Home Inspections: Is a Sewer Scope Inspection a Must?
I have a very happy client who recently purchased his first investment property thru a short sale transaction. We submitted a backup offer in November 2009. After a month, we got into first position. In another month, we got bank approval on our offer and proceeded to do the inspection. My client was aware that there were a lot of things that needed to be fixed in this house and we included a sewer scope inspection. The sewer report showed that the sewer line needed to be replaced. There was a break at the tap, somewhere in the center was a repair gone bad and the connection to the house was also broken. Since this was a short sale, the seller couldn’t afford to pay for this, the buyer, of course, had no interest in paying for a repair on a property that he didn’t own so we figured, it wouldn’t hurt to ask the seller’s lender to either reduce the approved purchase price on the property or escrow money to cover the repairs. Thus, the negotiations began. When we mentioned to the buyer’s lender that we had to postpone the appraisal due to inspection issues, he wanted to know what it was all about. A sewer line has to be in good order because it is a health and safety issue. In this case, the buyer’s lender told us to go somewhere else as the bank will not fund a loan if the repairs were not completed before closing. This lender would not consider a scenario where the money for repairs would be held in escrow. With our closing deadline looming ahead, we scrambled to find another lender who would fund the buyer in this scenario. Many lenders said “No” until I talked to Susan Larson of 1st Bank in Fort Collins. 1st Bank approved my buyer immediately and agreed to close with the money for the sewer repairs to be held in escrow. More good news was that the seller’s lender approved a $6450 bid for a sewer line replacement. My client is a happy man. He obtained a good investment property and avoided future sewer line problems. When you are in the inspection process especially with old houses, it is best to get a sewer scope done – whether it is a normal transaction or a short sale. Even if the listing says “SOLD AS IS”, the sewer line may get replaced if you ask for it.
