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Is he up the Zayante Creek?

by Patti Lyles

Anna: Q: My brother just bought a house two weeks ago and today one whole basement wall fell into the basement. Is he up the Zayante creek, or is there something the inspector or Realtor missed?

Patti: A: Yikes! I hope no one was hurt.

Your brother should call back the inspector, the agent and a real estate attorney to help figure out what the problem is, if it is a new problem or an existing problem that was missed, whether the seller knew about it, and what needs to happen to resolve the situation. You may also want to call a structural engineer to get his or her opinion about what caused the basement wall to fall in.

It's unclear from your letter whether the wall of the house fell in or just the plaster or drywall. If just the plaster or drywall fell into the basement, it's possible that there is a serious leak coming in from outside or inside the house. If the entire structural wall of the house collapsed, there could be a water problem, an unstable ground problem or simply a total structural failure of the house.

Let's assume the problem is water leaking into the house. It's entirely possible that the inspector missed the fact that the basement wall was waterlogged or was unstable. Did your brother walk around the property with the inspector during the inspection? If not, is it possible that the inspector didn't actually look in the basement? Did he take any moisture readings? Did he touch the wall?

Once you figure out if the inspector missed the problem or not, you can take corrective action. A good start would be to demand repayment of the fee your brother paid for the inspection. Then, you can talk to a real estate attorney about whether your brother has any legal options against the inspector or seller.

I'm going to skip over the Realtor for the moment and move on to the sellers. Basement walls don't just collapse overnight. Typically, there is a long history of moisture problems, leaking, or major cracks that are greater than 1/8 inch.

What did the sellers disclose on their seller disclosure form? Did they disclose prior leaking of the property? Had there been any major cracks in the basement that they fixed? Was the basement freshly painted? If so, that could be the sign that they were trying to cover something up.

If you suspect a seller disclosure issue, you'll have to prove that the sellers knew, or should have known, about the problem. The Realtor may also be liable, if she knew something about the house's physical condition and didn't disclose it.

It's time to hire an attorney and put on your Sherlock Holmes cap. You've got a lot of work to do to sort this mess out.

One final thing to keep in mind: Sometimes bad things happen and nobody is at fault. It could be possible that the sellers had no knowledge of problems with the basement wall and the inspector did a good job in looking at the house. There are risks in buying property and sometimes nobody is at fault when bad things happen.

Certainly you want to get to the bottom of your issue. You need to investigate the issue further and see if the seller knew of the problem, whether the inspector should have discovered the problem, and whether the Realtor knew of the problem and did not disclose it.

Don't buy a house with these problems

by Patti Lyles

10 environmental, design factors to look for

Recently I received a letter from a reader who asked if having a tall water tower about 1,000 feet from his house would hurt his home's market value. By coincidence, a few days later I saw an appraiser friend at the local post office so I confronted him with that question.

"It sure won't help a home's market value," was his reply. Then, being an experienced appraiser, he reminded me the water tower is called "functional obsolescence." That means it is a material fact that is virtually impossible to eliminate but has a significant impact on market value.

Functional obsolescence factors, whether within the property or outside, should always be considered when buying a home. Sometimes they "kill the sale." But in other situations, the buyer doesn't care or even likes the problem, which other buyers loathe.

For example, years ago I owned a rental house where the backyard adjoined a school playground. Although the house was in excellent condition, when prospective tenants spotted the playground hidden behind bushes, they suddenly lost interest. I quickly learned to advertise that house as "Close to elementary school." Then I had no trouble renting to families with children.

Looking back, I now realize that house adjoining the noisy school playground was a "bad house." It had an incurable defect that most prospective buyers and tenants disliked, thus affecting its desirability and market value.

EVEN NEW HOUSES HAVE DEFECTS. Fortunately, most on-site problems with new houses are correctable, such as paint scratches or doors that don't close right. Buyers of new houses should (a) understand the terms of the builder's warranty; (b) hire a professional inspector to thoroughly check the house before the sale closes; and (c) inspect the house with the builder (called checking a "punch list") so both parties are aware of problems needing correction under the builder's warranty. Realizing the importance of having satisfied customers, the best builders promptly take care of any defects reported by the buyers.

THE DUTY OF HOME SELLERS TO DISCLOSE DEFECTS. Most states now have either statutes or precedent court decisions that require home sellers and their real estate agents to disclose, in writing, known defects with the residence. However, some sellers and realty agents have "selective memory," meaning they forget to reveal some defects, hoping the buyers won't discover them.

When a home buyer can prove the seller and/or realty agent knew or should have known about a home defect, the buyer's legal recourse is to either (a) seek rescission of the sale or (b) sue for monetary damages. However, the buyer's difficulty is proving the defect was known before the sale closed.

PROFESSIONAL HOME INSPECTORS AREN'T PERFECT. In addition to obtaining a written home-defect disclosure report, even when a home is being purchased "as is" (meaning the seller won't pay for any repairs), smart buyers insist their purchase offer include a contingency clause for their approval of a professional home inspector's report.

When hiring a professional home inspector, be sure to inquire as to the inspector's experience. Personally, I prefer members of the American Society of Home Inspectors (ASHI) because of their high membership standards. Local ASHI members can be found at or 1-800-743-2744.

Home buyers should always accompany their professional inspectors. In addition, the realty agents and the seller are welcome to attend, just in case an unexpected serious defect is discovered and needs to be discussed.

When a serious undisclosed defect is found by the inspector and the buyer still wants to buy the house, a smart buyer will use the inspector's report to (a) get the seller to pay for repairs; (b) reopen negotiations with the home seller to get a repair credit, or (c) go ahead with the purchase anyway, knowing of the defect, even if the seller won't offer any compensation.

DON'T BE FOOLED BY HOME-WARRANTY POLICIES. Home sellers and their realty agents often buy, as a sales inducement, a one-year home-warranty policy. These policies pay for repairs to built-in appliances, plumbing, wiring, furnace, and the hot water heater. Often excluded, unless an extra premium is paid, from warranty coverage are the air conditioning, plumbing outside the home's perimeter, roof, foundation and structure.

Home buyers should be aware warranty companies charge about $50 per service call, even if the defective component isn't covered by the policy. A favorite ploy of many home-warranty companies, especially when the problem is very expensive to repair or replace, is to say the defect was a "pre-existing condition," which is not covered by the policy. The best place to resolve such conflicts is in the local Small Claims Court where the home buyer usually is favored by the judge.

THE "TOP 10" STEPS TO AVOID BUYING A "BAD HOUSE." Although most professional home inspectors have these key factors on their checklists, savvy home buyers also should be on the lookout for these potential serious problems:

1. MOLD AND MOISTURE. Even the best homes, at one time or another, have mold or mildew. The cause is trapped moisture, usually due to poor ventilation. In excessive amounts, such as after a flood or water pipe break, it can ruin a home because mold can be extremely difficult or impossible to remove.

2. RADON. According to the Environmental Protection Agency, this naturally occurring, radioactive gas is created in soil and rock beneath 1 in 15 U.S. homes. Radon allegedly causes cancer in residents whose homes contain radon underneath.

3. ASBESTOS. Asbestos was routinely installed in millions of U.S. homes for fireproofing, insulation, roof shingles, and floor tile. In good condition, there is nothing harmful about asbestos. However, when it deteriorates and the particles become airborne, asbestos can cause fatal lung disease.

4. LEAD-BASED PAINT. Before 1978, lead-based paint was used in most homes. It can cause brain damage to young children who ingest it, usually from flaking paint chips. But it is not dangerous if the paint is in good condition.

Federal law requires sellers of homes built before 1978 to provide home buyers and tenants with (a) a federal booklet about lead-based paint dangers, and (b) a disclosure form if the seller or landlord had lead-based paint tests performed. If desired, home buyers have 10 days to have a lead-based paint inspection at the buyer's expense.

5. FORMALDEHYDE. Many manufactured homes contain this material which causes eye, nose, and throat irritation, as well as coughing, rashes, headaches and dizziness in some people.

6. CARBON MONOXIDE. Malfunctioning furnaces, wood stoves, kerosene heaters and lamps, fireplaces, water heaters, and gas stoves can produce invisible but deadly carbon monoxide in homes. The easy solution is to install a carbon monoxide detector, usually costing $25 to $40.

7. DEFECTIVE WELL WATER. If the home being purchased depends on well water, be sure to include a purchase-offer contingency clause for a test of the well-water quality. Also, have the well's pump tested to be certain it is in good working condition.

8. SEPTIC OR SEWER SYSTEM. A home that is not connected to a public sewer system probably has a septic system, which drains waste water into the soil. Be sure the septic system is located a substantial distance from any well. If the seller reports the home is connected to the public sewer, be sure to verify this and that the sewer pipe is not broken.

9. HIGH-VOLTAGE POWER LINES. Government tests have been inconclusive if adjacent high-voltage power lines cause cancer and other diseases. But they certainly don't benefit health. The presence of nearby high-voltage power lines won't enhance a home's market value and can be considered a serious negative factor at resale time.

10. OTHER NEGATIVE INFLUENCES. There are many possible negative influences, sometimes beyond the home's lot boundary, that can affect desirability. Examples include a high crime rate, heavy street traffic, poor location, poor-quality public schools, lack of public transportation, nearby noisy railroad tracks, poor floor plan, inadequate or dangerous wiring, galvanized pipes, an old furnace, leaky gutters, flood zone, high fire-hazard area, earthquake fault zone, seismic hazard zone, easements and encroachments and high property taxes.

SUMMARY: No house is perfect. To avoid buying a "bad house," smart home buyers ask lots of questions and insist on a professional home-inspection contingency clause.

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Photo of Patti Lyles Real Estate
Patti Lyles
Century 21 Showcase, REALTORS
P.O. Box 67275
Scotts Valley CA 95067

DRE #01385517