The Un-negotiable Letter

December 19, 2005

Bob Kille Acuspect Home InspectionThis is the next installment of the “Least Restrictive” article in which a fellow home inspector was heading for court over the word “few”.

It’s Friday evening about dinner time when the phone rings and a message is left. Dear home inspector, I just wanted you to know that I’ve sent out a letter detailing my demands for payment in the amount of $5,400 for the damaged adobe bricks on the yard wall.

This is a non-negotiable amount as it is considerably less than the $8,700 estimate in my possession for the total work needed. If agreement on this matter is not satisfied by next week the matter will be taken up in civil court, not in mediation, as you seem inclined to believe by virtue of your contract.

Well, have a nice weekend.

Yeah, right. I think that any communication back to him should be in the same manner, at his home phone Friday evening so he can mull it over the weekend.

If you haven’t read the previous post, the client in question is a shyster-lawyer. My theory about how all this is going to go down is one step closer to happening. The Theory? That the lawyer wants our good man to submit the claim to insurance so he can collect an easy $5,000 by merely writing a letter.

Most attorney’s know that insurance will settle almost immediately for sums of $5,000 and less because to get any type of defense set up and ready will cost at least that with no confidence in the outcome.

So what’s my advice to our hero?

Our home inspector has a lot going for him and I’ll just list the positives; mediation – arbitration in the contract payable by party taking action, fence is outside the scope of a home inspection – commented on as part of the pool barrier and listed in satisfactory condition for it’s age, inspection report recommends further review by expert on the effected “few” bricks. Total of 200 bricks with minor deterioration at the face per experts report.

Now the negatives; client claims that an adobe wall partitioning his property line is not a fence but a barrier and that it is in the scope of a home inspection, client claims that he relied on the word “few” to mean 3 bricks thereby negating the need for further review, client maintains that the condition or absence of the clear sealer for the adobe brick was not reported on and that its absence would have been germane to the sale price, client claims about 275 badly deteriorated bricks per expert.

So here’s the scoop as I see it.

Lay out the case in terms of money and lost opportunity costs and offer something reasonable as relates to his bottom line to make it go away.

Our lawyer wants to go to civil court – 1/2 day at $250 per hour = $1,000
Court remands the case back to mediation as per contract, lawyer pays the $500 mediation fee, losses 1/2 day at $250 per = $1,000

Mediation unsuccessful as lawyer wants the un-negotiable sum – case moves to arbitration per contract, lawyer pays the $500 arbitration fee, losses 1/2 day @ xx = $1,000

I happen to be a certified AAA mediator and I can tell you that neither party will get what they want in mediation or arbitration. So worst case for our home inspector is 225 blocks @ 12 bucks each = $2,700 + $600 for sealer = $3,300

At this point our hero and our lawyer have about 2 days into this if you count the prep work. So our lawyer is out the court and mediation costs, plus the time off @ $250 per hour. That adds up to, lets see…. $5,000 and change.

H’mm, doesn’t sound so appealing now does it?

Our home inspector also has some lost opportunity cost which add up to about $1,200 for the two days and possibly some legal advice amounting to $500 bucks, figure two grand. And don’t forget the possible worst outcome of $3,300 for a total of about $5,000 and change.

Arbitration is binding, but if the worst case happens to our lawyer and he gets a pittance he may take you go to civil court anyway to throw out the binding settlement agreement, 1/2 day @ = $1,000 If there’s a reasonable settlement @ about $1,500 – $2,000 your both still out your opportunity costs. Which in his case out weigh the settlement for a loss and that’s why he won’t take this the distance.

As you can see the math just doesn’t work for the lawyer unless there’s an easy settlement.

My advice was to put this all down is a similar fashion but without the specifics or admittances and offer up a one time offer of $1,500 to let him save face and get this nusiance over with. A little laungage about seeing it through to the end if the offer is declined wouldn’t hurt.

It will be worth watching just to see if my theory is correct. I’ll post more news as I get it.

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click on this link. www.inspectorsuccess.com

Worst Inspection Report Award

December 17, 2005

Bob Kille Acuspect Home Inspection Not long ago I was giving some advice to a new inspector after an ASHI meeting, seems he was having trouble like most new inspectors getting business and he was losing money. I gave him some of my best stuff (raise your prices) and at the end of the conversation he asked me if I would look over one of his reports and let him know what I thought.

Well, I just had to say yes as he had been telling me all about how much this report cost to put together ($26.00). Yes, that’s American green backs. A small fortune if your doing any kind of business, to give you an idea it would cost me $15,600 just for reports if I was to use what he’s put together.

Time just kinda slipped by and I didn’t get to his report in the fashion I had envisioned. Here’s what happened and I hope you pay attention to this poor guys mistakes.

I received a call from a realtor I hadn’t heard from in a while, she was a good for three or four inspections a month in the past and I was really happy to hear from her. Thought that I’d lost her. Happens.

She wanted me to come and inspect a property that had just been inspected by another inspector, who by the way killed the deal. She now had a new buyer and wanted to make sure that a repeat of her last experience was not forthcoming. She also wanted to discuss the last inspectors report as it seemed very out of the norm to her.

So I’m at the house and see the last inspection report on the counter (guess who’s) and I ask how it was that the home inspector in question got the job. Turns out that he joined the local chamber of commerce, sat in on a meeting, won a door prize of $50.00 in gas coupons from our realtor. In a stunning moment of clarity he promptly types up a $50.00 off your next home inspection coupon and mails it to our realtor with a note of thanks.

As you can imagine, she was very impressed and thought she’d pass the coupon on to her buyer. Basically, she was going to give our new home inspector a chance to get her business. And boy did he BLOW IT! Not even a pretty binder was going to help him now.

Fresh from school or perhaps an inspection conference, our new home inspector has come equipped to evaluate the homes electrical circuits with a new fangled device called a Sure Test Circuit Analyizer. Somehow all of the circuits in this 5 year old tract house were faulty and the house was a fire hazard waiting to go up in smoke at anytime.

At least that’s how the red inked comment that took up one full page made the house look to the buyer, and to me as well. A full page of red ink, might as well been his own blood for what it cost him.

No, it’s not over. This is just the start of this inspectors woes. Tune in to my next post and we’ll continue with our worst inspection of the year award.

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click on this link. www.inspectorsuccess.com

Least Restrictive Wording

December 11, 2005

Least Restrictive Wording

A fellow home inspector related the story of a complaint letter received from his client complaining of deteriorated burnt adobe brick exterior. The letter detailed how many bricks were bad and their location according to the Brick Adobe Company who was retained to do an evaluation after close of escrow.

The home inspection report did reveal that a few of the bricks had some minor spalling and recommended further review of the building’s brick by an expert for a better understanding of the repair/replacement cost and present conditon.

In the letter received, the client explains that he did not have an expert evaluate the building as recommended as he relied on the word “few” in the inspection report to mean 3 bricks and that 3 bricks were not sufficient in his mind to call in an expert and pay yet another inspection fee.

In his mind the “least restrictive” wording of the comment lets him decide if the recommendation needs to be followed without consequence to himself as the informed client.

This story gets a little better, as it turns out the client is a Lawyer. The client asks that our inspector pay the $8,750 somolians for the Brick Adobe Company estimate of repair. The repair includes a 3,500 dollar weather sealing for the brick as the Brick Adobe Company assures the client that the inspector should have called for sealing of the brick in his report. Isn’t that the way it always goes?

So what happened? The inspector did exactly what he should have done, he communicated with the client immeadiately and informed him that he would take a look at the effected areas. He then called a fellow inspector with tons of experience and hired a qualified evaluation from another expert, The Adobe Doctor.

Turns out that most of the effected brick was in the fencing. Fencing according to the Arizona Standards of Practice is not included in the scope of a home inspection and of course the report specifically states this fact but then makes the fatal mistake of commenting on its condition as generally acceptable.

Commenting on the condition of anything not in the scope of a home inspection pulls it into the scope and once inside the scope an inspectors inspection of the item must rise to the level of a professional (for hire) inspection.

This is a good story thou, as it turns out the company our inspector hires for the second opinion just 2 years ago repaired and resealed the entire building. There’s still 2 years left on the warranty! What luck.

Our inspector is now armed with what in most people’s minds a very good case against any payouts, right? Wrong. Our client the Lawyer, knows that any action he takes will cost our inspector 2k minimum just to put up a defense. He also knows that the insurance company will settle any claim out of court for less than 5k.

Stay tuned, I’ll let you know what happens

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click this link.www.inspectorsuccess.com