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Buyer Beware – all that sparkles does not shine
January 2, 2012 | 
Author
Do you see the warped plywood that lays between the dirt and the wood framing? This should be concrete. This home is being advertised has having a cleared, (zero) pest report. This image displays that there is still rotten wood in place.
Last month, I showed some clients an attractive house in one of our solid Oakland neighborhoods. The marketing campaign advertising this home as “all new” was an asset to my clients. They have good jobs and credit but, like most new homeowners, they can’t absorb the cost of any major repairs right now. The house had all the sparkle of a fresh remodeling project: fresh paint, granite counters, stainless steel appliances, new landscaping etc. It was the right house, in the right location, in apparently superb condition. My clients were excited and, after two visits to make sure, wrote an offer that was accepted. Next came the inspection period. Although everything looked perfect on the surface, it was still important to have reputable professionals give their independent opinions. The back story on this house is that it was purchased at a foreclosure sale, all cash, by a group of investors. They prepared it for resale and marketed it as having $80,000 worth of improvements.
Our inspections began with a three hour examination of all systems by my favorite home inspector. He checked the roof, the crawl space, and everywhere in between. What he found was substantial pest damage to the structure, an outdated electrical system with glass fuses, potential drainage problems, and a sewer connection that was inaccessible for video inspection. Based on this we got a drainage consultation from an expert who advised us that the house some of the work done to improve the house was not done to building code standards, that it needed $40,000 to $50,000 worth of structural work, and that we should get an engineering inspection, at an additional cost of $500, to confirm that this work would be enough.
Sadly, I sent my clients’ cancellation notice to the seller today. They spent several hundred dollars on inspections and had their hopes raised and crushed by the entire incident. But that is a much better outcome than they would have had if they had relied on superficial impressions given by the remodeling work. All buyers should have inspections on their properties. Whether it’s old, new, or “flipped” like this one.
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What to Inspect When You’re Inspecting
Tips On Home Inspections
All home inspection should be done by an ASHI (American Society of Home Inspectors) certified inspector. These guys will look at everything from the foundation to the roof. They’ll inspect the electrical, plumbing, roof condition, foundation and everything in between. An inspection can cost anywhere from $585 to $ 650, depending on the size of the home.
Pest inspection of termites or beetles and all water damage. Approximately $235
Sewer – buyers are responsible for sewer lines until they hit the city main. For $75 your inspector can take a video camera into the pipe to check the condition of the pipes.
When to Get a Second Opinion:
Pest/Termite Inspections:
Recently a seller supplied an inspection report that had been done by an out-of-area pest inspection company. The report stated that there was no pest damage to the seller’s property.
I encouraged my buyers to get a second opinion. My clients employed a highly respected local company to do another inspection. The local company found $6500 worth of pest damage. Ultimately, I was able to negotiate a $6500 credit for this discrepancy.
Sometimes home inspectors will call for a second inspection. It could be for anything from electrical wiring follow up to having a structural engineer come to look at the foundation.
Anytime that this is suggested it is recommended that you have professionals look before removing your inspection contingency. (An inspection contingency is a period of time during an escrow that a buyer is allowed to investigate the condition of a home and neighborhood.)
Jason, who has been with Harry Clark Plumbing for 16 years, takes a look at the sewer line.
Paul, an ASHI certified home inspector, discovers an electrical cord for the dishwasher goes to nowhere.
The electrical system in this home called for further inspection, so my electrician, Ron takes a look.
Paul inspecting the attic for signs of moisture, unsafe wires and more.
Paul is searching everywhere for what's inside this partition and if it can be easily removed for my buyers.
This is an example of rot. The screwdriver should not be able to insert into this doorjamb.
12 month Oakland and Berkeley Real Estate Market Recap
We are now in our Fall real estate season. Homeowners who have waited all summer to list their properties and are now trying to sell, before winter. . I am seeing “cream-puff” properties, (homes that have it all: vintage details in tact, great flow, structurally sound, lush landscaping, stable neighborhoods and are priced right) sell quickly. Other homes that need work, are over-priced and that are not presented well to the market seem to sit on the market.
Buyers can be very cautious about neighborhood, property condition and their future space needs. Beyond that unless a buyer has all cash, a home needs to appraise. An appraiser is an independent person who analyzes a property, neighborhood and recently sold homes to determine if a home is worth the purchase price. They are the eyes to the bank who is providing the loan to the buyer.
As a seller it can be difficult realizing your home is not worth what it was 1,2,or 5 years ago, but you have to price it carefully to gain the attention it deserves. Speaking of pricing and analyzing comparable sold data, Red Oak has proprietary data for our clients. My sellers are also able to study custom graphs scrutinize number of units sold, median pricing, average days on market and more. What makes the data available to me different from my competitors is: neighborhoods are broken down into real neighborhoods, not just zip codes. I can access data on various square footage, bathroom count, select time or just one Thomas Brother Map Code. The possibilities are endless. Red Oak as a company scored a great coup, with the addition of Aman Daro, our Director of Media. I am fortunate enough to partner with him on all of my listings. See my Bay Area recap on the next page, but please call or email me with your questions, I am happy to chat with you about your property. – Deidre 510.693.4253
DOM= Days on Market (Click on the chart to enlarge)
Are you up for a short sale?
The chart above illustrates the active conforming, (regular sales) and short sales by zip code in Oakland and Berkeley as of three days ago. Short sales are here and we are all affected by them. You as a seller might owe more than your home is currently worth and need to sell your property due to a life change; you could be a home-buyer and are in love with a property that is being sold as a short sale; or if there are multiple properties being sold as short sales in your neighborhood, (they are often being sold slightly under market price) and are affecting your home’s value. To learn more about short sales email me at, deidre@redoakrealty.com.