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Flash Lites

FULL HOUSE:  KBHI Vacancies Filled

+ Hasta la Vista Mike Green -- One Vacancy to Go. 

 

Get ready at PLI! Radon Certification Before It's Too Late. 

November 2011
In This Issue
Winner of the Contractor of the Year
Appraisals Weigh Down Housing Sales
KBHI appoints new members- Green gone!
New KBHI Appointees

Contractor of the Year Award

 

Winner

 

Do you have a better photo?  If so, please email the photo to us so we can put it into next month's newsletter.

We will vote on the best contractor of the year at PLI.  

 

2nd place - Japan


Governor Signs Bill SB 34 
 

 

Mark Oerther

Photo from Mark Oerther website

       NEW KBHI Member

 

Mitch Buchanan   

Photo from Mitch Buchanan website

          NEW KBHI MEMBER

 

Mark Schmidt

Photo from Mark Schmidt website

     NEW KBHI CHAIRMAN

 

 JR Bone

 Photo from JR Bone website 

  REAPPOINTED KBHI MEMBER

 

 Kevin Farris

 Photo from Kevin Farris website

  NEW KBHI VICE CHAIRMAN

 

Planning to Save Gas

 
  Gotta do a couple of inspections, pick up a radon, catch a breakfast or lunch meeting, and run an errand or two?  Did we mention picking up the kids?
  Save gas. Take the most efficient route.  Try the new, free MapQuest Route Planner. 
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Provider #  KBHI:P-1001 CE-1002 KBPE License # R-0403
Appraisals Weigh Down Housing Sales
Appraisers 2011     
   In the Kentucky markets, appraisals have become a prime closing problem.  Since AMAs, (Appraisal Management Associations) we're seeing young appraisers from as far away as Cincinnati trying to work properties here.  Comparables are hard to sort for people who do not know and regularly work any locale.  Foreclosures frequently are showing up in appraisals when they compare poorly.  If foreclosures typically are sold 36% below FMV (Fair Market Value), and that's why new construction is so slow, then foreclosures either should not be used or need to be adjusted. 
   That is especially true in Kentucky.  Last month, the National Association of Realtors reported Kentucky had the nations second highest discount to an FMV in foreclosures. Kentucky foreclosures average 48% below FMV - almost half off. Yet foreclosures are forced into comparables because of the shortened time window for acceptable comparables.
     Appraisals were a hidden problem before the housing bust.  The bust made it clear that appraisals too often substantially over-valued homes to make loans fly.  The result was foreclosures with higher losses and borrowers under water.  Many thought it happened because banks hired the appraiser and used the hiring call to tell the appraiser the number the lender needed for Fannie Mae or Freddie Mac.  AMAs were meant to be the solution.  But the problem was as much a problem with state regulation and the profession was it was with the lender demand.  The same people who put lenders and borrowers into fictional pricing before the bust generally have tightened their control since the bust.  It now takes 2,500 appraisals to get an apprisal license in Kentucky, about ten times as many as before.  That's made it nearly impossible for new people with new ideas to get licensed.  And that has hardened the control of the same people who fouled up the appraisal process before the bust.
     Fundamentally, appraisers before and after the bust tried to measure value with low-utility measures, like cost per square foot.  They don't go in attics or crawl spaces, and they generally do not know what they're looking at in electrical, plumbing and HVAC systems, other than them being there.  I had a "smart home" with $250,000 of electronics, including a generator, that appraised like its next door neighbors, by the square foot, even though the neighbors had only basic routine wiring.  Automated valuation models are even less well informed about the condition of the home.  Maybe appraisers should have to mix in a home inspection report for some better measure of condition.
     Some appraisers are even writing quasi-home inspection reports. Recently one appraiser reported an electric 60 gallon hot water heater in a vacant house had not heated the water after his ten minute test. The bank called the home inspector asking for a letter explaining what was wrong.
    And while we're looking for data, who's in charge of this mess?
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Greetings!

     Thanksgiving time.  It's a family favoirte, after a nice summer for many home inspectors.  Professsional Learning Institute is your authoritative source of dependable news to stay up-to-date in our industry.  "Flash Lites" goes to all home inspectors as a "headline" news service.  (Alums get in-deopth Newsletters too.) 

     Thanks for all your support!  And stay safe out there    

PLI is offering a Radon Measurement Training Seminar in Louisville.  To get certified, or CE, you must register this month.  Manuals and national exams are ordered in advance. 
New KBHI Members Appointed
GREEN GONE
Hasta la vista, "Mike."
Hello, Governor.     

     Mike Green's term on the Kentucky Board of Home Inspectors ("KBHI") ended. 

    It's over, the Governor's Office ruled Thursday.
    Green is not "reappointed," as some blurbs mistakenly said.  He's gone.  In fact, he was gone on July 15.  Serving after then was prohibited by law.
    Green's exit also provides an example to follow, courtesy of Gov. Beshear.  The new KBHI would be wise to follow it, and Kentucky's home inspecting law.
    The story is simple as can be.  So is the law involved.
    A few days ago, a news release went out naming new appointments to the KBHI.  It included Mike Green, who already had been on the board 6 straight years.
    Whoops.  State law is crystal clear.  "A member shall not serve on the board for more than six (6) consecutive years."  KRS 198B.704(7).  That 6-year term limit ruled Green out.
    PLI knew it was a mistake, so PLI held this newsletter, for the mistake to be corrected.  It is as important to get the news right as it is to get the law right.
    The Governor's Office caught the flub almost instantly.  The next day, the error was corrected.
    Boards & Commissions, which oversees such things in the Governor's Office, shot out a note:  "Upon review, David [aka "Mike"] Green has completed all eligible terms to this board," the memo said.  "We will begin a search for his replacement."
    The Governor's Communications Director put out the news the same day.
    End result: Green is off the KBHI.  But can he keep showing up?
    "We have addressed this matter.  Mr. Green will be replaced and although, as a member of the public, he may attend the meetings, he will no longer be a member of the board," Boards & Commissions wrote.
    Now, really, it was simple to figure out what a one sentence statute like KRS 198B.704(7) means.  So this is not about brilliant legal work by some policy wonk in the Governor's Office.  (The error was partly due to a computer glitch, and partly because neither Green nor the KBHI was straight with the Governor's Office.  In fact, the KBHI specifically told a OOPs staffer not to bring it up with Boards & Commissions.  But that's another story.)
    The heart of this short story really is about the honesty and responsibility it takes to admit an error and promptly correct it.  That's leadership, and character.
    The Governor's Office got it right.  They goofed.  OK.  Poopey happens.
    The instant they realized it, they admitted it and they fixed it.
    It does not get much better than that.  That's the way it's supposed to work.
    Gov. Beshear often says he "leads by example."
    Everybody makes mistakes.  Here is a picture perfect "example" of what to do then.  It is an example the new KBHI can follow too.
    The KBHI dodged the term limit law for months.  For a board that exists solely to administer the home inspection law, that was opposite the Governor's example, and leadership.  The Governor, and the people of this state, trusted the KBHI to carry out the law -- fairly and impartially.  An (unlikely) acknowledgment from the KBHI that it erred would be a step in the right direction.  It is critical for the KBHI to set the example for obeying the law, if it is to claim any moral authority to expect that home inspectors do.
    The Governor's Office, and its Boards and Commissions crew, learned the KBHI avoided checking with Boards & Commissions, starting last July, when Green's 6-year term limit first came up.
    Green's sixth year on the board ended July 15.  The KBHI meeting that month was July 19.  Green could have prevented all this right then.  So could the KBHI.  They both can read.  Instead, they picked scofflaw, and waltzed themselves, and their governor, into the breach.
    Knowing his term ended July 15 also did not stop Green from showing up, pretending to be a member of the board.  Then all the other board members let Green sit at the table.  That misconduct turned it into a big deal, when just obeying the law was simple.
    Even after the entire statute - all 15 words of it - was read out loud at the July meeting, and again at the August meeting, the KBHI played Sgt. Schuklz. "A member shall not serve on the board for more than six (6) consecutive years" supposedly was a stumper.  Really?
    Looking for any excuse, some board members wanted to hide behind the board lawyer.  The board is well aware its lawyer routinely gets it wrong.  The board needs to hire a law firm that understands the law because it might save money.  The board also could have asked for a written legal opinion.  The fact that it did not get a written opinion speaks volumes.
    More important, the whole idea is dead wrong.  Lawyers and staffers are not responsible.  The KBHI, only the KBHI, is responsible.  No one else is.  That's the job.
    The Governor appoints board members for their own judgement and wisdom.  If he, or the General Assembly, wanted someone else making KBHI decisions, the law would say so and the Governor would appoint them.  If a board member wants somebody else to make decisions, then quit and get the governor to appoint them.
    Board members are there to know the law they administer, and be the experts carrying it out.  Not to avoid it.  Dodging the law only squanders more home inspector license fees.
    Already the KBHI  wasted hundreds of thousands of inspector license fees, by far the majority of the fees it collected.  The cash was lost in budget "sweeps" that never would have happened if the KBHI spent it - as it was supposed to - on public awareness, and PR, and marketing to educate the public, for example.
    Now the KBHI has to cope with a series of motions and votes it let Green make, knowing he was prohibited from serving when his 6 years expired, in July.
    In the October meeting, for example, Green made or "seconded" almost a half-dozen motions -- impossible, of course, for a faux member, forbidden to serve.
    Green made motions to (1) have the board lawyer rework a regulation; (2) hand the board lawyer a trip to Florida with half the cost of a seminar that has nothing to do with home inspection; and (3) take adverse action on a pair of license applications.  Motions can only be made by board members.  Obviously.
    Green also voted on at least one decision (to lobby for a change in the home inspection laws) where his vote made the difference between the motion passing or failing.  But, of course, Green had no vote to cast after his six years ended his term.
    He also voted repeatedly, in three meetings after his term expired, to pay himself -- as the board member he was not -- for his daily fee, expenses, and travel.  So the KBHI gets to waste more time and money unwinding that that mess too, and get the money back.  State Auditor Crit Luallen just audited one board at OOPs (the Office of Occupations & Professions), turning up tons of trouble.
    The auditor's report on OOPs, the same state agency that houses the KBHI, found two "material weakness."  "Material weakness" are the most serious.
    The audit found OOPs "does not consistently retain original documentation and does not properly monitor expenditures or revenues from license fees for the board.  For example, the audit found that board members' travel vouchers - approximately 53 totaling $6,800 - were paid without proper approval by O&P between July 2009 and May 2010."   OOPs has a new Executive Director, and Deputy, now.  In fact, it was the new Deputy who volunteered to check on Green's term limit with Boards & Commissions.  He should have.
    The audit also found that the board involved, the State Board for Proprietary Education (which Green arranged to have oversee some home inspector schools) was "inadequate" at the job and "lacks a clear understanding of its role and lacks any historical knowledge of ongoing issues facing the board."
    If it's not too late, the KBHI would be smart to see if can avoid being the State Auditor's next OOPs audit - starting with Green's unlawful payments.
    All of this is trouble the KBHI makes for itself.  It's a nuisance and a headache.  All of it costs home inspectors money.  Nobody's perfect, it is unbelievable that no one on the KBHI could figure out the meaning of "a member shall not serve on the board for more than six (6) consecutive years."  Just count six fingers.
    The KBHI even let Green make the October motion, and then vote for it, to nearly triple KBHI pay and have the lawyer push another regulation to pull it off.
    That's one more way the new KBHI might think about leading by example - and following the Governor's.  The Governor, and the Attorney General, cut their pay this year.
    If the honor of being asked by the Governor to serve our Commonwealth on the board is not enough, maybe board members ought to be doing something else.  Public service is about pitching in, and serving our community - not about the pay.  No one was appointed to see how much money they could grab.  There are plenty of people happy to take any unhappy appointee's  place, and accept the honor the people bestowed by entrusting them to fairly, selflessly carry out home inspecting law.
 

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FULL HOUSE --

NEW KBHI APPOINTEES

     Just as the Mike Green soap opera was unfolding (or folding), Gov. Steve Beshear also appointed thee new home inspector members to the Kentucky Board of Home Inspectors.

     Their terms expire July 15, 2013.

     The appointments were announced soon after the KBHI elected its first officers who were not home inspectors.

     Mark Schmidt, the remodeler representing Homebuilders, was elected chairman of the KBHI at the October 11 meeting.

    Kevin Farris, an Elizabethtown realtor representing KAR, was elected vice-chairman.  That puts him in line to become chairman next year, if things go as usual.

    The board did not designate its secretary at the meeting.

     The election of new officers was one month later than usual.   J. R. Bone, the outgoing chairman, was elected to the chair at the Sept. 14, 2010 KBHI meeting, the normal election month.

     For more than the last year, the KBHI officers complained about the Governor not filling the home inspector vacancies on the board.  Outgoing chairman Bone said at the last  meetings that the governor's office stopped returning his calls.  "I've stopped communicating.  It's too frustrating for me... It's been going on for 2 years now.  It's real frustrating to know we have to have a vote today on chairman and vice-chairman," Bone said at the October session.  Anybody really think nobody in the Governor's Office noticed 2 years of calls and emails?  Really?

      Bone may have gotten the chain of command upside-down.  Memo to new board members: The people elected the Governor to run the state, not the KBHI chair the Governor appointed.  The KBHI reports to the governor, not the other way around.

     Memo to Board: If you think the Governor overlooked the KBHI inspector vacancies for two years, even as he filled every other vacancy, then I've got a beachfront home in Arizona to sell you.

     The KBHI leadership was realigned on October 11.  As soon as new, non-inspector officers were elected, the Governor filled the KBHI home inspector vacancies.

 

     Now, in short, is the time to turn this board around and get it to work.  After the original first three KBHI chairmen, the board slowly turned into a money pit.  First Green, Patton, and (probably inadvertently) Bone broke the code of ethics with self-serving votes.  Nabbed, they voted to dump the code of ethics.  But they couldn't get off the hook just with that, so snuck into some unlawful secret meetings to claim they exonerated themselves.  That resulted in an Attorney General's published opinion, 09-OMD-132 Opinion of Attorney General, finding they broke more laws.  Every new KBHI member should read it.  It is the law governing the board.  Then Green tried to cling to the chairman's job for months after the legal limit.  The General Counsel for the Public Protection Cabinet had to jump in and push him out of the chair - a little like he just had to be pushed off the KBHI this week -- to obey the law.  The list goes on.  Green and Bone voted to dismiss complaints against each other, for example.  The DHBC Commissioner had to intervene more than once, just to get the board to follow other laws, like one on discipline, when Green got the board to punish an inspector (coincidentally competing with Green) for ignoring its "advise" on Federal Electric panels.
     What the board did not do was just as prominent.  While they were distinguishing themselves with all that unpleasantness, over the same years the KBI managed to take not one single unlicensed home inspector off the streets.  It frittered away nearly $300,000.00 it left collecting dust in the bank unused.  It produced not one brochure or publication to inform the public.  Its never wrote a single memo researching the best practices elsewhere, or even how licensing worked in the other 36 licensing states.  It never even balanced its checkbook and passed a budget.  It was such a mess, it started doing everything it could in secret meetings, as though it was not there for the public.  It spent years mangling the original, working regulations, but it never managed to adopt a code of ethics - though its statute calls for one.  It also never promulgated a regulation on environmental hazards, likewise required by the KBHI statutes.
     That truly remarkable record of board bombs led directly to the KBHI getting thrown out of the Department of Housing, Buildings, and Construction (DHBC).  That was the real purpose of HB 250, the much misunderstood new law that removed the KBHI from DHBC, and dumped it into OOPs, last June.  The KBHI did not get HB250 passed.  DHBC did.  It is a pity the KBHI never understood what was going on.  The old board members were clueless about what HB250 said, and did.  (It was written by DHBC's capable General Counsel, who walked it through the General Assembly.)  Not one KBHI member even showed up for a legislative hearing, as DHBC staff did (PLI was there covering the action).  One result is that  today, the investigators DHBC has, and the administrative law judges it has, and its lawyers who daily handle housing and building law, are all gone for the KBHI.  The board lost all that.
    So, for those who really believe the Governor just somehow overlooked home inspector vacancies on the board, or did not notice all those calls from the KBHI inspectors, or appointed every other vacancy by accident, here's a clue: Think again.  Try making sense of it this time.  It is important to get the message loud and clear.
     That thumbnail history of board bombs is worth remembering for all new board members, and for lots of home inspectors.  Whether board members had sense enough to know it or not, lots of people were watching.  They still are.  Everyone knows boards get misguided, and sometimes screw up cosmically.  When that happens, it's time to straighten out and fly right.  Now is one of those times.
    This month, leadership shifted away from home inspectors who made such a muck of things the last three years.
     Now the new KBHI officers get a full board to work with.
     That puts the ball back in the board's court.
     That might be a lot of pressure on the new board members.  After all, they've got a mess to clean up on top of just doing the job - all while they are learning the ropes.  Working in state government is way different than just inspecting a home.
     The three new inspector members have a decent shot, though.

 Read about the New Members:                                           

Read the complete story -click here

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Lorri Keeney

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