The Housing Crash, House Flipping, and Mold Inspections Fraud. “Unreal!”
- The home buying market has been unrealistic, artificial, and competitive for the last two years, forcing buyers to skip inspections and all contingencies.
- House flippers, Real estate agents, brokers, Zillow, Redfin, Open Door, and many similar platforms “have” a lot to do with this frenzy. They have promoted and pushed many home buyers, especially inexperienced first-time home buyers, to ignore the inspection clause and all contingencies on their purchase, causing the buyer to bid over the asking price.
- A Home inspection, mold inspection, and mold testing “could” have saved buyers many financial and emotional heartaches.
A real estate transaction MUST, is to conduct a certified, experienced and reputable inspection before signing on the dotted lines. Waiving a property inspection, “whether” residential or commercial, is complete insanity for any first-time buyers, “novices”, or savvy investors. During an inspection, you will always have a clear picture to make an educated decision to walk away from the deal or to walk into it with the understanding of all damages and repair costs.
Many buyers have taken the “more” risky and costly action “by waiving” their inspection rights in the past two years. More than 21% of accepted bids in 2021 removed the home inspection clause, according to forthcoming data from the real estate website Redfin. In 2019, it was just 13%.
You”cannot” Blame the fiercely competitive real estate market or real estate agents dictating and advising you wrong for your lack of due diligence. But remember the law is on your side, you have 3 years statute of limitation in California.
Buying a property is “one of” the largest and most valuable investments of your entire life. You are committing your life savings, “families” well-being, credit rating, and your “name” “by signing”on the bottom of “documents” that obligates you to “tens of thousands of dollars”, or in locations such as Southern California, to millions of dollars to”creditors and lenders” that are fierce in foreclosing on you.”Why would you choose to forgo an inspection?”
“Market conditions or a real estate agent’s advice should not replace true wisdom. You must know what “you’re” getting yourself into.”
Waiving a property inspection has been costing buyers a tremendous amount of out-of-pocket expense, stress, anxiety, and legal fees to contract attorneys.
“An honest and reliable real estate agent or broker would urge you to forgo a thorough inspection or give you the advice to do so. When your reputation and financial security are at stake, you must be wiser than a fox.”
Why Buyers Have Been “Dropping Inspection Contingencies”
- Artificial low-interest rates.
- Playing the field against big institutional and local investors.
Inexperienced or dishonest real estate agents, the Covid-19 pandemic, extremely low-interest rates, speculative investors, and other factors led many buyers to submit offers that were higher than the asking price and with as few contingencies as possible.
One of the biggest drivers of fierce competition in the homebuying market was the historically low-interest rate. According to Freddiemac charts, the monthly average commitment rate and points on a 30-year Fixed-Rate Mortgage was 3.11% in 2020 and a never seen before 2.99% in 2021.
The pandemic lockdown and the ability to work remotely did encourage migration, which in turn led to the waiving of inspection and contingency rights as well as unrealistic price increases.
Local house flippers and institutional investors bought 24% of all single-family houses sold nationwide last year, up from 15% to 16% annually going back to 2012, according to a Stateline analysis of data provided by CoreLogic, a California-based data analytics firm. Investor purchases “have” doubled or more in Florida, Nevada, Vermont, and Washington states from 2020 to 2021. In Vermont, “investor purchases” grew from 7% of sales in 2020 to 17% last year and in Nevada from 18% to 30%. Five states saw the highest share of investor purchases. Investors bought a third of single-family homes sold in Georgia (33%) last year, with Arizona (31%), Nevada (30%), California, and Texas (both 29%) not far behind. Investor ownership began to grow after the Great Recession of 2008-2009 when large swaths of overbuilt Sun Belt homes went into foreclosure, and investors snapped “snatched” them up. Due to the extremely low-interest rates and increased demand for suburban housing caused by the pandemic, investor ownership increased once more over the past two years. Investors saw an opportunity to win bidding wars by making cash offers that were sight unseen and closed quickly.
Many, if not a high majority, of these homes were in despairing conditions from leaking roofs, old plumbing defects, major water damage, tile and showers with improper grouting, and many other defects. Many house flippers and institutional investors only do the bare minimum cosmetic changes to sell these properties as fast as possible and with the highest profitability.
An experienced and professional inspection could have saved buyers against unethical transactions.
Here at GPMI, we have been receiving an absurdly high volume of phone calls in retrospect from buyers that have been fooled into purchasing a property without an inspection or contingencies. The first thing that comes from these conversations is, “my real estate agent’s advice was that if we want this house, we should move fast, skip the home inspection and any contingencies and offer way above the asking price!” These are the most unethical sentences that we have ever heard. A reputable, trustworthy, and experienced realtor has fiduciary duties to their buyers to guide them for the best practice, experience, and economically sound transaction. A realtor should not walk their buyers into the lion’s den.
Educated and smart realtors are equipped with all sorts of data to help their buyers to make sensible decisions. If that means not buying today and not facing tens of thousands of dollars on repairs or serious defects and damage, well, then that is what it would be. Later that buyer and more referrals will come their way. However, since real estate is a commission-based industry, everyone is motivated to close deals as quickly and profitably as possible, regardless of the consequences this kind of behavior may have on the new buyer.
Over $20,000 in repairs the first week in my new home.
A few hundreds of dollars on an inspection could have saved all these unpleasant consequences:
One of my phone calls was with a young lady that purchased her first two-bedroom condo here in Irvine, CA.
It started like this: I listened to my real estate agent and did not conduct a home inspection. When I moved in, the first week, the old water heater completely broke, the dishwasher was broken, and water damage was visible behind the kitchen cabinets. Lastly, when I was unpacking and organizing my toiletry and opening one of the bathroom cabinets, I was slammed with an awful odor and a giant black substance on the wall. Later I found out there was a major water leak in the upstairs units that affected my condo as well. Even the homeowner association was aware of this water damage. But this was never disclosed in my contract. Both the seller’s agent and my agent were aware of this issue, and no one ever mentioned it.
The cost to install a water heater in the Southern California area can range anywhere from $1,000 to $7,500.
Budget/Economy dishwashers expected cost: $200 to $500, Mid-Range Dishwashers Expected Cost: $500 to $1000, Luxury Dishwashers expected cost: $1000 or more.
And now, I have to spend my time away from work, dip into my credit cards and find licensed and experienced vendors and attorneys to handle this heartbreaking mess.
Here at GPMI, we pray and hope that no one faces this kind of unforeseen consequences in their property purchase. If you have waived your property inspection rights and are in need of a confidential Dosh and ACAC Certified inspection, expert witness, and environmental testing, give us a call. For a list of Statue of Limitations in California, please visit: https://www.courts.ca.gov/9618.htm?rdeLocaleAttr=en