"Brain Pick a Pro" Interview with Inspector John Edwards


Larry: Welcome to the Wednesday Night Brain Pick a Pro Teleconference live from Charlotte, North Carolina and Spartanburg County/ Inman, South Carolina. Live tonight on the Teleconference is a friend of mine, fellow Investor and business owner, John Edwards with Assurance South in Inman, SouthCarolina. Welcome to the Program John, how are you?

John: I am doing great Larry, Thanks for the invitation, I am looking forward to talking with you tonight.

Larry: It is going to be really exciting. You know you and I have talked about doing this a little bit in the past and doing some other things together. In fact, we swapped some links on our Website. Before the night is over I want you to be able to give out all not only your contact information but also you have a couple of Website’s that are for Investors, don’t you?

John: Aside from the Home Inspection Website or the Site for the Home Inspection Company, I also started just as really a kind of free service a Classified Ad site called upstateinvestor.com for Investors in the Upstate of South Carolina and Western North Carolina to advertise property that they have for sale.

Larry: That is really neat service and I appreciate whenever you contacted me and asked me to submit a couple of articles as well as you even put a little banner ad up there for me to direct people over to our side and I really appreciate that.

John: We are always looking for submissions from seasoned Investors or Lender, Mortgage Brokers, Insurance people, whoever; we are always looking for articles to help keep the Website fresh. Anyone listening in would like to submit an article, just get in touch and I would love to talk with you about it.

Larry: That is great and you are going to give all your contact information near the end of the call and that way people can get in touch with you. Why don’t you start John and tell us just a little bit about yourself, little bit about your background and bring us up to speed.

John: Okay, I was born in Columbia a number of years ago, moved to Spartanburg in 1980. Actually worked in local television for twenty-three years. I worked with my last television job over in SCETV the small Spartanburg station of SCETV and left there in June 2003 deciding to move out on my own and did some research and decided that Real Estate Services and more specifically Home Inspection was something that I really wanted to do. I had always been interested in Real Estate and property and had done a good bit of remodeling work, my house and other peoples houses. I turned my unfinished basement into a recording studio when we first built our house a few years ago and that was a lot of fun but anyway here we are. Back in March of this year when Glenn Woodson started the Foothills REA Group I joined up primarily as another business development stream and it did not take long before I was really itching to do some investing and learned a lot from people from like you and all the other speakers at the meetings and seminars and so forth. In early September I bought my first investment property. It was a HUD Foreclosure and I rehabed it and it is on the retail market right now in the slowest season of the year.

Larry: Wow! Congratulations.

John: Thanks, I appreciate that. I really do.

Larry: That is really great. You know you mentioned a couple of important things. You mentioned number 1: That you said it is on the market in the slowest season of the year; however, you cannot look at that because if you had said “this is the slow season, we are not going to do anything, let’s just hold off until Spring”, not only would you have missed that deal but you may not have gotten to your first deal.

John: Oh absolutely, that was one of the biggest messages that I have taken away so far from all the great educational opportunities that the REA and CREA Groups have offered is jump in, the longer you set and wait the longer you set and wait.

Larry: You know there are people that will, you know just like tonight. They will be on this call or be on other teleconference calls or listening to tapes or whatever, but you have to take that first step. People say knowledge is power, that is lie. The use of knowledge is what power is. To have to use it, it doesn’t mean anything if you have a shelf full of tapes and books and CDs and videos and Seminars but they are setting in the closet and you have not done anything with them. One thing I like to share with people is to know and not to do is the same thing as to not know.

John: Very well said!

Larry: If you know how to do it and you go out and learn but you still don’t do it, it is the same thing as not even knowing. You have to take action. You know what is really neat and we’ll talk about this a little bit more; but what is really neat is when we go into our Boot Camps and our one day Seminars and training events and we have people that at the end of those that say, “Hey I was really intimidated at first, but now I feel so comfortable and so confident and it seems like there is just safety in numbers. When you get a lot of people together and they are all excited about doing their first deal and they are learning how to structure and do it the right way and make the right decisions and say no if it is not a good enough deal and make sure their first deal is a good deal not just a first deal.

John: You make a real good point, I think Larry, about there being safety in numbers. I would add to that continuity because I know just the repeat act of attending the meetings and attending the focus groups and the seminars and so forth and so on, it keeps you built up, it keeps you enthusiastic about all the opportunities that there are out there.

Larry: Absolutely, I have had people who have asked me before, “how long do I have to keep coming to these REA meetings?” My standard answer is, “until you start liking it”.

John: That is exactly right. Another thing too is just so the rank and file members of the group is not necessarily people who present at the meetings and so forth; but just rank and file members and particularly the seasoned investors are an incredible source of knowledge and information that everybody should be ready to avail themselves of.

Larry: I am a firm believer that a good idea does not care where it comes from. You don’t have to be setting next to Lou Brown or Ron LeGrand or Barney Vic or whoever to pick up a good idea. I mean, don’t get me wrong, these guys have great ideas, have great products, do awesome seminars; but you can learn a lot just by finding out at your local REA Group – Hey, who is player, who is buying five to ten houses a month, let me take them to lunch. You take your list of questions and you set down and nine out of ten of them will set there and they will just open up and tell you everything you ask them.

John: Oh yeah! I would say more like nine and a half out of ten. That was one thing that was really amazing to me is how willing everybody was to share the information that they have even though a lot of times we find ourselves in competitive situations you still got people who have a certain camaraderie within the group and are genuinely interested in helping those of us who are newly starting out.

Larry: That is why even in our Boot Camps, I don’t mean this is a bad way; but everything that we teach at our Boot Camp, I could stand up there and teach it the whole time, only because I have been exposed to it, that is the only reason. We have seven, eight, in fact I think in this one coming up in January at Myrtle Beach, we are going to have nine different speakers at the Boot Camp on a tremendous amount of subjects. These are people that specialize in certain areas and they know very detailed specifics about what it takes to be successful in their particular niche or area. That is why I like to bring in other people, just like what we are doing here tonight. I am firm believer in education and learning; and learning as much as you can from as many people as you can. Then you come up with your own conclusions.

John: I think that is a great outlook.

Larry: Yes it is, it is very exciting. I guess we have taken enough time on that.

John: Well it is easy to get excited once you start talking about it.

Larry: Oh, it is. I love it. Tell us a little bit about home buyers and investors, we often hear that we should get a property inspected before we close a deal. Why should we do that? Can I do it myself or can I get my rehab person to do it? Tell us a little bit about that.

John: Starting off with what I call the traditional home buyer, the owner/occupant, the majority of those folks just really don’t have the knowledge or training to know what to look for, in terms of the condition of a property. A lot of people have never even been inside a crawl space or even an attic in some situations; so for that person, the owner/occupant buying a house to live in is the largest single purchase and investment of their life; especially in the case of the owner/occupant. It is a place they are going to be coming home to every night and so emotion can get caught up in the process of buying a home. You know Larry, as investors, one of the first things we learn is: we should never fall in love with a property. For the traditional home buyer, the owner/occupant, that sometimes cannot be helped so that objective and educated and viewpoint of the condition of the property that a professional inspector can provide is going to be very valuable for that person. The person selling a home or an investor, especially a rehab or re-sale investor, there was a study in 2001 that found that 77% of buyers nationally and 80% of Southern buyers, got a professional inspection before closing the deal. If you are selling your house or if you are investing in a house that you are going to turn around and flip, a rehab and turn around and retail. It pays to know in advance what your buyer’s inspector is going to find. Of course, there are plenty of, in particular in the case of investors, people out there who do have the knowledge to make a pretty good assessment of a home’s condition, particularly those with some years experience. At the same time, it never hurts to have a second opinion; and quite often I have been fortunate in attracting a good bit of business from the investment community and quite frankly, what I hear is they either just don’t have the time that they would like to spend evaluating a property before they buy it or else they just really just don’t find
crawling around in a 24 inch crawl space to be a real good time. That is the angle from the Investors view point.

Larry: Exactly. You made a good point, in fact, the very first teleconference I did I had Mike Ivie, who is a friend of mine who does re-habs. He is a contractor and re-habs fifteen, twenty houses a year, I don’t know. As soon as he gets the house fixed up and ready to go on the market, he gets a home inspection so when he does get a buyer and the buyer starts talking about I need to have so and so look at this; you can rest assured because I have already had a Home Inspector come in and inspect the home. Here is what they found, here is what I did to correct it. Now you will get a clean inspection if you have one done.

John: Right and I think you make an important point there. I am really happy to hear that he is doing that. In my experiences it is pretty rare and kind of few and far between. Still the buyer is always encouraged to get his or her own inspection, because not everybody is going to be a ethical as the person you were talking about. They may have an inspection performed and than their documents may be altered, you know documents can be altered. It is unfortunate, but it happens. Just to maintain that arm’s length relationship, the buyer is always encouraged to get his or her own inspection, but I am really happy to hear that Mike is doing that.

Larry: He is and I think that is a great way to do it, especially if you are retailing a property. The retail home market is a little different in the sense that you are looking at somebody that is going to live in the house and they are going to be a little more, maybe critical, I don’t know if that is the right term or not. They are going to want to know every little thing.

John: They are going to be a lot more concerned, because they are going to be spending time in that house. That is where they are going to live. It is going to be home.

Larry: I remember when I bought my house, the one we live in now, I bought it back in May 1996 and when we had the inspection done, man you guys find everything. I mean, they noted that there was a small crack in the front walkway about ¾ of an inch high that could be considered a trip hazard.

John: Absolutely and I’m glad you mentioned that Larry because that brings up what to me is the most essential aspect of an inspection and that is safety. The very first thing that I look for, the question I am asking myself before I start an inspection and all throughout the inspection is “could a child get hurt here?” A simple little thing like that; and it is probably not something that the Seller is going to be sued for later if the Buyer’s child trips and scrapes his knee; but still safety should be the first and foremost consideration at any home inspection.

Larry: Absolutely, plus you want to know what works and what does not. Tell us a little being a professional Home Inspector. What is that, I mean do you have to be licensed, do you have to go to school, what kind of qualifications? What are we looking for and what is considered a Home Inspector, anybody can come out and say I inspect homes.

John: South Carolina is one of the few states in the country that has a licensing requirement. In order to become a Professional Home Inspector and become licensed you have to take a forty hour course, you have to pass a State exam, and there are certain continuing education requirements as well. North Carolina is also is a licensing state but a majority of the states are not. There are also professional organizations that offer certifications and continuing education, the organization that I belong to is called NACHI (The National Association of Certified Home Inspectors) and if we can we will talk a little more later about their website; because that is a great educational resource for people who are interested in things about the condition of the property they are considering.

Larry: I am sure that every state, because there are some people on the call here from other states as well. I am sure every state does have their own qualifications.

John: Actually, there are only; and I would have to go back and check because I haven’t looked. Some states have passed Legislation recently; but it is only a minority, fewer than half of the states actually require a licensing for Home Inspectors. In South Carolina and North Carolina that is a little bit of a reassurance for the client who is hiring the Home Inspector to do the inspection.

Larry: I guess, also, some states will allow licensed Contractors to do the inspection.

John: That is right. That is what I neglected to mention a minute ago. In South Carolina you do not have to take the test if you are a Licensed General Contractor or residential builder. You automatically qualify to do home inspections. Those are the only two exemptions to the requirements for training and for passing the test.

Larry: Tell us a little bit about, how long does an inspection normally take? Is that something that you go out there and spend all day or how long, and you prepare a report I know. Tell us a little bit about that.

John: The average inspection is going to take two to three hours. My inspections physically take a little bit longer depending on the age, general condition, features of the house, I might spend up to five or six hours on a 2,000 square foot house or even on a smaller house if it is very old or has a lot of damage and so forth. Myself personally, I very rarely book more than one inspection per day, I am just more comfortable doing business that way. Some inspectors do, book more than one per day and that is not to suggest that my inspection is necessarily better than anyone else’s but I do usually take more time than what you will find with the average inspection. Report format and delivery is going to vary from one company and one inspector to the next. Some inspectors use checklists that are filled in by hand, delivered to the client immediately after the physical inspection on site. Other inspectors use laptops or PDAs to take their notes while they are actually going through the inspection and they have portable printers and they actually print the report on site. I use an online reporting service called Report Host. In a typical inspection, I will finish the physical inspection go back over my notes, come back to the office, write up a report and then file it online and e-mail the client, usually that same evening, the web address URL of his or her specific report and than delivery a hard copy the next day.

Larry: That is neat, that is really good. I am actually on your site right now looking around.

John: I hope you are able to get in, because my ISC Server was acting up.

Larry: I am actually in and looking around. If there is anybody would like to, why don’t you go ahead and give out the web address. We will do it again at the end, but in case some people would like to look at it.

John: Sure, absolutely. assurance-south.com is my website and e-mail is john@assurance-south.com.

Larry: I have noticed in these inspection reports, you guys take a lot of pictures, don’t you?

John: Yes, some of us more than others. I have really been trying to rein myself in lately because printer ink is getting so expensive, but I typically tend to shoot pictures of even the most minute little problem or concern that we happen to notice beside obviously cosmetics and that kind of thing which we really do not concern ourselves with as long as the cosmetic issue is not an indication of another problem. We put a lot of pictures into each report. On my site at the bottom of each page, there is a link to a sample report which at this point in time probably needs to be updated. It is an overall flavor of what my reports include and then most inspectors, most inspection companies now have websites where you can go on and look at their sample reports and I would encourage anybody who is considering inspections to do that just so you will know in advance the kinds of issues and thoroughness of that inspectors work and his report.

Larry: And what you are actually going to get. You do not only the full report, but you also provide a summary, just a brief description of every area and what you found, right?

John: Right. Some people want to cut straight to the chase, they do not care about the pictures, they want to see just hard information and so we take out all the pictures and include nothing but the concerns and the summary.

Larry: That sound like me.

John: Yes, Larry that does sound like you.

Larry: I noticed there are fifty-one different sections in your summary report of the different areas you cover and can write a detailed description about.

John: That is simply a summary of the various concerns and all that turn up during an inspection itself. The inspection itself, the items we inspect are what we call the major systems that make up the home. The exterior and grounds, the foundation, the structure, the electrical, plumbing, HVAC and of course the roof system. Inspection reports are broken down into those general categories and individual concerns in those categories are noted there.

Larry: Tell me about, you know. When you get a call from somebody, whether it is a buyer or seller, am I able to be out there with you while that inspection is going on?

John: I absolutely encourage the client, whoever the client happens to be, to be on site for the inspection. Per the client’s wishes the agent and/or the seller or the other party in the transaction are also of course welcome to be there, but the client. It is almost like a realtor’s relationship with a client. Whoever hires me is the person whose interest I am charged with looking out for. The client has the option of inviting or not inviting his agent or the seller or whoever to the inspection itself. Sometimes occasionally, very occasionally, a realtor will come and take part in the inspection; but realtors typically do not have the patience to hang around that long and typically have other things to do so quite often the Realtors task is simply to show up at the appointment time and unlock the house. Once again, that is entirely up to the client. I absolutely encourage the client to be there because the whole point of doing the inspection is to educate the client about what is going on or why this is a problem or why that is not a problem.

Larry: For the most part, the client is probably is more than likely the buyer, right?

John: Typically, in most cases. Now I have done Seller’s inspections and they do come along.

Larry: Like what we talking about Mike does earlier.

John: Exactly. I would say a good 80-85% of the inspections I have done have been Buyer’s inspections.

Larry: Does the buyer, or your client, have any responsibilities before the inspection?

John: They do, there is a fairly – I don’t want to say limited – but there is fairly well defined scope to the typical standard home inspection. Just for the sake of a definition. Physical examination of the major systems that make up the home that we listed a minute ago. It is important to remember, Larry, that the standard inspection is a non-evasive inspection limited to readily accessible areas and only uses normal operational controls, such as mechanical systems and appliances. There is one exception to that and that is the cover on the electrical service panel that is typically removed to inspect inside the electrical panel, but nothing else gets taken apart. Basically, the inspector’s job is to observe and report.

Larry: There is some areas you cannot get to or I guess cannot reach or whatever, right?

John: If an area is inaccessible, the inspector will simply note “not accessible, not inspected”. I did not answer your previous question completely. Responsibilities of the client, of course, there are some but if he or she is using a Realtor it is a great opportunity to pass the buck for those responsibilities unless the Realtor and the Commission. For the most through inspection – all utilities should be turned on and functional before the Inspector arrives and by functional, I mean it is not enough to have the water turned on at the street. If there is a main shutoff inside the house, that should be turned on as well as individual shutoffs to faucets, toilets. Same thing with the electrical, not only should be meter be in place and the service turned on, but the main breaker and all circuit breakers in all the panels in the house should be turned on. If there is a gas or oil furnace to be tested, those fuels should be available and “turn on ready” basically. The reason for all of this is that when Inspectors walk into the house for the very first time he or she has no idea whether there is a bad valve on the water heater or a leaky shutoff somewhere, a dangerous electrical condition or whatever. Very few inspectors will energize shut down systems, even to the point of flipping circuit breakers what are turned off; because of safety and liability issues that are involved there, so that is a responsibility of the client. This time of year a lot of vacant properties have been winterized. The client should be aware, the Realtor should inform the client, of this. If the house is de-winterized for the purposes of inspection, the client is typically responsible for the cost of re-winterizing the house. Putting anti-freeze in the drains, turning off the water supply and draining all the faucets and toilets and so forth and so on. That should be performed soon the inspection unless the utilities are going to be left on so the pipes do not get cold enough to freeze. The client is also responsible for securing permission for the inspection, to enter the property and to make arrangements for access; typically the Realtor showing up to open the house at the time of the appointment for the inspection. All of these responsibilities are typically outlined in the Inspection Agreement which the client signs before the actual inspection takes place.

Larry: Let me ask you this question. A lot of the properties that we buy are bank foreclosures, we don’t typically get the power turned on before we buy it. You can still do a lot of inspection, just not the mechanical part of it?

John: Absolutely. Obviously, we want to be as through as we possibly can. If a particular utility is not available and therefore not able to test a furnace or an electrical appliance or whatever, that is just noted in the report, basically it is just left out. We prefer not to do that; but as long as the client, investor, the buyer is aware that that particular item has been excluded from the inspection and will be excluded from the inspection and they are comfortable with that then everything is fine.

Larry: Tell us about this. We have talked about a lot of the things that you do cover in an inspection, what are some things that are not included in an inspection?

John: Going back to what we said earlier, it is a visual non-evasive inspection of the property. We mentioned the consideration of the utilities already. It is important to note, Larry, that the home inspector is a generalist not a specialist. The report is typically not going to include a diagnosis of problems observed or recommendation for action, but simply the observation of the problem itself. For problems other than minor issues that the average person could take care of without much trouble, the inspector is typically going to recommend further evaluation and repair by a qualified specialist in whatever field that particular problem happen to occur, whether it is the HVAC, the electrical or what have you. Probably easier to reiterate what the inspection does include: visible areas, components, equipment that is operable using normal control. For instance, a standard inspection is not going to report on a cracked heat exchanger that is not visible through the vents in the furnace cabinet, most of them aren’t. The inspector will try to determine the age of the furnace and if it is reaching the end of its, what is thought of as a typical lifespan, he will probably recommend evaluation by an HVAC specialist even if the unit appears to be working properly during his inspection. So then it is up to the client to decide whether or not to follow that recommendation. Other things not included. Obviously, things that we cannot see: an underground oil tank where the filler neck has been removed, cosmetic issues which do not appear to be the cause or result of a more serious problem.

Larry: You are not really supposed those filler necks from tanks underground, are you?

John: Well, oil tanks are a whole other thing and people need to be aware of the liability associated with them. You are not supposed to remove the filler necks, but I have seen it three times that I know of; because I was told the thing was there otherwise would be no way to know.

Larry: Right, and I have heard people say that “it is an old tank, you just cut the top off and fill it with sand and then cover it up”. I don’t think that is a good idea, is it? You are not supposed to do that, are you?

John: No, there are companies that, and sand is typically involved in decommissioning the thing, but it needs to be decommissioned by a professional. It needs to be professionally pumped out and then the sand added, ideally the surrounding soil checked to make sure not leakage has already occurred because that does become I huge liability issue. If either DEHEC or the EPA discovers that a leak has occurred there, at the end of the day, the owner of record of the property at the time of discovery is ultimately responsible. Now, they may go after prior owners first, but at the end of the day, the current owner of record is going to be responsible for the cleanup and that is not cheap.

Larry: You know, I can tell you this to. My wife had a house that was for sale. After we go married, we fixed it up. We actually finished the basement and put it on the market; and it had one of those tanks and the pipe was sticking out of the ground about a foot and a half high. You know, a few feet from the foundation. You could see it as plain as day; and several people said, “Oh that is going to create a problem, you need to cut that off and fill it up and bury it.”; but I never did. I left it there and we sold the house, it was never mentioned, the buyers, inspectors never mentioned it, that we are aware of, the Lender never said anything about it and it closed without any problems.

John: To be perfectly honest with you, I would suggest that maybe the Inspector should have made mention of that, just because underground tanks can be such a liability with regard to leakage, but I am glad you did not try to hide the fact that it was there. I am glad that it did not impede your ability to sell the house.

Larry: I figured, well you know, the worst thing that could happen in that we would have to take it out and have to remove it. That is just a part of life we are going to have to deal with it. We are not going to try to hide something.

John: De-commissioning an underground tank is a lot cheaper than cleaning up one that has leaked. You are talking maybe $500.00 to maybe $600.00 to a tank specially de-commissioned if it is going to stay underground. Maybe a little more to have it dug up and taken off; but it is not something that is going to ruin a sale.

Larry: Are there companies that do that kind of work?

John: There are, and if anyone wants get in touch with them, or if they have more questions, I have one company specifically that I know of in the upstate that handles that. Of course, they are online. Online search would be a good way to turn those up, but quite often a lot of oil companies will offer that service.

Larry: That is good to know. I did not know that, John.

John: Some do, not all do but you just have to look around and find them where you can, but they are out there.

Larry: You can contact an oil company and if they don’t do it they probably know somebody who does. You have talked about a lot of things that it does cover and a lot of things that it does not. What about some specialty type inspections, like I know you are not specifically looking for or doing a termite inspection, are you?

John: Absolutely not. The standard home inspection should never be considered a substitution for a Termite inspection. In South Carolina, an individual must be specifically licensed as a Termite Inspector as in most states, unlike Home Inspection, in most if not all states they require specific licensing to be qualified to issue a Termite letter. Now that said, any Termite damage that is observed during the course of the inspection should be photographed and reported in the standard Home Inspection, but the absence of that observation in the report should not be construed as the property is free from any current or prior infestation.

Larry: Remember, as an Investor, termites are our friend.

John: Oh absolutely, because they are so scary.

Larry: You can fix the termite problem, it is the Seller or the Bank that does not want to have to deal with it. Termites are your friend. John, what about mold? Do you inspect for that too?

John: I do not. Mold is tricky. There are many home inspection companies out now that are including mold analysis in their inspections. Either part of the inspection or as an add on. I am not aware of any current licensing requirements in South Carolina regarding mold inspection. For that matter, you can even buy a “do it yourself” test kit for mold on line. Now Larry, in the inspection community there is a fair amount of controversy about whether an inspector who is not specifically trained and certified in mold should be offering mold analysis. Just because it might lead to a false sense of security on the part of the client. Again, standard inspection, visual inspection of readily accessible areas. Just like with termites any mold that is observed during the inspection should be photographed and reported. The standard inspection is probably not going to reveal mold that may exist inside duct work or other areas that are not visible during inspection. Once again, we do not take things apart except for that electrical service panel. My personal opinion is that mold inspection and analysis is better left to those specifically trained and certified in that field. There are environmental service firms out there that specialize in issues like mold, and that is why I do not currently offer mold inspections. At any rate, if the client does contract with a Home Inspection Company for inspection that includes mold inspection and/or analysis, the client needs to read the fine print real carefully and ask specific questions about the scope of the mold inspection itself. Radon is another issue. Radon is kind of the mold of yesteryear because nowadays nobody seems to care much about Radon. Which is really kind of ironic, because there are several counties in the upstate that are hotspots on the EPA map for Radon. I do offer Radon testing because the Radon test is much more cut and dried. If someone is concerned about that, I do offer that as an add on to the standard inspection. The EPA Compliance Test is very cut and dried.

Larry: What about lead based paint?

John: Lead based paint, if the house you are buying was built before 1978 there is a possibility that the house has layers of lead based paint. Probably not as the top layer, but quite possibly underneath and the client needs to be aware and the Inspector is responsible to inform the client if the house is known or appears to be build before 1978 then the inspector need to inform the client of that possibility. There are several great publications on both lead based paint, asbestosis as well as mold and Radon and the other things we talked about available on the EPA’s website. So that is a great resource for people who have concerns about those particular issues.

Larry: You know now with the lead based paint laws. If a house is built or was built prior to 1978, you have to, either as a landlord or as a Seller, give the lead based paint disclosure brochure.

John: The brochure that the EPA does publish. You are absolutely right, Larry. That is something that particularly an Investor would want to be familiar with; but also someone who is going to life in the house; and again, the lead based paint is typically not going to be a problem as long as it is covered up by another layer of paint and does not get disturbed. The problem occurs when you go in and start sanding areas that may have lead based paint that will release that lead into the area. Those dust particles that may contain lead into the air and that starts causing health problems that we worry about. Asbestosis is kind of a similar situation. You know a lot of the blown ceilings before the 1980s contained asbestosis as well as other building materials and insulating materials and so forth that contained asbestosis.

Larry: In the attic?

John: Possibly in the attic, for much older houses that can be a concern; but for asbestosis that is not readily crumbly, it is not likely to be disturbed in a way that would release asbestosis fibers into the air. It is typically does not have to be a big concern. If it is painted over, sealed and not accessible for instance for children to scratch at or whatever, typically does not have to be a concern, but definitely something to educate oneself about.

Larry: That is good information, that is good to know. What are some examples of defects or things that you might be looking for, might find in an inspection?

John: What we mentioned earlier, that is job one. That is first thing we are looking for and once again could a child be hurt in this house. Let me give you an example. I did a fairly large nicer home in an older golf course community a couple of months ago. It had been really well maintained and had very few concerns, but the electricity service panel was mounted on the exterior of the house which in itself is not a problem; but when I opened the hinged cover for the service panel, the depth front cover was completely missing from the box. So the bus bars, wiring all totally exposed; and within easy reach of a wandering child. The panel was also of a brand that is well known to be problematic, even when it is properly mounted and covered, so that is a red flag that goes fifty feet in the air when you see something like that. Other safety issues that you are looking for. You are looking for handrails, guardrails with openings between the spindles, the balusters that are large enough for a child’s head to get stuck in for instance. Looking for receptacles near sinks or outside that are not ground fault protected. Looking for folding attic stair units that are not properly fitted into the framing. Ranges that are missing anti-tip brackets and on and on for safety issues and of course, there are dozens and dozens and hundreds of general structural issues and water problems and so forth and so on.

Larry: That is a lot things you need to be looking for, isn’t it?

John: And again, I think for most home buyers and some of the inspection community there are things that you get caught up in the process of buying a house and you just don’t happen to think for this one thing or that one thing and quite often the one thing that you did not think to check for is what is going to come back to bite you.

Larry: Are you looking to see if the home meets certain building code requirements?

John: No, a home inspection is not a code inspection per say. As an inspector I do not quote building codes. I am required to be familiar with them. It is kind of an odd situation, part of my education and training and continuing ed is to remind me to stay up on how building codes currently exist, but it is not like a county building inspector who goes in and checks for code compliance on new construction or a major rebuild or something like that, once again, I am familiar with it but I am not qualified to quote code.

Larry: It is still good to know the code. Is there such a thing as a house failing an inspection, or do you just give your report and let it fall where it may.

John: Thank you for asking that question, Larry. There is a radio commercial up here that airs occasionally for a gutter company. That says that water damage caused by faulty gutters is the “Number one reason that homes fail inspection”, every time I hear that I want to throw a brick at the radio. It is very true that water damage caused by faulty gutters or poor installation or whatever is a very common defect, there is no such thing as pass or fail a home inspection. The Inspector’s job, once again, is observe and report. If there is any kind of pass and fail involved, it is going to be on the part of the Client once he or she gets the Inspection Report and decides on a course of action. There is another story too about that same house with cover breaker panel. A couple of days after that I got a call from the Electrician that my Client had hired to further evaluate the panel. Of course, that was my recommendation to be immediately evaluated and repaired by a qualified specialist. I had also mentioned was of a brand known to be problematic. The electrician asked me what I required with respect to the panel; I thanked him for bestowing me with authority I did not have. It is really not up to me to require anything. The Home Inspector’s job is not to accept, reject, approve, disapprove or require, the specific recommendation for a remedy to a concern lies with the specialist that the Client hires if the Client follows the Home Inspector’s recommendation to do so.

Larry: I bet probably what that commercial is talking about “failing” an inspection is when a Lender is requiring something to be done.

John: That is another very good point. Occasionally and Inspector will hear something like this from the potential Client “Well, I know there is problem with the roof that my Lender might disallow my loan if that is in the Inspection report, can you leave that out?” the Client always wants to serve the Clients best interests but ethical consideration dictate that always report any defects observed during inspection. In that particular case what I would probably agree to do, is exclude the roof from the inspection entirely and note on the report that the roof was not inspected at the request of the Client and include language that means this report does not fully comply with the state’s standard of practice of Home Inspection. If that is in the report, if the loan is contingent on the results of the inspection, the Lender is going to want to know why the Client wanted the roof excluded. We really want to keep clean and ethical and above board.

Larry: Yes, and you want to protect yourself too.

John: Oh absolutely, there is no doubt about that.

Larry: You do not want to be responsible if something comes later about the roof, let them know exactly why you did not inspect the roof and it was the Client’s request.

John: I will not inspect something if the Client asks me not inspect it; but I will not purposely leave something out of the report for some alternative motive like that.

Larry: I do not blame you, it is just not worth it. A lot of the homes we are starting to buy now are not that old, maybe only five or ten years old and they look like they are in pretty decent shape. Do we really need to get a home inspection?

John: I’m glad you asked that too Larry. Believe it or not I have some more stories. Back in the summer I did probably the most expensive house that I have ever done. It was a half million dollar house in Greenville. It was occupied and fully furnished at the time. Only twelve years old, generally looked to very well maintained. As a matter of fact the Seller was on site supervising some maintenance work while I was there doing inspection. It was in a very prestigious area it was a very attractive home and the crawl space was so wet that you could have probably stocked it with trout. There was power vent fans running, sump pumps, so forth and so on; but there was very real problems with water in the crawlspace of that house. So, another example: a four-year old tract house that I inspected that was on a slab foundation. It was a nice quite little neighborhood developed by a national builder, you would recognize the name if I tell you what it was. They had gone in along the bank of a creek and put in a retaining walls and then back filled and built a row of slab houses. The only problem was that they obviously had not back filled correctly against the retaining wall because the house was literally breaking in half. A four-year old house now, visible exterior crack in the slab, perfectly adjacent to cracks inside that were opening up in the interior walls. I felt really sorry for the young woman who had bought the house new. A young woman in her twenties and what she was looking for from me was documentation, by a certified inspector, to the fact that yes there are some serious problems here because she kept getting the run around every time she would complain they would send over a drywall guy with some mud and they would splash it over the cracks or whatever else inside and they would just keep opening up and the doors are starting to stick and all that stuff. Just because a house new or newer not so old, just because it looks good. Before you started looking for the cracks this house looked great; but that does not necessarily mean that you should not have the house inspected by a professional inspector.

Larry: Let’s talk about the other extreme. I also buy some houses that are pretty old. Sometimes I get somebody on the phone and say now when was you house built – in the 1900’s. What are some of the specific things in houses like that.

John: You are talking about a lot of properties that are of interest to the Investor community. Just like even newer houses are always going to have some issues that is going to trigger a flag in a home inspection. I tend to be pretty picky and report everything that I find, but I also make it clear to the Client that perspective is really important. A saggy floor in an eighty year old house does not necessarily indicate foundation problems or other major damage. It might just be the result of some normal settlement of one pier over time. Just like people, houses develop health problems, get sick, have to be doctored from time to time, but the common cold is a lot more common then pneumonia. Get back to the specific question, things that we often find outdated are electrical systems; galvanized plumbing that is well past it’s expected life span; uneven settlement is a real concern it can cause some serious foundation and structural problems. There are any number of things that can be wrong with older houses. Once again, something else to consider is that in a lot of cases and I don’t speak badly of modern builders or whatever, but in a lot of cases you will find despite being eighty years old, some houses back then were constructed an awfully lot better then some of the construction you run across today. The house has been standing or eighty years without my permission. I should be so lucky to last that long, So once again, perspective is important, we will look for those serious problems; but we want to know which problems are serious and which are not. That is what we are concentrating on in the older house. Something else that you see a lot of is what we call the “harried homeowner” amateur attempts at repairing things, like pounding wedges underneath support beams, on top of foundation piers that kind of thing. Things that need to be addressed but the house will fall down tomorrow because of them. It is a slightly different approach but at the same time, the same approach as what we look for in new construction.

Larry: I guess this is one case where the old saying “they just build them like they used to” is really true?

John: It is unfortunate, you are seeing things like the manufactured joists and so forth. Now materials, I think, are even as much or more than the situation with the built quality in older homes, the materials were so much better; because hardwood were abundant and the material themselves were just of better quality because we had not used up so many of the planets resources at that time. It is the new material and so forth and construction, of course, are all related to economies and trying to maximize the economic return on the investment of building a house and if they are done right they can be just as good as an older more stout construction, but it is important that they are done right. Go back to the example of the cracking slab house.

Larry: Let me ask you this question, John. You know I am a Licensed Contractor in North and South Carolina as well. There are times when you want a full blown inspection, but there are also times when maybe I just want to have somebody go out and check a few things, maybe I cannot get to; like a narrow crawlspace or an attic that you cannot get into really well or something. Is that something that you can do and what would the difference be in the price of something like that?

John: Yes, that kind of thing is available. I do it, other Inspectors do it, particularly for Investor Clients that we have developed relationships with and we get to know. One thing about Inspectors working with Investors, is that Investors are repeat business for home inspections. The traditional owner/occupant buyer may buy a house and live in it for fifteen or twenty years and while I may get a few referrals from them I am not going to get any repeat business. Investors are constantly buying and selling so they are repeat business for us. To get back to the question, yes we can do mini-inspections and inspect only specific components of the property at a reduced cost; the cost is based entirely on how much work is entailed and how much time is involved. What we do in those cases on the inspection report is to note that at the Client’s request once again a full inspection was not performed and so the inspection should not be considered in compliance with the State’s standards to practice. Once again, as you said earlier, that basically is to protect the inspector. You know, why didn’t you do a complete inspection; that was what we contracted for. I have my Investor Client’s who tell me, “I want to be looking at houses, I wan to be going out and making deals and so forth, I don’t want to be crawling around a crawlspace, fighting camel crickets and spider webs and everything else”, so that is a service that we try to offer when it is requested.

Larry: Camel crickets, I never knew what those things were called, but I knew as soon as you said that exactly what it is.

John: Well, I just heard that term the first time myself. I always called them Spider Crickets, but then someone told me that the correct name for them was “Camel Crickets”. It is kind of a weird feeling to crawl inside a crawl space and get half way up in there and turn on the flashlight and shine it on the wall and see 150 to 200 of those guys just sitting there staring at you.

Larry: It is funny and I knew, as soon as you said that, exactly what you were talking about; because I have seen hundreds of them.
I wanted to ask that question for everybody listening, but I actually knew that you would do that because you have done that for me before in the past.

John: I have and look forward to the opportunity to work with you again and anyone who is interested in that kind of thing, we will do everything we can to tailor an inspection to the Client’s specific wants or needs outside of what we discussed before – doing something that might not be entirely ethical. Full disclosure as to what was done and why it was done this way, or why something was not done and we are happy to provide the service the Client needs.

Larry: Let me ask you this, this is a very important question. I have bout house before, talked with Sellers about houses and they say, “Oh, I have already got and inspection”. I understand if I was selling a house and I would get one that I know if the inspector comes and says there is something that needs to be done, that I would do it and that would be the end of it. Should I rely on somebody else’s inspection?

John: Is human nature always 100% reliable or 100% dependable? Unfortunately, that is not the case and once again the buyer is always encouraged to get his or her own inspection. One thing that I will tell you about my Company, Larry, is that I will decline to inspect the same house for both the Buyer and the Seller. There is no dual agencies when I do a home inspection just to avoid any appearance of a possible conflict of interest. If I had done an inspection for you as a Seller and then you said, “Hey, John Edwards is a great Inspector, you need to give him a call and have your inspection done by him”, I would decline that inspection simply because you were already my Client on the transaction.

Larry: Right, I’m with you. That makes sense. But you are going to inspect the same, regardless of who it is?

John: Absolutely. The standards are very clear and the things we are looking for are not going to change, except possibly stylistic from one particular house to the next. We want to give as though an inspection within the standards of a standard home inspection as we possibly can.

Larry: Now what about this, I know some inspectors and you included also do remodeling work or are contractors do remodeling. Tell us a little bit about that and what you look for and expect when your inspector is the same one doing the work?

John: Well the Inspector should not be the same one doing the work. According to South Carolina Standards of Practice once again, an Inspector must restraint from doing repair work on a property that he has inspected for a period of 12 months. It is permissible, for instance, if the Client wants to retain the Inspector as a Consultant after the inspection and have the Inspector kind of supervise and sign off on whatever repairs are made, as long as the Client has hired the Contractor’s independently. The Contractor’s do not have a business relationship with the Inspector. That kind of thing is permissible; but for the obvious conflict of interest reasons in general the Contractor or the Contractor’s company is forbidden from doing remodeling work on houses that they have inspected for a period of 12 months.

Larry: That makes sense, I never really knew that.

John: Once again, I could come in and tell you if you were not a knowledgeable Investor, or not a knowledgeable Real Estate professional I could come in and tell you – “you know, Larry that floor is going to need about $5,000.00 worth of work, there is an awful lot of rot under there, but I tell you what since I did the Inspection for you, I think I can pull it together for you for $3,500.00, how does that sound to you? Of course, you are going to be lapping that up – you know great, I am going to safe a bunch of money because my Inspector is doing my repairs. Wherein the floor may actually need no repair or only a few hundred to a thousand dollars worth of repairs. That is the kind of possibility of an appearance of a conflict of interest that those regulations are designed to prevent.

Larry: Tell us a little bit about you John. I know you do Home Inspections, but what else do you do?

John: I have been branching out, of course; maybe we mentioned that I have my first rehab property on the retail market and I am also starting to do some light remodeling work. Both for Investor and just the general public, although not people I have done inspections for on that same property. I am also moving into doing some protection and preservation work for REO properties, the Lenders as well as doing, for some time, I have been doing drawing inspections. Something else that I have worked with a fantastic company called Financial Help Services with and doing drawing inspections both for rehab loans and for new construction loans. Any Mortgage Lenders or Bankers that are maybe listening in on the call that service is available in the upstate as well as in Western North Carolina. Feel free to get in touch on that.

Larry: Man, John this was been a tremendous amount of information. The time just flies by.

John: Yet it doesn’t seem to like it was much information at all, so I hope there was something useful there that you all can take away.

Larry: It has been a tremendous amount. Why don’t you tell me how wide of an area do you actually cover?

John: Typically the counties that make up upstate South Carolina for Standard Home Inspections, I am not currently licensed in North Carolina, because frankly, I just have not had the time to go through the process yet. Because you do not have to be licensed to do drawing inspections or protection, preservation work, I do offer that in North Carolina as well as South Carolina. My general area of service runs from about Cherokee County, maybe over into York County in South Carolina on over to Pickens and Anderson.

Larry: Would you inspect one for me in York County?

John: Would I inspect one for you, absolutely.

Larry: Okay, call me tomorrow and I give you the address and I’ll meet you over there at the house I need to get you to inspect.

John: Alright, that sounds great. We will definitely take care of that.

Larry: Why don’t you give the people listening your contact information. Do you mind if people would maybe call you from even out of state John. I know you are great to work with and you have done inspections for us in the past; and you know I am going to get you to come up and do this one up in York, you have done stuff for us in Gaffney and Spartanburg and around. You wouldn’t mind if people, maybe even from out of state, would contact you just to ask you a few questions and that sort of thing, would you?

John: Absolutely not, I would be happy to do that Larry. I also want to share a great educational resource on the website of the National Association of Certified Home Inspectors (NACHI) it is nachi.org, and outstanding website with all kinds of information about Inspections, about Home Construction, so forth and so and a great feature of that website is that there is a public bulletin board where anyone can come in and ask questions which they may have about specific items – HNAV, electrical, plumbing, structural, roof, foundation or whatever and have those questions answered by a NACHI Certified Inspectors. That is something I hope everybody will avail themselves of, once again it is nachi.org National Association of Certified Home Inspectors.

Larry: It is a great site, I’m on it now, I’m actually on the Bulletin Board right now. I was on the site. I saw your name listed there as an approved NACHI Member; and there are categories on the Bulletin Board under General, Announcements, State Legislation, Exterior, Interior, Electrical, HVAC, Plumbing Structural, Education, General Tips, Hardware, just a tremendous amount of information on the Bulletin Board. It is a very active Bulletin Board.

John: Just like we talked about earlier with the Investment communities that I had found investment communities so willing to share information, you find the exact same thing with the NACHI Certified Inspectors who hand out on the NACHI Bulletin Board. Always very willing to try and help whenever they can. Especially if you have a question about a specific issue in a house you can take a digital photograph, you can upload that to the Bulletin Board along with your question. That will be a great help in the Inspectors having a look and maybe being able to give you some ideas of what the particular issue may entail. Once again, great resource and I hope everybody will take advantage of it. My information is Website – assurance-south.com; e-mail – john@assurance-south.com; telephone – 864-494-3026.

Larry: Take a minute and tell us about your Investors website that you came up with.

John: I was going through a slow period several months ago thought it would be a good service to put that up online and then maybe look down the road with that being a revenue producing sight, once I start offering paid advertising and of course, as soon as I got the thing on line I got too busy to maintain it any more. So the best I can do anymore is try to go in and update the articles and maintain classifieds, but hopefully there will be some time in the future to keep it going; but it is self-service, if you have a product you want to list, if your are looking for a property, if you have a work truck you want to sell or just whatever and once it is intended primarily to upstate South Carolina and Western North Carolina hence the name – upstateinvestors.com. Anyone is welcome to go in and post away on the classified. Hope people will take advantage of it and once again, always looking for articles for ideas for someone in a particular area of specialty in Real Estate is willing to submit an article to be considered for the site, I would really love to see them.

Larry: I really appreciate having you on the call tonight, John. It has been a lot of fun

John: It has been fun Larry. It has been a great time and of course, you are one of the guys I was talking about being so forth coming, sharing information and so forth and so on. I want to thank you for that and for the opportunity to be on with you tonight.

Larry: Before we go, I do to take just a minute and tell people who are the call about our upcoming Boot Camp. It is going to be in Myrtle Beach. January 28, 29 & 30. It is $1,495.00 that includes two free nights a Myrtle Beach at the Landmark Resort Ocean Front and we are also going to have Saturday a Lunch and Learn where we are going to pay for your lunch and we are going to spend the lunch doing that with Q & A and a little extra. We are going to have nine different speakers. That is going to be myself, Wendy Sweet is going to be talking about creative financing strategies and understanding financing, Turk Atmay who has been on the Teleconference before is going to talk about putting systems and processes and procedures in place and goal setting as well as Fred Hoffman who spoke in Spartanburg and speaks around in a few different places, he owns right at a couple of hundred houses and he is going to talk about his system and how he sets up his business and operates it and he is extremely successful, we are going to have Gary Bradco who is a good friend of mine that specializes in foreclosures and that is what he does every month is buy foreclosures at the auction and pre-foreclosures, I am going to have John Morrow who has been on the Teleconference before, this guy buys luxury homes. He makes a minimum of $200,000.00 a deal and I just talked with him and he has worked it out where he can come to the Boot Camp and talk and tell us about how he buys luxury homes. The we are also going to have Roger Schwartz who talks about Commercial Real Estate and Development, another gentlemen that is coming in that works with John Kale from Prism Financial going to talk about how to finance a commercial deal, then I believe I am going to get Graham Treakle who is now becoming a National speaker and is going to talk about short sales. It is just a tremendous amount of information, not only do you get three days of intense training, I am going to make live phone calls, right on the spot, negotiating deals right in front of everybody. We are going to talk about every conceivable method to find properties, how to manage properties, all the forms and documents, you get a CD with fifty-eight forms and documents on it, a 428 page manual to go along with it and you get a copy of the live phone calls and when you sign up, we also throw in the Insider’s Guide to Financing for Investors as a primer to get your ready for the Boot Camp, that is a product that we sell for $400.00 and we are throwing it in as well. If anybody on the call would like to sign up, I will be at the office for the next little bit, probably twenty or thirty minutes working on some things on the computer here, you can call a new toll-free number: 877-LarryGoins, of course you do not need all the letters, it is 877-Larrygo. If anybody would like to call and sign up for that, we have I think we have about 22 or 24 seats left, something like that. We can only take about 55 people I believe it is, but we have about 22 or 25 seats left, I think there might have one or two people today called in so if anybody has an interest in that or even any questions about it, please feel free to give me a call and we will be glad to get you signed up for that as well. So with that, John I really appreciate you having you on and seriously if you will give me a call at the office tomorrow I will get you the address for that property and I can meet you over there and we can go out and I would like to walk through it with you when you do the inspection.

John: You just gave an opportunity to mention something that I had completely neglected to mention throughout the entire Teleconference. That is that I do offer an Investor discount.

Larry: An investor discount excellent. That is an important thing John.

John: The money is something we want to keep in mind, isn’t it Larry?

Larry: You don’t want to forget that, we are Investors and we are tight. John, thanks again, I really do appreciate it and look forward to working with you more in the future. Hope everybody on the call has a great night, next week when you call in we are going to have Donna Boyer who is a National Speaker. She is going to be a Metrolina REA in January and she is known as the Note Lady, she is going to be talking about buying and selling discounted Mortgages and she is a National Speaker, Author, Trainer, and Investor and she will be on the Teleconference January 5. She will be on our call next week. So everybody look forward to that and thanks so much for calling in and John you have a great night.

John: You too and I would also like to thank everybody for calling in Larry.

Larry: Sounds good, thanks a lot!

Hi, this is Larry Goins and I would like to thank your for listening to this audio program and I would like to remind you to please visit our website at www.larrygoins.com for other information as well as we have a link for freebies, we have articles that you can read and I would like to share with you that we also offer one day training events for basic Real Estate Investing and we also have three day Boot Camps as well as the Boot Camp in a Box, which contains the complete three day Boot Camp on Audio CD as well as DVD Video. Please visit our website for the location and schedule of our one day and three day Boot Camps coming up. We also have a home study course called The Complete Insider’s Guide to Financing for Investors which consists of over 500 pages in the manual and ten audio CDs as well as two forms disks and other products and services as well. We also offer personal coaching and mentoring so whatever you needs may be, please feel free to give us a call. If you are a Real Estate Group, Investor Association, Mortgage Company owner or other Organization and would like to have either myself or Wendy Sweet or Leon Humphrey speak at your group about Real Estate and Finance and Investing, please feel free to give us a call. Our direct office number is: 803-831-0056, I am at extension 304, Wendy Sweet is 310. I would also like to remind you that we also offer traditional financing as well as hard money and re-hab loans for investors. Please visit our website there at www.financialhelpservices.com. Thank you very much for your business, we sincerely appreciate and please remember: Our Mission is to Put People and Principles in Front of Profits, when we do that everybody profits.

Thank you and have a great day!