or refers to, can you explain that?

Have a Great week,

Anthony

Originally posted by Les

Anthony, kinda complicated for my mind and seems to increase your "liability". I have a tendancy to read inspector's contracts with a bias.

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Originally posted by Anthony

Les,

I'm sorry I worded my comment in a way that wasn't the easiest to understand. Let me state again, I'm not a lawyer and this isn't legal advice.

All I'm trying to say is to have a plan so that you don't loose a sale to what amounts to a "captive client" simply because you only want to sell a new inspection. What If Chevy decided it would only sell you a suburban, but all you want is malibu, "Sorry we will only sell a suburban" Lots of other dealers out there, right?

Half a loaf of bread is better than no bread at all, especially if your hungry.

Recertifications happen all the time in banking, ask any appraiser.

They appraised a house 20 days ago, They don't perform a new appraisal from start, there is a form to recertify the first report. Your legal liability MAY be double on this job, but that is only because you have a 2nd client. You would have just as much liability as if you performed a new inspection that day for a new client. You are now charging the 2nd client on this inspection and part of that charge is covering you exposure to liability. If it would make you feel better add a blurb stating the client was availed a new inspection and declined/refused the offer. Les, Let me know if you have any questions about this.

I don't understand what you reading the inspectors contract with a bias means or refers to, can you explain that?

Have a Great week,

Anthony

id="blue">Anthony,

I did not mean anything other than an admission that I read lots of inspection contracts from all over the country and most are poor. Inspectors seem to refuse to seek and follow legal advice from attys that know the business.

I often feel badly about my lack of writing skills when "speaking" to inspectors. Never seem to have that p;roblem when addressing them in person.

it is hell getting old!!!id="blue">

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Originally posted by Anthony

Half a loaf of bread is better than no bread at all, especially if your hungry.

That would be fine if all inspections and inspection reports were the same; they aren't.

If I understand the appraiser business correctly, the whole point of their own training and certification is to ensure that, regardless of who does the appraisal, they will all be in the same ballpark on the value of the home. That's not the case with home inspection reports; those are all over the map.

So, if I know that I sweated bullets to do an inspection and write the best damn report on the planet, why the hell should I allow someone else to come along and purchase the same inspection at the price of the low baller down the street that inspects at 40% of my price and whose report is good only for lining the kitty box? If they want to pay 40% of what I charge for an inspection, I say let them hire the low-baller.

There are Lexus inspections and there are Yugo inspections. You can hire a Yugo inspector, but you shouldn't expect to get a Lexus inspection at the price of the Yugo and don't be surprised when you hire the Yugo guy if it costs you the price of a Lexus down the road.

Hungry? I'm seeing suck-up artists who charge that Yugo price going down in flames all around me and I'm turning away work to inspectors with 15 more years in the business who are slow because they've put their eggs all in the same basket and are relying mostly on referral handouts from the real estate folks for their business.

I say don't be a sucker; charge what you're worth...for everything you do or produce, and let 'em go to the Yugo guy if they're looking for Wal-Mart.

ONE TEAM - ONE FIGHT!!!

Mike

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