Am I Sensing A Disturbing Trend?

By
Home Inspector with Jay Markanich Real Estate Inspections, LLC

Over the years I have noticed tricks builders play with their clients when it comes time to get inspections.  For example, they will call at 4:55pm and say they forgot that the schedule had changed and are sorry for the mix up but if the client wants that inspection they were considering they need to have it the next day between 9 and 11am.  Or they will apologetically call and say there was a snafu and the inspection needs to be postponed one day after having been scheduled for a week.  There are many such tricks.  When people call me to order new construction inspections I warn them about some of the games and they never believe me!

A recent thing I have noticed regards the various requirements they are placing on the home inspectors themselves.  And each builder has their own criteria.  Certain affiliations, certain licenses, certain insurances and so forth.  One builder wants this combination, the other wants that combination.

I ran into a new one the other day.

This was new construction and the final inspection.  It had been quickly arranged.  I have already done two inspections this year on this builder's homes and had sent them my license and E&O insurance policy.

Virginia requires me to carry $500K in E&O.  I carry $1mil.  I carry that much because it isn't much more expensive and, I have found over the years, that builders require that much.

There was a new twist this time - the builder wanted to be stipulated on the policy as a "Certificate Holder."  Why I don't know - it's my policy.  But I had it done.

Getting to the property I was required to stop in at the sales office for the key.  When I went in the lady there apologized because they "forgot" to have me send them a copy of my "General Liability Insurance, for $2million."  This is the "new corporate requirement of home inspectors."  It had "slipped her mind" to ask in advance.  I asked and they don't require this of appraisers or termite guys.

WHAT BOTHERED ME WAS THE LOOK I HER EYES.  IT WAS A GOTCHA MOMENT.  I READ PEOPLE VERY WELL, AND THAT'S EXACTLY WHAT WAS GOING ON. 

Called an "umbrella policy," I don't know if most home inspectors carry this.  It is not required by my state.  BUT I HAVE ONE, AND FOR $2MIL BECAUSE MY AGENT TOLD ME TO GET IT.   It costs just under $400/year and covers me no matter what I do.

Years ago I was burned by a builder who demanded to see my insurances before he would allow me on site.  I asked why they didn't ask for it in advance of the inspection and they claimed they "forgot."  The inspection never happened.  Who carries their insurance with them?  Well, I only get burned once.  For that reason I carry a copy of all my insurance policies in my car.

I smoothly said, "No problem!  I have a copy of it in my car!" and pleasantly walked out to get it.  Bond, Jay Bond...  not shaken OR stirred.

SHE WAS CLEARLY TAKEN ABACK.  IT WAS PRICELESS.  I GOTCHA!

The inspection did not go as smoothly.  I went back twice!

I contacted Lenn, who has been around the block once or twice, about this new trend I am sensing.  The trend - to make it so difficult for home inspectors by having them carry so many different "umbrellas" that they can't get on site.  I think she agrees with me.  She said the obvious, that this needs to be handled up front and in the contract by the real estate agents - exactly what the builder requires of the home inspector and when.  No games, no gimmicks.

But, she pointed out, many people do not have agents!  This might be the wake up call.  Before you buy, get an agent AND a home inspector.

My recommendation:  builders can require anything of anybody they allow on site.  I think they will begin piling on more and more requirements.  It could be this or that combination of licenses and insurances, amounts of insurances, you name it.  But once those requirements are known up front and written into the contract, you can't get burned.

 

 

Posted by

Jay Markanich Real Estate Inspections, LLC  

Based in Bristow, serving all of Northern Virginia.

Office (703) 330-6388   Cell (703) 585-7560

www.jaymarinspect.com


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Re-Blogged 8 times:

Re-Blogged By Re-Blogged At
  1. Kate Smith 07/02/2011 09:34 AM
  2. Joanne Gillet & Danah Prophet The Edge Of The Beach Team 07/02/2011 12:13 PM
  3. Kathleen Vetrano 07/02/2011 02:12 PM
  4. Randal Jenkins 07/02/2011 07:55 PM
  5. Keith Lutz 07/03/2011 01:15 AM
  6. Deana "Dee" Langley 07/05/2011 02:04 PM
  7. Gene Riemenschneider 07/06/2011 03:05 PM
  8. Jason Nenadov 07/06/2011 03:19 PM
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Tags:
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Rainmaker
1,280,183
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Dorte - I learned in MBA school that everybody knows 750 people.  That could be a lot of good or bad advertising!

Lee - you can add a rider to your GL overnight.  But auto insurance?  Ha!  That's a good one!  Go the bike route and have UPS deliver the ladder!

Chris - and it is morphing!  One has this requirement, another that one.  When they all settle on the impossible one I will let you know.

Tim - and the builders realize that!  Hence the changing nature of the requirements!

Jul 03, 2011 06:19 AM #199
Rainmaker
1,280,183
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

And thank you to everybody for your reblogs!  I hope your clients can use this information also!

Jul 03, 2011 06:20 AM #200
Rainer
64,095
Mark & Janelle Potter
The Real Estate Network 719.331.4824 - Colorado Springs, CO
Mark and Janelle Potter Realtors - Broadmoor Colo.Springs CO Home Sales

Jay - Great Blog. Thanks for the heads up!  I have a very good freind's daughter buying new construction with us.  I will get her a copy of your blog and look for an inspector with the required policies.

Jul 03, 2011 08:34 AM #201
Rainmaker
128,117
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Really good and interesting post.  I bookmarked it not only in AR but on Firefox as well.  I'm saving this for my new home folder.  Awesome stuff.

Jul 03, 2011 08:38 AM #202
Rainer
40,693
Scott Perry
Jireh Business Information Solutions, Inc. - North Huntingdon, PA

Hi Jay,

I think I know why your builder wanted to be named as a Certificate Holder on your policy.  There's been an ongoing discussion about this over on SourceOfTitle.com.  More and more title insurers are asking to be named as certificate holders on the E & O policies of title examiners.  This is because sometimes an examiner's coverage will lapse mid-term because the insured failed to pay their premium finance installments.  It's become more and more common in recent years, and when a claim does arise, the title company has no recourse against an examiner.  As a Certificate Holder, the company would be notified if one of their contractors' E & O coverage has lapsed.

Don't know if it's ever been an issue with inspectors, but that's the rationale our underwriters are using.  Thanks for a very interesting post.

Regards,
Scott Perry

Jul 03, 2011 09:34 AM #203
Rainmaker
265,780
Jane & Jeff Daley, PhD
Luxury Valley Homes For Buyers & Sellers Phoenix AZ Area - Scottsdale, AZ
Scottsdale Real Estate Arizona

Greetings Jay - In Arizona the good builders welcome the home inspectors. There is three builders we have worked with that I particularly like. The have a home inspector come in themselves before they give access to the homeowners inspector. Then they go in and fix everything found. There mantra is the more eyes on property the better the product and there reputation.  It works, I recommend these builders frequently. Unfortuneately we have the not so good builders as well. Buyers must do their homework when not working with a good agent familiar with new construction.

Jul 03, 2011 09:46 AM #204
Rainmaker
143,948
Liane Thomas - Corona & Riverside Real Estate
The Jet Team, Allison James Estates & Homes - Corona, CA
Bringing you Home!

Why on earth would a builder NOT want the buyer to have an independent home inspection? Can they really be afraid what little ol' you might find???

Cannot tell you the number of times I have forced strongly suggested buyers of new construction get an independent home inspection. Cannot tell you the number of serious items that have come up as a result.

Jul 03, 2011 12:19 PM #205
Rainmaker
1,280,183
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

M&J - and one with a lot of experience!  Policies aren't important to the process except to the builders apparently.

Thanks Mike!  That's a lot of bookmarking!  And a good folder to have.

Scott - this was the first time anyone asked to be a cert holder.  But I had it done.  It was the last minute stuff that was disconcerting.

J&J - that is probably how it should be.  The builders I have the most problems with are the national ones.  Maybe it is just here.

Gee, Liane, I don't know.  Maybe because of the stuff in my previous three posts?  And yes, I find some really unthinking stuff at times!

Jul 03, 2011 01:14 PM #206
Rainer
121,192
Monique Ting
INET Realty Honolulu, HI - Honolulu, HI
S, e-PRO, SFR

Jay, thanks for sharing that story... I never realized that this was going on. The public should be warned of things like that...

Jul 03, 2011 03:22 PM #207
Rainmaker
132,221
Jeanne Kozak
RE/MAX In Action - Martinsburg, WV
REALTOR and Broker/Owner in WV and VA

We had a builder that outright told the buyer that they were wasting their money on a home inspection, that the inspector will always find something so that the buyer thinks they are earning their money...this was with their agent present, who never said a word. The buyer insisted on the home inspection, needless to say it did not go well, when we contacted the agent she made the comment that most home inspectors were previous builders that could not make it, thats why they are home inspectors now. She is a fairly new agent, probably won't be for long making those kinds of comments. The builder refused to do most of the requested fixes or return the earnest money...so you know wehre that is going.

Jul 03, 2011 04:42 PM #208
Rainmaker
1,280,183
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Well, Monique, my post is something of a warning right?  This has been going on for many years!

Jeanne - I hear things like that from time to time, from very myopic people.  That agent clearly doesn't know what she doesn't know.  Couldn't make it?  Does she know what I have to do every year just to maintain my certification?

Here is an interesting blog I posted some time ago about how I am a placebo!

http://activerain.com/blogsview/1394784/-home-inspectors-are-just-placebos-

Jul 03, 2011 05:42 PM #209
Rainmaker
263,036
Pat & Steve Pribisko
Keller Williams Greater Cleveland West - Westlake, OH

In Northeast OH, many new home buyers think you don't need a Buyer's Agent for new construction.  They think they don't need an inspection, because it's a new home!

Jul 05, 2011 09:00 AM #210
Rainmaker
1,280,183
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

And, P&S, that is a huge mistake and one born of ignorance.  You simply don't know what you don't know.  The agent needs to be firmly in charge there!

Jul 05, 2011 09:04 AM #211
Rainmaker
229,431
Reuben Saltzman
Structure Tech Home Inspections - Minneapolis, MN
Minneapolis Home Inspections

That's unbelievable, Jay!  I gotta tell you, you are THE MAN for having that insurance paperwork with you.  It would have been hilarious if you had taken the receptionists picture while handing here the paperwork.  

Jul 05, 2011 10:39 AM #212
Rainer
133,138
Sylvia Jonathan
Coldwell Banker Platinum Properties - Irvine, CA
Broker Associate, SFR

I was unaware of these shenanigans, and maybe they dont happen in SoCal because I have not had any complaints from people who bought new. I can only imagine that builders play this game because they know that they are cutting corners in this difficult economic climate. I always tell buyers that buying a new home does not mean they are getting an better home.

Jul 05, 2011 04:26 PM #213
Rainmaker
1,280,183
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Thanks Reubs.  But I got burned.   That's why I carry it!  You know the old adage - burned once, shame on you; burned twice, shame on me!  Or something like that!

Sylvia - this has been going on around here for a long time!  Over a decade for me anyway.  Maybe not there though!

Jul 05, 2011 05:22 PM #214
Rainmaker
1,286,270
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Jay this is a great post and just another reason people need an agent and a home inspector when buying a new house.

Jul 06, 2011 02:35 PM #215
Rainmaker
1,280,183
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Yet another Gene?  You bet!  I have one tomorrow, new construction.  The agent called to complain they had just called him saying he needed the inspection tomorrow at 8am.  Fortunately I wasn't booked until noon!

Jul 06, 2011 05:39 PM #216
Rainmaker
267,342
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Jay~ Good luck on that inspection tomorrow. I hope you don't have to pull a GOTCHA, but I'll bet you are well prepared, just in case!

Jul 06, 2011 10:56 PM #217
Rainmaker
1,280,183
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Thanks Liz.  It's today and the agent told the realtor I didn't need to show anything to them.  We'll see...

Jul 07, 2011 05:38 AM #218
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Rainmaker
1,280,183

Jay Markanich

Home Inspector - servicing all Northern Virginia
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