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  • Writer's pictureNancy Bennett

Between a Rock and a Hard Place



Story of the week from the trenches: I am working with a set of buyers who are in contract on a house. There was a 10-day Buyers Investigation contingency in place, so that the buyers could perform their due diligence on this home.


The buyers wanted to have a Sewer Lateral inspection completed during this time. A sewer lateral inspection is where a specialized vendor will drop a video camera down the main sewer line from the outside of your home (by the front door) and scope all the way down the pipe to the city’s main sewer line connection in the middle of the street. It’s kinda cool to watch this inspection while it’s happening. The inspector will note areas that may have tree root intrusion into the pipe or “offsets.”


An offset is where two pipes come together, but at some point since they were installed, the ground has shifted, causing a gap or offset between these pipes. In both these cases, items can get stuck in the pipe and start causing a backup. That backup can take days, weeks, or even years to fully block the flow of water and things, and that’s when everything backs up into your home. Yuck is right!


Anyway, during the sewer line inspection and as previously noted by the seller, there was a rock found in the line. The rock is approximately 2 inches and the area of the pipe that it’s sitting in is 4 inches — so halfway blocking the pipe. Clearly, it will continue to be a problem unless that rock is removed. 


The vendor cannot get beyond this rock to complete the inspection, so he had to stop and let us know that he could move the rock with a different tool (specialized smaller roto rooter), and nudge it down the line until it reached the city main connection. Then he would video scope the line and complete his inspection.


 **visual example, not related to this case


**You’re probably asking yourself, how did that big of a rock get in there in the first place? We’ve deduced that it must have been during construction, maybe the rock fell into the pipe when the contractors were laying it out that day, and no one noticed? I don’t know, maybe there was some Coors Light at lunch that day? 


The problem that we ran into is who would be responsible for any damage that could be caused by “nudging” or pushing that rock down the line? What if a crack in the pipe was noted after the rock was moved? And that crack started to leak, when it hadn’t been leaking before?


What if, while moving the rock, the rock creates a hole in part of a pipe that unknowingly is already rusted out (60 years in the ground)? And now there is a significant flow of water leaving the pipe (under the house) at the break point after each flush? That would be a mess!


So the question we’re stuck with is, how do the buyers complete their inspection without taking on responsibility for any possible problems due to the inspection/rock movement? Or should the sellers pay for and complete the remainder of the inspection, asking the vendor to nudge the rock down the line and those sellers would then take responsibility for any damage that may be caused or uncovered, since it’s their home?


Yes, the two parties are between a rock and a hard place! 


Average rate on a 30-year home loan falls to 6.6%, Freddie Mac said


By Helena Kelly

Assistant Consumer Editor for Dailymail.com


U.S. mortgage rates have fallen to their lowest level since last May — offering much-needed respite to overstretched homebuyers.


New figures from Government-backed lender Freddie Mac show the average rate on a 30-year fixed-rate home loan is now 6.6 percent, down from 6.66 percent last week (*and in many cases much closer to a 6% rate this past week locally).


Freddie Mac chief economist Sam Khater said Thursday: 'This is an encouraging development for the housing market and in particular first-time homebuyers who are sensitive to changes in housing affordability.'


Mortgage rates have been pushed up by the Federal Reserve's aggressive interest rate hikes to tame inflation. The Fed's funds rate is now at a 22-year high of between 5.25% and 5.5%.  


It comes amidst ongoing uncertainty over when the Fed will start to cut interest rates again.




In theory higher rates are used to reign in consumer spending when inflation is red-hot. Cooling inflation is therefore critical to bringing rates down.


But the annual rate of inflation rose slightly to 3.4% in December, sparking fears the Fed could delay rate cuts until later this year. Retail sales also rose by 0.6% in the last month of the year. Officials will next meet Jan. 31, but it was widely expected they would vote to hold rates steady on this date.


Instead economists had pinned all their hopes on the following March 20 meeting. At the very beginning of the year, traders had priced in a 70%-plus probability that the central bank will announce cut rates by 25-basis points on this date. 


Inflation must cool in order to pave the way for interest rate cuts this year — after the Fed hiked rates to a 22-year high of between 5.25% and 5.5%. Economists had predicted a rate cut was likely in March this year 


Inflation rose to 3.4 percent in December — above economists' predictions.


However, experts agreed the rise in both inflation and retail spending in December puts this plan in jeopardy.


Andrew Hunter, deputy chief U.S. economist at Capital Economics, told clients after the release: “We still think a further slowdown lies ahead as slowing employment and wage growth feed through and the lagged impact of higher interest rates takes some additional toll, but there is still little to suggest a sharper downturn lies in store.”


Mortgage rates are not directly dictated by the Fed's actions, but instead track the pattern of 10-year Treasury Yields. These are determined by a range of factors including inflation, economic growth and the Fed's benchmark funds rate.


So, during this month, we’ll see how homebuyers are reacting to the current and expected Federal Reserve movement and comments coming up later this month.

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