Akron Life November 2022

I have several FHA clients with a budget of $130,000 or less who want to live in Euclid. Out of the few properties available in this city, most sellers are unwilling or unable to complete the extensive violations, which prohibits my customer from qualifying to purchase the home. It creates a sense of defeat in many buyers. — CK , Euclid

complexity in an already substantial activi ty in a person’s life.” Jeannet Wright is the legislative com mittee chair for ACAR and an agent with FASS Real Estate Services in Shaker Heights, which has a point-of-sale inspection re quirement. “Point-of-sale inspections can deter or hinder FHA buyers from being eligible to purchase a home,” she says, pointing to FHA buyers. These government-insured FHA loans are easier to qualify for, require a lower down payment and credit score and usually have lower closing costs. The goal is to give respon sible potential homeowners an opportunity to live the American Dream. Specifically, down payments can be as low as 3.5%, and credit scores can skim the 620 level. “Depending on the municipality, if there is a point-of-sale escrow requirement the buyers must assume, those monies are need ed upfront, and repairs have to be finished before you can get that money back,” Wright says. “So, you actually need double.” This amounts to more out-of-pocket cash for buyers who are pinching pennies to save for the minimal down payment and closing. Task says, “[The inspections] are a barrier to homeownership. If a seller will not bring

ANOTHER EXPENSE Cost is a big factor impeding home clos ings if a point-of-sale inspection produces multiple, expensive violations. A seller can write in the real estate contract that the buyer will assume violations, which can mean responsibility for posting escrow and paying for repairs. Consider a buyer who has saved enough for a minimal down payment and closing costs. Discovering that another $5,000 or more is required to complete the deal could kill it. When someone is buying or selling a home, they could be going through a major life experience — a death, birth, divorce, new job or job loss,” McMillen says. “You don’t know what is going on in a person’s life, and if you are forced to sell or buy, a point-of-sale inspection only adds to the

Shaker Heights, Cleveland Heights — most of the ‘Heights’ have them, and some include escrow or are just exterior,” Task explains. Task thinks a positive, effective model is that of communities like Lakewood and Beachwood. “They have a defined process for regular inspections of the exterior of homes as they appear from the street,” he says. This way, inspections truly maintain the beauty of a community and its housing stock as opposed to reserving the review of violations to sellers alone. As Task points out, if only sellers are required to get the inspections, how does that help the com munity at large if longtime homeowners are not held to the same standards? Lakewood, Task says, divides the city into four quadrants and each is inspected every four years. There are no point of sale inspections on owner-occupied properties. If the home was a rental, there is a required inspection policy before transfer. “That way, their inspectors are not bogged down,” he explains. “Because what can happen is when the market is hotter, you don’t have enough inspectors, and it can take many weeks to get an inspection. And then if there are violations, they have to be repaired, and the inspector has to go back. That delays closing, and people have lives and jobs, and they have to arrange movers. How is a real estate market supposed to work effectively?” What can happen when a municipality loosens its point-of-sale inspection policy? “Garfield Heights removed escrow several years ago and does exterior inspections only and you can see, when they did that, within two to three years compared to a neighboring community, what happened in terms of the returns in the housing market,” Task says. “There was a legitimate return of values.”

A D O B E S T O C K

4 Akron Cleveland Association of REALTORS