A COMMON PITFALL IN THE CONDO PURCHASING PROCESS

During the last few years we have shown and/or sold a number of condos. During the most recent two sales, in both cases we represented the buyer.

We always make it a point to atempt to keep in touch with former buyers. In each of the last two instances our buyers informed us that they had subsequently been recently confronted with bills for "improvements" that they were unaware of at the time of their purchase.

In one instance there was an indication on the title that there was a suit being brought by the homeowners association against the builder because of defects in the outside wall of what was a relatively new seven story condo in Seattle. In that instance the buyer did purchase the unit even though the outcome of the suit was unknown at that time. However the settlement agreed upon during the litigation was not enough to accomplish the required repairs. On a prorata basis each owner had to pay for the difference. This particular client was assessed about $26,000 for her share of the repairs.

In the second instance there was no indication in the disclosure statement, the purchase and sales documents or the Condo Certificate that was provided indicating there were any issues. When our client began attending the home owners association meeting she found that there was a relatively long standing concern between owners and the condo property managers about the need for major facility maintenance. The home owners dues was inadequate as far as providing enough funds for major maintenance over a long period of time. In the final analysis the property manager was not held responsible for the costs that would be incurred to perform the necessary maintenance. The home owners association are still in the process of determining how the funds, again which are to be billed on a prorata basis, will be provided. It appears that a contract will be placed based upon funds obtained after each home owner pays their share up front.

Based upon the above two incidents, in the future we will strongly recommend that any condo buyers attend a home owners association meeting, or at least obtain copies of the most recent meeting minutes before making their purchase.

HOME INSPECTIONS - A MAJOR PHASE OF THE HOME BUYING PROCESS

When buying or selling a home, one of the more controversial aspects of the process is often the home inspection. The format usually followed by inspectors in our area is that provided by the Washington State Pest Control Association. The forms cover all aspects of home inspection including electrical, structural and utilities both inside and outside of the home.

Home inspections are the property of the buyer and only he can decide who, if anyone can receive a copy of the report. Most home inspections cost on average somewhere between 200 and 400 dollars.

An inspection report can stop a sale in its tracks and cause a buyer to reject a home.

There are, however many things a buyer should take into consideration when examining his inspection report before he decides on what specific actions he may want to take. When using the authorized state inspection format it would be virtually impossible for an inspector not to record some number of “findings”. This would include any home, whether it is one year or 50 years of age.

The inspection process allows a number of ways for a seller to respond to a buyers list of desired corrective actions. Among them may be one, or a combination of the following:

Seller agrees to repair all of the items requested, OR
Seller agrees to provide a monetary amount to the buyer, at closing, for the buyer to fix some or all of the items, OR
Seller agrees to repair only a select number of the requested items, OR
Seller refuses to perform any of the requested repairs.

The outcome of some inspection requests for corrective action is that the seller becomes so upset, because he thinks his home is in such great shape, that he chooses D, above and the sale fails.

Another extreme is that a buyer is so disgusted with the number and/or kinds of findings by his inspector that he “wouldn’t touch the home with a 10 foot pole” and the sale fails.

The respective listing and selling agents have a major responsibility in assisting the parties to determine what (if anything) is major, and what actions (if any) should be taken. It is imperative that the two agents in the above situations never let responses reach such extremes. At the very least agents should be on guard to defuse inflammatory responses such that a satisfactory solution would not be achievable.

We don’t believe a seller must always provide a new water tank, or a new roof, or new siding etc as some inspectors would lead a buyer to believe “might be” required. When buying a “used” home we believe a buyer should anticipate the need to replace aging components sometime in the future. That is why it is imperative that the asking price and/or the offering price take into account the worth of the existing product as it is.

Items that are non-functioning are a different case. Water, power, sewage and drainage systems for example should be functioning – unless a buyer was already aware that such problems already existed. If these kinds of problems exist they should have been taken into account by virtue of a reduction in the price of that particular home as compared to otherwise comparable homes.

Our most difficult experiences have occurred with inspection reports that list 30 of more “anomalies” in a home. Many are in fact advisory statements or comments that allude to what “could or might be” a problem in the future. Inspectors take slightly different approaches when considering what is a defect vice what might be considered normal wear.

Individuals entering into Real Estate transactions should keep in mind that the purpose of an inspection is primarily to protect the buyer. In our state a buyer; A/ doesn’t need to have an inspection, or B/ can be his own inspector, or C/ can ask for additional inspections, and D/ can reject a home based “generally” upon the inspection - however in no event does the buyer need to provide reasons to the seller.

The best thing going for a seller is when he enters into a contract with a buyer that really desires the home. In these cases most often the inspection phases proceed smoothly and the actions agreed upon are usually within reason.

The most practical question a buyer should ask himself after examining his inspection report might be; would I be willing to move into this home today? If the answer is yes, that may arguably sum up the seriousness of the inspection findings.

PORT ANGELES -THE BACK-UP CAPITAL OF THE UNITED STATES

The following describes a true story about a sequence of events that recently revealed an important aspect of the history of Port Angeles.

During an Engineering dinner meeting I attended on 13 April 2006, an eminent land surveyor in our State, Mr. James Wengler was the speaker.

Since he was addressing a group of engineers, he had chosen as his topic an example of an interesting challenge he had encountered while conducting a recent survey. Although I am familiar with the art (and profession) of land surveying, his presentation proved to be a real eye opener.

His surveying firm in Port Angeles had been requested to conduct a new survey on what was identified on historical maps as “Block 42” on the township of Port Angeles. What was thought to have been an original survey had been performed by a Norman Smith, and had been duly recorded on 21 January 1884.

The challenge began when Jim began researching records of previous surveys. He found a number of surveys, as well as transcribed versions of the original. His concern was that there were differences between many of the documents. In particular Block 42 had variations from record to record. Jim then requested the city auditor to allow him to search the archives kept in a building that hadn’t been maintained for years. There he found the archives in disrepair and full of mold. He then had to work through the Washington State Archivist in Olympia in order to authorize the records to be cleaned up and released. Still his comparison of the various documents indicated certain differences.

Some time later Jim was visiting his former home in New York when he found out that the U.S. Library of Congress, in Washington D.C. had maps that might be of interest in solving the ambiguities that continued to confront him. While at the Geography and Maps Division of the Library Jim found the information he was seeking. Included was a plat map of Port Angeles, Washington Territory dated February 2, 1864 prepared by a J.M. Edmonds. Ultimately, this map which was prepared based upon surveys made by George W. Sloan from February 4 to the 26th in 1863, was determined to be the official survey of record.

Jim’s company ultimately prepared a three page survey/mapping document dated 5 December 2005. It can be found in Clallam County under auditors file number 200s-1170565. This document details the many surveys that preceded it, and it resolved the discrepancies. Ultimately it even satisfied Jim’s client.

The most interesting aspect of Jim’s research revealed that Norman Smith’s survey of Port Angeles had been commissioned by members of President Lincoln’s cabinet in order to develop that town site for use as the Union’s capital, in the event the South won the war. Jim’s studies found documented evidence to this fact – however to this day you won’t find this information in our history books.

Future Method for Controlling Home Power Consumption

An interesting question for homebuyers has always been what is the cost of utilities for the home they are purchasing? Many buyers request that a seller provide them with recent bills for the various utilities as part of their data gathering process before purchasing a home.

In recent years there have been significant changes in comparative costs for gas verses electricity. For years the Pacific Northwest had been fortunate to have had relatively cheap electricity, due in part to our wealth of water driven power plants along our various rivers. In recent years the relatively large disparity in gas vice electric costs has disappeared. Only the dreaded concern of foreign oil having a significant impact on future natural gas prices limits more companies and individuals from using more natural gas-fueled appliances.

A major concern with electrical power usage is that unless something is done in the near future, we will not be able to cope with the ever increasing power demands. Data indicates that in the United States power usage has been increasing at a rate of 1.7% per year while capacity increases have only been on the order of 0.5% per year. One solution would be to reduce power consumption during peak load times, thereby saving power and reducing costs to consumers. Most power companies employ a system wherein customers are charged more per kilowatt hours when used at peak power periods than they would be changed during normal or off-peak periods.

In an effort to reduce electricity costs in the future, the Associated Press published an article recently that described a potential method for homeowners to better control electric appliance power usage. To verify the adequacy of the concept a pilot program has been started in several Washington State cities. The program consists of placing dryers and water heaters, each having special circuit card installed, in a sample number of homes in various areas of the state. The special circuit card will allow the monitoring of selected characteristics of the local power grid through the home’s electrical outlet. If the pilot program is successful future appliances will have the capability to recognize a peak load period on the power grid and consumption can be delayed, or deferred to a less than peak usage time with no degradation to the particular function the appliance is providing.

More Competition - How About Zillow.com?

Our friends and clients have been calling and writing inquiring about one of the latest Real Estate internet sites, Zillow.com. Is it valid? Should we use it? Does it eliminate the need for Realtors to provide a potential seller with a CMA?

Many in our office have looked at this site. It is locally based (Seattle) and apparantly some number of people have made a significant investment in the site. Like most of you the first thing we did was check on our Real Estate holdings, and some of our clients to be able to judge the goodness of the information provided.

With some exceptions, we felt that without having done a physical examination of the properties, Zillow hadn't done too bad a job. Using data from public records, such as tax information, latest sales prices of adjoing properties and applying an appreciation factor they apprived at their number.

On the down side many of our friends report numbers way off from what they think their home should be valued (both above and below I might add).

We think this. It is a great aid and should be used for a reference. However, one should not assign a market value without a realtor who can compare your home not only to "comps" but to take into account all improvements not on public records. Also in order to account for those special features so many homes have that make them worth more than similar structures. Specifically we are talking size, location, workmanship, quality of the materials employed and any amenities.

Our Latest Problem - Where Is The Septic System?

It seems like we are always finding some kind of new problem concerning Septic Systems. Our latest experience is related to a waterfront home we recently showed. Built in 1966, on only one quarter of an acre of beautiful Hood Canal waterfront. But (a) there is no "As Built" in county records; and (b) the original owners have passed away. Our buyer is extremly interested in the poperty but is concerned about making an offer because of this situation.

We have found locally there are at least two companies that will attempt to solve this kind of problem. One company's process is to first locate the Septic Tank, and they have ways to do that; then they employ sensors and a camera to map the Drain Field. In one instance the company uses Fiber Optic sensors inserted in the tank's output side, then they move the sensors through each leg of the field. They can determine the depth of the lines, sometimes the material the lines are made of and most importantly they will map the system. According to the county, if done properly these drawings can be accepted for the county records as the "As Built" documentation for a home. We were told that a ROM estimate for the above service would be on the order of $500. With the cost of waterfront being what it is these days that seems like a fair price to pay for that kind of information.