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.

1 comment:

Cindy Dy said...

Thank you for this post. Keep it up. Hope to read more post from you guys.