Things to know for potential Home sellers and buyers
By: Dennis Rodkin
Just as more Chicago-area homeowners are seeing their property values recover from being under water, some Illinois legislators want to send all home sellers down into the sewer.
A bill introduced in the Illinois House in February would require home sellers to pay for a report on the condition of their properties’ main sewer lines, with an inspection done by camera. Real estate groups are fighting the proposal, saying it will add hundreds of dollars—and in some cases, thousands of dollars—to the cost of selling a house.
The report, written by a licensed plumber, would evaluate the sewer line’s likelihood of becoming clogged by tree roots, baby wipes and other obstructions, and would be added to the disclosures that state law already requires of home sellers, including the presence of radon, lead paint and termites and disputes over lot lines.
The current disclosure form requires sellers to verify that the home’s plumbing is in working order. The difference is that a lot of the problems included in a standard disclosure form are visible to buyers, said the sponsor of the sewer inspection bill, state Rep. Luis Arroyo, D-Chicago.
But “without that camera that goes in and looks at 100 feet of sewer line, you’re only disclosing what goes on with the toilets,” he said.
“This is to protect homeowners,” said Arroyo, a former employee of the city’s Department of Water Management. “I get a lot of calls from people six months after they bought a house, saying their sewer main collapsed and they’re out thousands of dollars” for the repairs. He declined to say exactly how many calls he has received.
“We get that call twice a week,” said Wally Welker, a project manager for Quality Plumbing Services, which serves the North Side and north and northwest suburbs. Welker said partial collapses or clogs often get noticed when a young family buys from an older homeowner, and immediately increases the water use on the property. The greater stress on the sewer system can result in backups or very slow drains, often the first sign of a collapse.
A home’s sewer line may clog from tree roots invading through an opening or crack in the clay pipe, from baby wipes and other debris getting trapped at a break or opening in the pipeline or from complete collapse of an old clay pipe. Newer sewer lines are most often made of PVC plastic, and are more resistant to collapse.
Since Arroyo introduced the legislation Feb. 4, real estate industry groups have been asking their members to oppose it, arguing that the cost of sewer-cam inspections—which start at about $375 to $400, according to two plumbers —would be an unfair burden on low- and medium-income homeowners.
“When you’re selling a $200,000 house, spending $500 more to do it is expensive,” said Phil Chiles, the immediate past president of the Illinois Association of Realtors. “People are already trying to get every penny out” after the downturn. Chiles predicted that most sellers would tack the cost of the inspection onto their list price, hoping to transfer the cost to buyers.
Sellers typically spend about 10 percent of the price on the home to cover commissions, title insurance and related costs, according to research by online real estate database Zillow.
Some sellers could end up paying for a lot more than a sewer report. If the inspection turns up signs of an imminent collapse or closure of the sewer line, sellers might be on the hook for a bill that could exceed $10,000, said Paul Fredericy, manager of Power Plumbing & Sewer Contractor in Chicago.
WHO PAYS? WHO BENEFITS?
The bill does not specify who would pay for repair work. In an interview last week, Arroyo said he would expect the buyer and seller to “include that in their negotiation on the price.”
But a seller who receives a report saying that a sewer collapse is coming would have to decide whether to pay to have it fixed before selling, or hope a buyer comes along who’s willing to pay for it.
Either way, the buyer’s total cost goes up, Chiles said.
Rep. John D’Amico, D-Chicago, a cosponsor of the bill and a practicing plumber, argues that for many homes with old sewer lines, the buyer’s costs will go up anyway when the line collapses at some point in the future. The legislation “takes the gamble out of it. You know if you’re looking at something major with the sewer line and not getting hit with a bill unexpectedly.”
D’Amico acknowledged that the bill would generate business for plumbers: In 2014, more than 146,000 homes sold in Illinois. At $400 a pop, that would generate more than $58 million in revenue. Nevertheless, he said, “we’re trying to protect the buyers.”
Welker and Fredericy both said that they often advise buyers of older homes to have a sewer-cam inspection done before signing a purchase contract. Once they’ve had a home inspection, Fredericy said, buyers often call a plumber to find out the cost of found defects, such as slow-draining sinks. That’s when “we tell them they need to look farther, look into the sewer line.”
Welker, however, disagreed with the legislation’s proposal to have sellers pay for the sewer-cam inspection. “That should be the buyer’s responsibility,” he said. “They want to know what they’re in for. The sellers don’t pay for the home inspection, so why should they pay for the camera?”
Last week, Arroyo said he may revise the bill to split the cost of a sewer-cam between buyer and seller.
Article from: http://www.chicagobusiness.com/realestate/20150317/CRED0701/150319835/real-estate-groups-aim-to-flush-sewer-cam-bill