Issue Date: October 12, 2005

Can Point of Sale Ease the Pain?

By Jody Zink
Licensed Realtor in Ohio & Michigan

Figuratively, Toledo Mayor Jack Ford has gotten out the pom poms. And opponent Carty Finkbeiner is making a cross-sign with his index fingers.

As elections draw closer, a hot topic in Toledo real estate is the possibility of required home inspections for sellers. It’s otherwise known as the Point of Sale ordinance.

Council has toyed with a law like this for years. Mr. Ford recently brought it to the forefront.

Here’s what it means.

Someone trying to sell a home would first need to get a certificate from the city saying the structure is safe and meets basic building codes. This would apply to owners who haven’t lived on the property for 6 months or more--mainly landlords and investors. Violators would be slapped with a first-degree misdemeanor and possible $10,000 fine.

Now, in a typical real estate transaction, (if there is such a thing) it’s buyers who pay for housing inspections. Realtors even make it part of the contract, to protect their buyer clients. Info gathered during inspections helps them decide whether to move forward, negotiate, or run the other way. The underlying tone here: Buyer Beware.

Some pros and cons, now. First the pros.

Buyers would know upfront that the property under consideration meets certain criteria—and at the seller’s expense to boot. As a Realtor representing buyers, it could do a couple of good things for me. Since inspections are often the source of detriment to transactions closing, a clean bill of health before the house even sees the market could eliminate some hassle. I like that!

Second, I work (and learn) with a lot of beginner investors. Sometimes they’re scared to pounce. We walk through dozens of houses, and not the pretty ones. Perhaps an “all clear” signal from the city could restore their confidence to invest. I like that, too! But enough about me.

Proponents point to similar laws in the suburbs of Cleveland. The pro-active approach has helped eliminate blight and maintained older neighborhoods. Other advocates say it protects vulnerable, unsuspecting buyers, particularly those who buy on land contract where the seller finances the buyer, not a bank or mortgage company.

Now, some cons.

How many people buy on land contract? I’m glad you asked. According to the Toledo Board of Realtors, the number of owner-financed transactions using a Realtor in 2004 and year to date 2005 is about one percent.

The significance? Realtors represent the majority of all Toledo area real estate transactions. Using a Realtor not only reduces risks, but buyer’s interests are protected for free because sellers pay their fees.

Along with the Toledo Board of Realtors, the majority of city council members are opposed to a point of sale ordinance. Opponents point to Detroit with its abandoned buildings and largely vacant downtown. Detroit has had a point of sale law since the mid 70’s. And what about laws already in place? Sellers right now are required to provide property and lead based paint disclosures to protect buyers. Those against point of sale

legislation argue that current laws need to be enforced before creating new ones.

One last con to wrap this up: government intrusion. For sellers, their mandated “all clear” certificate equates to a permission slip to sell. Opponents rally around a laissez-faire approach touting government should steer clear and allow business to thrive unshackled. Burdensome regulations create red tape, hoops and delays. I hate delays.

Oh, that reminds me. Right now the plan is stalled in city council, somewhere in the community and neighborhood development committee where it’s being scrutinized by a task force, currently without a deadline.

Jody Zink is a licensed REALTOR in Ohio and Michigan with the Loss Realty Group. Her column appears every other week in the Toledo Free Press. She can be reached at jody@jodyzinkrealtor.com or 419-725-1881.