Condition is Critical
by Don Dunning, ABR, CRB, CRS
DRE Lic. #00768985
Originally appeared in Hills Publications, April 9, 1999 and
ANG Newspapers (Oakland Tribune, Alameda Times Star, et al), April 17, 1999

The condition of a home is one of the key elements in determining its value. This is particularly true at a time of high and still rising prices. In a seller's market, buyers have the double pressure of having to compete with many others for the same house while trying to determine a reasonable offer without knowing its true condition.

Like our bodies, systems in a home tend to wear down with time. Items such as plumbing and electrical are not the most expensive. Drainage and foundation, on the other hand, may run into tens of thousands of dollars.

Pre-sale inspections

During a general home inspection, the roof, heating, plumbing, electrical, drainage, foundation, and framing systems, as well as other aspects, are reviewed. Fewer than five percent of all new, local listings have a pre-sale inspection report by a professional home inspector. In addition, many sellers and their agents will not allow buyers to have their own pre-sale inspection before writing a contract. This presents a real challenge for buyers. 

Compounding matters, some buyers, prompted by perhaps 10 other offers on the home they love, may feel compelled to waive inspections. I do not recommend this risky strategy. Unless you have extensive contracting and/or building experience in all the trades, I strongly suggest a professional inspection.

Termite reports

In this area, most homes on the market have a termite (structural pest control) report. Although it may seem simple and straightforward, there is a definite art to reading and interpreting what these reports say and do not say.

For example, my buyers were interested in a property that had two termite reports. The first totaled approximately $15,000; the second, by a different company less than a year later, was under $2000. I was concerned because the second report did not mention items from the first that I was told had not been corrected. 

I recommended to the buyers we investigate who did the work, what it entailed, whether it was done under permit and why the first company was not brought back to reinspect. Without experience and knowledgeable advice, many buyers unknowingly walk into a black hole and find out only later how widespread the termite issues really were.

Unpleasant surprises

Inspection reports completed during the escrow many times uncover problems unknown to both the buyer and seller. At that point, especially with multiple offers, sellers are often reluctant to take responsibility for the faults. 

The buyer may be left with the unpleasant choice of taking on potentially expensive defects or canceling the contract. An even worse scenario is when the buyer chooses not to have inspections and discovers serious issues after close of escrow.

Final thoughts

Unlike a television or computer that is not functioning properly, you cannot simply return a house once you own it. Although a seller is legally obligated to disclose known problems, these disclosures do not substitute for comprehensive inspections. Certain deficiencies can involve safety as well as value, e.g., a cracked furnace heat exchanger. No matter how excited you get about a particular property, remember that condition is crucial.

Don Dunning has been a full-time, licensed real estate agent since 1979 and a broker since 1982 and is past president of the Oakland Association of Realtors. He provides sales and hourly listing or consulting services with Wells & Bennett Realtors in Oakland and is an expert witness in real estate matters. Call him at (510) 485-7239, or e-mail him at , to put his knowledge and experience to work for you.


Copyright © 2007-2015 by Don Dunning
Permission is given to freely copy any or all articles for personal and
noncommercial use provided they are copied in full without
modification and that proper attribution is given.
These articles may not be published, broadcast, rewritten, nor linked to from another site.

Banner photo by S. Dunning, Copyright © 2007-2015
Digital photo of San Francisco skyline taken from Treasure Island, SFBay