Bridging the divide on REO inspections

DEAR BARRY: My friend is trying to buy a house and is concentrating on foreclosed properties. He usually makes an offer and then hires a home inspector. If the inspector finds many problems, my friend doesn't buy the house. So far, he's done this twice. What seems unfair is that the next buyer who comes along has to pay for a home inspection when one has already been done. This seems like a rip-off.

If an existing inspection report were available to download, a buyer could simply ask the seller if any repairs have been done since the last dated inspection. How many times must a home be inspected in such a short period of time? --Roy

DEAR ROY: What you say makes sense, but there are two roadblocks that prevent public dissemination of home inspection reports on foreclosed properties. The first is home inspector liability. The second is the unwillingness of banks to provide disclosure on properties that they own. Let's take these in order.

When you hire a home inspector, you sign an inspection agreement. That contract specifies conditions that are within the scope of a home inspection and conditions that are not. Issues that are typically outside the scope of an inspection include environmental hazards, energy efficiency, portions of the property that are concealed from view, geological stability, low-voltage wiring, forecasting future leakage, and so on. When buyers sign the contract, they acknowledge and accept these exclusions, and the inspector is relieved of liability for those kinds of defects.

If inspection reports were made available to future buyers, the inspector would have no contractual relationship with those people. If a problem that is not within the scope of the inspection were discovered after the close of escrow, the buyers could take legal action against the home inspector, and the limitations specified in the contract would not be binding in that transaction. For this reason, home inspectors are strongly opposed to the publication and common use of their inspection reports, regardless of whether the property is a foreclosure. ...CONTINUED

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