Thursday, July 31, 2008

Point of Sale Inspections

The City of Shaker Heights requires that a point of sale inspection be performed on all houses prior to the transfer of title. The city charges the seller $100 for the inspection, which covers these interior and exterior areas. Once the inspection has been completed, a realtor can obtain it for any prospective buyer.

Either the seller must fix the problems found during the inspection or the buyer must assume the violations, with the provision that 150% of the estimated cost of the repairs be put into escrow. This ensures that the work is completed, and that the contractor is paid for it. Generally, the work must be completed (or have substantial progress made) within 90 days of sale. The estimate may be made by any contractor registered in Shaker Heights. The city may reject any estimate that they believe is improper. This is, I presume, to prevent contractors with a relationship to the prospective buyer from providing an estimate far less than the actual cost of repairs, thus allowing the buyer to put a substantially lower amount of money into escrow for repairs.

While this system seems to work well for owner-occupied housing, it creates certain difficulties for bank owned properties. Many of the bank owned properties have a considerable number of minor flaws that could easily be fixed by the average do-it-yourselfer. These flaws, however, when written up for the purposes of a contractor estimate, add up quite quickly - at least that's how we fear it will be.

We're waiting to hear back from our realtor as to the status of the point of sale inspection on one of the houses that we are interested in. Once it has been completed, we'll have our general contractor provide an estimate as to the total cost of the work, from which point we will be able to make a decision.

Tuesday, July 29, 2008

1853 Farmhouse

Shaker Heights farmhouse

23550 Fairmount, Shaker Heights, OH 44122 is an 1853 farmhouse on a quarter acre lot. It's a perfect little house, with emphasis on the "little" - the only reason why I'm not interested in it is the size - 1200 square feet.

Shaker Heights farmhouse
The windows and interior trim appear to date from the last quarter of the 19th century. The exception is the south side, which faces the back property line, where the windows and wood siding have been replaced. The replacement windows are lower-end, while the siding seems consistent with the original.

Shaker Heights farmhouse
The back is as lovely as the front.

Shaker Heights farmhouse
The interior trim appears to be in good condition.

Shaker Heights farmhouse
Carpet that once covered the wood floors seems to have been removed recently.

Shaker Heights farmhouse
The kitchen seems decent enough.

Shaker Heights farmhouse
As does the bathroom.

Shaker Heights farmhouse
Another detail.

Shaker Heights farmhouse
The house is almost completely hidden from the street.

Of course, this residence requires the usual work associated with a house of this age, but most of the real issues appear cosmetic - paint applied over poorly stripped paint on the exterior siding, cleaning up of floors, etc.

The house is listed at $79,900. It's bank owned, and right now, in this area, bank owned properties are selling for about 50% of the amount that the bank took the property for. (This is based on my calculations, of bank owned houses sold under $200,000, for which data was readily available, in the months June - March, which are the last for which I have complete data.) It could be a really wonderful first home, or place for someone who doesn't need quite so much space. The only major thing I'd change would be to build a garage that better suits the residence.

See more photographs of this house.


I created this blog with three goals in mind: to document the remodeling of the house my wife and I will purchase in Shaker Heights; to help guide others through the process of purchasing and repairing a home in this city; and to illustrate some of the many beautiful homes for sale in this city.

Shaker Heights was developed as a streetcar suburb. It has a long history of excellent schools and beautiful homes. While perhaps best known for its stately mansions, the vast majority of the homes are of a much more reasonable size.

For homebuyers, the city may be best known for its strict zoning laws and housing inspections. All exterior changes to a structure must be cleared with the Architectural Review Board. A point of sale inspection is required for all real estate sold in the city, and violations must either be corrected by the seller or assumed by the buyer. If they are to be assumed by the buyer, one must put into escrow with the city 150% of the estimated cost of the repairs, to pay the contractors doing the work and ensure that the work is completed. These repairs must be completed or have "significant progress" made on them within 90 days of purchase.

Some areas of Shaker Heights were hit rather hard by the sub-prime mortgage crisis, and now many homes sit vacant, unsold, and unsellable because of the amount of work necessary to pass city inspection. The work required is not so expensive as to make the properties undesirable, but the escrow process and the amount of cash required scares potential buyers away. It seems that the city didn't count on the possibility of homes needing numerous minor repairs of the sort of that might easily be done by many home owners. These sort of repairs, like the replacement of light fixtures and patching plaster are labor heavy but materials cheap, so that they make the outlay required at purchase much greater.

I hope to address these issues and more.