The Market Preview

July 18th, 2018

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

A Tale of Two Opinions
Will interest rates rise or fall? The answer is “it depends.” It depends on whom you ask. Opinions are divided.

The speculators are of one opinion. Grant’s Interest Rate Observer reports that net-short positions in 10-year U.S. Treasury note futures reached a record of more than 500,000 contracts in the first week of July. These traders are betting, with conviction, that the price of the 10-year note will fall and its yield will rise.

Recent news on consumer-price Inflation appears to support the speculators’ bet. The Consumer Price Index rose 2.9% year-over-year in June. That’s the largest annual increase in six years. Meanwhile, the New York Federal Reserve’s Underlying Inflation Gauge suggests inflation runs even hotter than CPI estimates. The UIG rose 3.27% in May. The UIG is at its highest level since 2006.

Consumer-price inflation influences long-term interest rates more than most influencing variables. Given the latest news on consumer-price inflation, we should expect more speculators to bet that interest rates will rise.

To bet that interest rates will rise appears the smart bet these days, but is it? Some market-participants apparently see it otherwise.

Interest rates on the long-end haven’t been rising. The yield on the 10-year note continues to hover around 2.85%, as it has for the past three weeks. Mortgage rates, which take their cue from the 10-year note, also continue to hover within a tight range. Mortgage New Daily reports that the note rate – the rate quote that determines the payment – has held for the past two weeks (at the national level).

Perhaps the contra-rising-rate opinion is more influenced by the shape of the yield curve than consumer-price inflation. The yield curve has flattened over 2018. It continues to flatten as we write. The spread between the two-year U.S. Treasury note and 10-year U.S. Treasury note has tightened to 27 basis points. (The 10-year note yields only 27 basis points more than the two-year note.)

Flattening is one thing, inversion is another. We’ve noted with great frequency in recent months the implications of an inverting yield curve. When short-term yields have risen above long-term yields, a recession has followed.

An inverted yield curve has correctly predicted the past seven recessions. The last two times the yield curve inverted was 2000 and 2006. A recession followed 12-to-18 months later.

So we have two leading opinions balanced on the opposite end of the fulcrum. This suggests to us that market-rate volatility will remain muted. We don’t see much variability in mortgage-rate quotes for the immediate future.

We also don’t see a reward commensurate with the risk of floating at origination. The conservative course is likely the prudent course. After all, low variability can give way only to higher variability.

Another Reason to Worry?
It’s always different. No two economic eras are alike. An inverted yield has accurately predicted recent recessions. It doesn’t guarantee a future recession. Unfortunately, another influencing variable appears to support the recession narrative.

Data mined by Calculated Risk Blog show that private fixed investment has fallen during every recession since the 1940s. Residential fixed investment is a huge component of private fixed investment. Calculated Risk Blog’s mined data show that residential investment leads nonresidential investment. As residential fixed investment goes, so usually goes other private fixed investment.

Residential fixed investment has broken away from the uptrend in private fixed investment. Though residential fixed investment has grown monthly for most of 2018, it has grown at a gradually lower rate each successive month. Its growth rate has trended down to a point where it’s not growing at all month over month. If past is prologue (and it isn’t always prologue), the trend does not bode well for private fixed investment and for the overall economy.

But let’s keep our perspective, let’s not exaggerate the fear. We’re not there yet. The yield curve remains positive, as does residential fixed investment.

That said, the trend in residential fixed investment is yet another reason we are so down on tariffs and trade wars. Rising building costs related to tariffs on imported lumber and steel will only hinder investment-spending growth.

Jackie Doran
Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender. 

Important Changes to the 4-Point Inspection Process for Florida Home Sellers and Buyers

July 17th, 2018

Steve Hollander – Hollander Real Estate

Effective September 1, 2018

Ryan Papy, President of Keyes Insurance and Carlos Gonzalez, President of Atlantic Building Inspections have recently advised Keyes Realtors® that major changes are taking place respective to the homeowners’ insurance underwriting process by Citizens. Since most other underwriters are likely to follow suit, it is important for home sellers and buyers in Florida to know that the traditional 4-Point Inspection process will be dramatically expanded effective September 1, 2018.

  • A more comprehensive 4-Point Inspection will be required of all homes 30 years old or older
  • The New Inspection Report is now four pages instead of two and includes additional Inspection standards in the four major areas:
  • Electrical – The New Report requires the Inspector to:
    • comment on at least 9 potential deficiencies
    • note the age of the panel
    • provide photos of electrical panel with cover on and cover off
  • Air Conditioning Systems – The New Report requires the Inspector to:
    • note the date of the last service and or Inspection
    • note any signs of damage including water staining, leakage, blockage
    • note any evidence of mold
  • Plumbing – The New Report requires the Inspector to:
    • test the temperature release valve on the water heater
    • test dishwasher, washer, dryer, refrigerator
    • report on any signs of mold
  • Roof Systems – New Report requires the Inspector to:
    • walk the entire roof
    • provide photos of all roof slopes and flat roofs
    • test for any soft areas
    • inspect all roof surface, including primary and secondary roofs
    • comment on an extensive list of potential deficiencies including cracked tiles, exposed felt or asphalt

Steve & Lauren Hollander to provide Sellers with a complimentary 4-Point home Inspection
Continuing the tradition of providing superlative service before and after the sale, Steve and Lauren Hollander of The Keyes Company in Palm Beach Gardens will:

  • provide this new, more comprehensive 4-Point Inspection at no charge to Sellers at the time of listing
  • submit the Inspection Report to Keyes Insurance to identify any potential deficiencies which may create a roadblock to insurance underwriting
  • assist Sellers to mitigate any issues which may stand in the way of a successful sale

The Markets In A Minute

July 16th, 2018

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

The Economy

Consumer prices barely rose in June, but the underlying trend points to inflation. Rising inflation will likely lead to more Fed rate increases and higher rates.

Producer prices rose more than expected in June, another factor pointing to inflation. This jump was the largest annual increase in 6-1/2 years.

Although trade war concerns have escalated, there’s not a lot of fear that this will hurt the economy. In the meantime, mortgage rates have remained stable.

Housing News

Homeowners have an estimated $5.8 trillion in accessible equity, the highest ever recorded. Despite this, fewer owners are taking cash out than in previous eras.

Inventory remains tight, but could loosen up a bit in the near future. Inventory increased 12.2% in the 2nd quarter, the biggest gain since early 2015.

Although refinance applications were down last week, purchase applications rose 7% for the week and were 8% higher than the same week a year ago.

Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time.

Jackie Doran

Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender.

The Counteroffer: Negotiating a Real Estate Deal

July 13th, 2017

Steve Hollander – Hollander Real Estate
Zillow Porchlight – by Jonathan Deesing

A lot can happen between an initial offer and closing day. Meet the counteroffer …

Buying a home is rarely as simple as making an offer and paying that offer out. Negotiations can go back and forth for weeks before the seller and buyer are both satisfied.

The vehicle for this negotiation is the counteroffer — a vital and complex rejection and counter to an offer made by either party. Counteroffers are typically handled between real estate agents and are time sensitive.

Selling or buying a home is more of a process than a transaction, so it’s important to understand counteroffers before you make your first offer.

Why was I countered?
As a home buyer, if you make an offer below list price, the seller may choose to reject, accept or simply let the offer expire. If there are multiple offers, the listing agent will lay out the options for their client and then notify all buyers’ agents of the choices.

Sellers may also counter your proposed closing date. If they need to move out quickly, they may want to push it earlier. They may also ask to rent the property for a time after the settlement.

Price and closing date negotiations are common from both parties, but there are even more reasons sellers can potentially get countered.

The condition of the home is likely the biggest factor here. As home buyers conduct ongoing research into the home, any problems with the condition of the house can result in a counteroffer.

If you’ve chosen to take appliances with you when you move, buyers may also look to negotiate for those.

Appraisals are another reason for counteroffers. If an appraisal comes in below the agreed-upon sale price, it will affect the amount the mortgage company will lend to the buyer.

Negotiation power
When reviewing a counteroffer, it’s important to have an experienced real estate agent who can capitalize on your advantages in a negotiation. Both sellers and buyers can take steps to put themselves in an advantageous position through planning and smart counteroffers.

Knowledge is power in negotiations, so try to glean as much information about the seller or buyer as you can. Your agent will also seek information from the other agent on your behalf.

Sometimes sellers use the pending sale of their home to finance another, meaning they have a truncated timeline and could be more eager to make a deal. Similarly, buyers who have terminated a lease may be desperate for a place to live and more willing to negotiate.

If you’re selling a home with known issues, anticipate how these problems may put you at a disadvantage during negotiations. A leaky roof may not be discovered until after buyers order a home inspection. Depending on the cost, they may ask the seller to either fix the roof or deduct the cost of a new roof from the sale price.

These types of issues put sellers at a distinct disadvantage because they have to either pay for repairs, lower the selling price, or reject the counteroffer and hope the next buyer doesn’t notice or care about repairs.

This is why it’s worth the money (around $500) to pay for an inspection before listing a house. Preparation can save you headaches and money down the road.

Responding to a counteroffer
If you’ve received a counteroffer as a buyer or a seller, carefully review every aspect. Real estate agents, apart from yours, are under no obligation to ensure you read the full contract. So make sure you read everything carefully before you sign.

With each individual counteroffer, consider every aspect of the sale, including old and new information. If you made an offer above the list price, there is always the possibility for an appraisal to come in low.

If you are responding to a counteroffer before an appraisal or inspection, keep those at the forefront of your mind. Prepare yourself for future counteroffers once they are completed.

Whether you’re selling or buying a home, establish a baseline for when you will walk away from a sale. As a buyer, you don’t want to spend so much on a home that you move in with no cash for improvements and repairs. And as a seller, you should know how much you want to make off the sale.

With a measured and informed approach, counteroffers can be your friend. Communicate often with your agent to let them know what you want from the sale, and never be afraid to walk away if things go south.

Read more:

Things To Do This Weekend

July 12th, 2018

Steve Hollander – Hollander Real Estate

Clematis By Night – Thursdays
Clematis by Night is the place to be for great live music, a taste of mouth-watering foods and fun people all in the hip ambiance of an energized downtown waterfront. Centennial Square at the end of Clematis Street in Downtown West Palm Beach.
100 N Clematis St. – West Palm Beach, FL 33401  Clematis By Night

Paw Prints in the Sand – Thursday thru Sunday
Enjoy seeing many different breeds of dogs? Boca Raton and Jupiter Tequesta Dog Clubs will be hosting “Paw Prints in the Sand” a 4 day Cluster of All Breed AKC Dog Shows at the South Florida Fair Grounds. Have you ever thought of owning a dog or want to compare different types of dogs before owning one? This is the place to see them perform. You can come and see them being groomed and prepared for the show ring. Get to talk to the experts about the different breeds and learn about responsible dog ownership.
9067 Southern Blvd. – West Palm Beach, FL 33411  Paw Prints in the Sand

Summer Concert Series – Friday
Ring in the weekend Friday nights at Concerts in the Court. A different band each week from pop to rock, country to jazz–loud, live and FREE. Come join us in Centre Court at Downtown at the Gardens! 7:00 PM to 10:00 PM
11701 Lake Victoria Gardens, Palm Beach Gardens, FL 33410  Downtown at The Gardens

Marsh Critters Dipnetting – Saturday
The marsh comes alive in the palm of your hand as we discover the amazing aquatic insects and small wonders that call the wetlands home. You’ll be knee deep in the marsh during this dip-netting adventure for the whole family! Bring closed-toe shoes that can get wet, a refillable water bottle, hat, sunscreen, towel, and change of clothes.
8264 Northlake Blvd – West Palm Beach, FL 33412  Kayak Cruise

West Palm Beach Treasure Hunt – Saturday
Legendary Adventures was created and formed with the goal of challenging teams, creating fun memories and encouraging participants to get out and explore our community. On Saturday July 14th 2018 we will be hosting our first CITY WIDE scavenger hunt. We invite you to assemble your teams and prepare to celebrate summer like never before. This captivating adventure is guaranteed to provide priceless memories for all. Reservations are required by calling 561-406-0611 or booking directly on their website.
324 Datura Street, Suite 101 – West Palm Beach, FL 33401  WPB Treasure Hunt

The Gardens GreenMarket – Sundays
At the Market, you can shop an abundance of just-picked, orchard-grown goods, a wide selection of seasonal vegetables and fruits, fragrant herbs, honey, homemade old-fashioned breads, pies, cheeses, sauces, handmade crafts and much, much more. This event is rain or shine.
11010 N. Military Trail – Palm Beach Gardens, FL 33410   The Gardens GreenMarket

Tropical Cooler Fest “Beach Edition” – Sunday
The biggest event will be staged at Bicentennial Park at the Marina Village in Riviera Beach. The event titled “Tropical Cooler Fest” proudly boasts to be the biggest one day event to hit Palm Beach. Fill your “Cooler” and be your own bartender. Come enjoy some great music from the Caribbean: Reggae, Soca, Salsa, Reggaeton mix with R&B. Tropical Cooler Fest is designed to be a 21+ event, with the objective of attracting Mature and Young professionals in South Florida with a passion for music and a great time.
190 E. 13th Street – Riviera Beach, FL 33404  Tropical Cooler Fest

The Market Preview

July 11th, 2018

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

Mortgage Rates Fall; Recession Fears Rise
 The trade imbroglio between the political powers that be in Washington and the political powers that be in the rest of the world continues to weigh on market sentiment. Market participants remain cautious. Heightened uncertainty has kept many of them bottled up in haven investments.

U.S. Treasury securities (long-term securities in particular) remain the favored haven. Yields on the longer-end of the curve have eased. The yield on the 10-year U.S. Treasury note has drifted closer to 2.8%. The yield is down 15 basis points over the past two weeks.

Mortgage rates have also drifted lower, though the drift has been less pronounced than the drift on the 10-year note. The range still holds at 4.625%-to-4.75% for the prime 30-year conventional loan. Rate quotes hold near the lower end of the range these days.

Given the unlikely scenario of any participants in the trade imbroglio retreating, many market participants will remain bottled up in their haven. This suggests to us that mortgage rates are unlikely to burst out of their range to move higher. Floating to save a few basis points appears a reasonable risk to accept in this market.

The story is different on the short-end of the yield curve. There, yields continue to rise.

This shouldn’t be unexpected. The Federal Reserve exerts most of its influence on the short-end of the yield curve when it raises its federal funds rate (the overnight lending rate among commercial banks). The prospect of additional increases in the fed funds rate has kept yields on the short-end of the curve on an upward trajectory.

Yields on the short-end of the curve rising while yields on the long-end of the curve fall have induced another worry — an impending recession. Market participants are worried that the yield curve could invert. Short-term yields could rise above long-term yields.

The worry isn’t unfounded. The yield curve has been a reliable recession predictor. Nine of the past 10 recessions have been preceded by an inverted yield curve. When the yield curve has inverted, the subsequent recession occurred 12-to-18 months later.

The spread between the yield on the two-year U.S. Treasury note and the 10-year U.S. Treasury note is scrutinized most. The spread between the two securities has contracted to 30 basis points. The spread was 50 basis points at the start of the year. The spread was 90 basis points a year ago.

So what’s the cause?

Market participants will buy long-term debt if they anticipate a recession. They buy the long-term debt because they anticipate the Fed will change course: It will lower the fed funds rates to counter the recession. The price of long-term debt rises more than short-term debt when interest rates are cut. Market participants anticipate booking a capital gain.

That said, it’s still mostly good for now. But if the economic costs associated with the trade imbroglio accumulate, it might not be less good a year from now.

This Trend Is No Longer Our Friend
We are 10 years removed from the bursting of the housing bubble. Prices have recovered, and then some. Home prices at the national level are at an all-time high. They continue to gain altitude.

CoreLogic reports that prices in its home price index were up 7.1% year over year in May. The year-over-year gains have ranged between 5% and 7% each month over the past five years. That the latest price increase is at the high-end of the range this late into the recovery is somewhat extraordinary.

Supply remains the issue. We have a dearth of it. Unfortunately, the dearth will continue into the foreseeable future. The soaring costs of principal building materials will hinder housing supply growth.

Random-length lumber prices are up 44% from a year ago. CME futures contracts are up about 52% for the same period. Lumber prices tend to peak this time of year and then bottom in the autumn months. This time could be different. This year, lumber is saddled with a 20.8% tariff applied to imported Canadian lumber. Canada has historically been a key supplier of lumber to the U.S. housing market.

Jackie Doran
Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender. 

Summer is Peak Season for Lightning

July 10th, 2018

Steve Hollander – Hollander Real Estate
AAA

 

The Markets In A Minute

July 9th, 2018

Steve Hollander – Hollander Real Estate
Jackie Doran – Capital Partners Mortgage, LLC

The Economy

Manufacturing activity surged in June, as companies accelerated production in advance of expected tariffs.

Stocks continue to suffer as concerns remain about the effect of tariffs on trading. Apprehension about a trade war isn’t helping mortgage rates much either.

The labor market appears to be near full strength, even as weekly jobless claims were up last week. The jobless rate is at an 18-year low of 3.8%.

Housing News

Overall construction spending was up 4.5% year-over-year in June and 0.4% over May. For residential construction, spending was up 0.8%.

Single-family home construction spending was up 8.2% in June over the previous year. Multi-family housing spending was also up 4.2% year-over-year.

Millennials really do want to be homeowners. In a recent survey, 36% of the 500 respondents reported taking a second job to save for a down payment.

Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time.

Jackie Doran

Capital Partners Mortgage, LLC
Loan Officer
NMLS # 364090
Jackie.Doran@CapitalPartnersMtg.com
(561) 716-0448
www.mortgagesbyjackie.com
© 2017 Capital Partners Mortgage, LLC. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Jackie Doran NMLS # 364090, . 11290 Legacy Ave, North Palm Beach, FL 33410. Capital Partners Mortgage, LLC  1515 N. University Drive, Suite 102D, Coral Springs, FL 33071. Corp NMLS# 1084639 (www.nmlsconsumeraccess.com). Equal Housing Lender.

Things To Do This Weekend

July 6th, 2018

Steve Hollander – Hollander Real Estate

Clematis By Night – Thursdays
Clematis by Night is the place to be for great live music, a taste of mouth-watering foods and fun people all in the hip ambiance of an energized downtown waterfront. Centennial Square at the end of Clematis Street in Downtown West Palm Beach.
100 N Clematis St. – West Palm Beach, FL 33401  Clematis By Night

Summer Concert Series – Friday
Ring in the weekend Friday nights at Concerts in the Court. A different band each week from pop to rock, country to jazz–loud, live and FREE. Come join us in Center Court at Downtown at the Gardens! 7:00 PM to 10:00 PM
11701 Lake Victoria Gardens, Palm Beach Gardens, FL 33410  Downtown at The Gardens

Safari Nights – Friday
The whole Zoo is open to explore as you join us for non-stop family entertainment at our Dinosaurs themed Safari Nights. Get into the spirit of the evening and come dressed to match the theme. Each date will feature a different family-friendly theme and will include entertainment for guests of all ages: including up-close animal encounters, a Komodo dragon keeper talk at 6:30pm, face painting and kids DJ, crafts and more! This year’s dinosaur night will feature something amazing!!! You’ll come face-to-face with an interactive walking dinosaur from Dino Trail. It’s over 8 feet tall and 12 feet long…and it ROARS!
1301 Summit Blvd – West Palm Beach, FL 33405  Safari Nights

Kayak Cruise – Saturday
Guide your kayak through the shallow waters of the Everglades as you learn about the history and ecology of Grassy Waters Preserve. This tour uses sit-on-top kayaks, so participants will get wet and mucky. Bring closed-toe shoes, a refillable water bottle, a hat, and sunscreen.
8264 Northlake Blvd – West Palm Beach, FL 33412  Kayak Cruise

Sensory Saturdays – Saturday
We are proud to present Sensory Saturdays at the South Florida Science Center and Aquarium! On the 1st Saturday of each month, all families affected by autism spectrum disorder are invited to explore SFSCA during a special morning visit from 8-10 a.m. – before we open to the public. Experience our exhibits without heavy crowds when we have softened general lighting and decreased the noise level and visual stimulation on interactive exhibits wherever possible.
4801 Dreher Trail North – West Palm Beach, FL 33405   Sensory Saturdays

The Gardens GreenMarket – Sundays
At the Market, you can shop an abundance of just-picked, orchard-grown goods, a wide selection of seasonal vegetables and fruits, fragrant herbs, honey, homemade old-fashioned breads, pies, cheeses, sauces, handmade crafts and much, much more. This event is rain or shine.
11010 N. Military Trail – Palm Beach Gardens, FL 33410   The Gardens GreenMarket

6 Home Shopping Red Flags Evan an Inspector Could Miss

July 5th, 2018

Steve Hollander – Hollander Real Estate
Zillow Porchlight – by Catherine Sherman

The home inspection should catch any deal breakers, right? Not so fast.

Bill Loden, president of the American Society of Home Inspectors (ASHI), has been inspecting homes for the past 20 years. But he says some home headaches simply don’t reveal themselves during a standard inspection — and some are outside an inspector’s scope.

“There are things homeowners think we can do, but we can’t,” he explained. “And honestly, most people don’t want to pay for [a specialist].”

To get the most value from your home inspection, it’s important to know a few things even professionals might miss.

1. Partially blocked or damaged sewer lines
Some house problems don’t show up overnight, and a partially blocked or damaged sewer line often falls in this camp.

“We’ll run water through the fixtures, but we’re there for a limited time,” Loden explained. “Two to four hours might not be long enough for the problem to reveal itself.”

Inspectors will likely determine the type of drain pipe used and estimate its age. They may also look for trees or stumps near the sewer pipe that could cause damage. However, sewer-pipe scoping (sending a camera down the line) isn’t typically included in a standard inspection.

2. Failing HVAC equipment
Similar to damaged sewer lines, HVAC equipment can be fine one day and stop working the next.

“If I check an air conditioner when temperatures are moderate, it can seem fine,” Loden explained. “But under stress, when temperatures shoot up, it can fail.”

Loden says inspectors can bring an HVAC contractor with them for the inspection, but typically it’s not worth the investment when you compare the cost of buying a new unit.

“It will cost anywhere from $3,000 to $5,000 [to hire a contractor] and could take two to three days to complete,” he said.

3. Cracked heat exchanger
An area where you may want to pay for an HVAC contractor: an old furnace.

“In my area in Alabama, we have a lot of package units [furnace/air conditioner combined] that sit outside. It’s not part of the standard inspection to examine the heat exchanger, but a lot of them develop cracks that can allow the indoor air to mix with combustion air that has carbon monoxide,” he explained. “You don’t want that in the house.”

Loden recommends having an HVAC contractor examine the heat exchanger if a furnace is more than 10 years old.

“If the HVAC contractor does find such a crack, by law they have to replace it before the furnace can be used again,” he said.

4. Electrical problems
Loden says the best way to think about a standard home inspection is a “visual inspection,” because when it comes to electrical issues, inspectors can’t always determine the problem’s source.

“If I find a receptacle that doesn’t have ground, I know it’s disconnected somewhere, but I don’t know where,” he said. “You’re going to have to have an electrician find the disconnect in the system.”

5. Structural issues
Is the roof sagging, or is it part of your new home’s architectural style? Luckily, a home inspector should be able to tell.

“All roofs — at least wood roofs — have some inconsistencies. A home inspector knows what’s normal and what’s not,” Loden said.

However, when it comes to identifying how bad a problem is or how much it’s going to cost to repair, an inspector isn’t the right person to ask.

“Because we’re not licensed structural engineers, we’ll refer homeowners to one,” Loden said.

6. Leaks
Leaks may not be there one day and show up the next. For this reason, inspectors might not initially detect them.

“A lot of times we go into vacated homes,” Loden explained. “With the plumbing system not being used on a daily basis, any leaks may have dried up. And it may take a couple days after the water is turned on for the leaks to make themselves visible.”

Loden recalls his own home inspection when it was pouring rain. “The roof was not leaking when I moved in, but six weeks later it was,” he said. “A home inspection is not a guarantee that the house won’t have problems in the future.”

He says that the best thing you can do is carefully check the drains in cabinets before and during your move.

“A lot of times homeowners place belongings under there. Sometimes they’ll pack them up after the inspection and bump the drain traps, causing them to start leaking. The same thing can happen when you move in.”

At the end of the day, the key is to take precautions and make sure you find a certified inspector who has been inspecting in your area for a long time.

“They learn where failures are likely to occur,” Loden said.

Read more: