In Australia, it is said, “walkabouts” are spiritual journeys by aborigines, meant to ritually evoke the large, heroic deeds of ancestors. And in New York City, it is now said, “walkthroughs” are inspection journeys by engineers, meant to evoke the large, heroically expensive building-conditions reports of necessity.
A relatively new little brother of the full-scale reports that co-op.condo boards use for capital-reserve planning, mortgage refinancing, and the like – but costing much less and taking up significantly less time and effort – walkthrough inspections may provide a viable alternative during the current economic downturn. Still, boards should try to get an understanding of what walkthroughs offer.
“I got the term ‘walkthrough’ from a managing agent some time ago who asked me to do this thing,” says engineer Ed Simoniello, a partner and the president of the SW Engineering Company. “I thought at first they were trying to circumvent a full building-conditions report,” he recalls. “But we tried it on a few small buildings for one agent, and [the boards] thought it was useful, so we began offering it to other clients.”
He’s not the only one. Architect Stephen Varone, a principal of Rand Engineering & Architecture, likewise says his company offers both “a physical-conditions survey, which is the whole nine yards, and something we call a ‘building evaluation,’ which is more like a list. It still has things like budget projections, but may rely more on photographs than on long narrative descriptions.”
In a full-scale building-conditions report, the architect/engineer typically has residents complete a questionnaire asking about apartment conditions, in order to help discern patterns indicative of larger building problems, and spends days doing a comprehensive physical survey – from top (roof) to bottom (basement), and from exterior (façade and building envelope) to interior (plumbing, electrical, and other systems). This kind of full-scale inspection may involve invasive tests, such as masonry probes, and often requires scaffolding. In the end, the co-op.condo board gets a thick, maybe 100-page report complete with new architectural drawings.
In a walkthrough, conversely, the architect/engineer spends a few hours “noting obvious conditions or telltale signs of problems,” says Simoniello. “We start at the roof, walk the fire escapes, walk through the common hallways looking for things like smoke detectors and emergency lighting, and work our way through the mechanical rooms and equipment vaults – just noting deficiencies, not listing models and giving information on all the equipment. We look at the façades with binoculars. And we look at a sample apartment or two to get a handle on any deficiencies people are complaining about.” The condensed report will note and prioritize things a board should address. Call it “Inspection Lite.”
“We’ve been doing it for probably a quarter of the price” of full-scale building-conditions reports, Simoniello says. Other companies charge as much as half the price, but comparisons are inexact since a major factor is the size of the building being inspected. Very small buildings aren’t cost-effective for architectural/engineering firms, since, as Varone says, “If I’m writing a 90-page report, it takes me just as long no matter the size of the building.”
Walkthroughs are most effective, say the engineers, for buildings up to six or seven stories, with two to four apartments per floor. Buildings larger than this get exponentially more complex physically “and management gets more complicated,” says Simoniello. Or as Varone puts it, breaking jocularly into fluent New Yorkese, “A 4,000-unit, six-building complex, you gonna do a walkthrough?”
No, obviously. But at least one co-op board officer in a small apartment building says a walkthrough inspection nicely fit his building’s needs – and budget.
“We’re refinancing,” explains Robert Kruckeberg, a high-school physics teacher who serves as treasurer for a 22-unit, self-managed co-op on Manhattan’s Upper West Side, “We needed to get a five- to ten-year estimate of capital-improvement costs, so we got three bids all around the standard price for a [full-scale] survey” of a building that size, roughly $8,000. “Then I looked at an old inspection report and noticed that back around 1994, the cost was maybe $1,500 – and even with inflation I didn’t see how the cost could have ballooned to $8,000. So, I went back and asked if we could get a lower-cost, partial survey.”
In this particular case, the board at Kruckeberg’s building had already recently had engineers examine the roof, “and we’re pretty confident about our front façade. We were concerned now about things around the foundation, possible leaks into the basement, and just wanted to be sure we hadn’t overlooked something.”
That’s when SW Engineering suggested a walkthrough, he says, at “about a third of the cost of a full inspection.” SW got the job, and Kruckeberg accompanied a company engineer who “was very open to questions and asked me about other areas of concern. So I was happy with what he provided. I’m not sure what a full inspection would add other than formal drawings.”
Even so, Kruckeberg notes, a walkthrough inspection may not be best for other small buildings. “In our case, because we’re self-managed, I personally have had a lot of opportunity to look at parts of the building and I’m much more familiar with a building than a typical board member.”
Sometimes, choosing a quick and inexpensive walkthrough as opposed to an expensive, full-scale report “has a lot to do with politics,” Simoniello says. “If two or three people on a board have control and just need someone to confirm what they want, then a walkthrough report should be adequate.”
“A client may decide, ‘I just need someone to give me a general checkup so I can confirm that our heating plant is actually my number-one priority before I spend a half-million dollars on that,’” says Varone.
In a macro sense, the difference in cost between a full-scale report and a walkthrough isn’t huge. Since a walkthrough is only appropriate for small buildings, we’re talking about spending maybe $5,000 to $8,000 as opposed to $10,000 to $17,000. But if you have 25 apartments, saving $7,500 could mean sparing shareholders a $300 assessment.
And ultimately, it’s better to get a walkthrough inspection than to be penny-wise and dollar-foolish and not get an inspection at all.
“The challenge is to get buildings to not neglect things and to be proactive,” says Varone. “I’d rather have boards opt for the smaller version than nothing. If more people wind up having some type of professional inspection done since it fits their budget, that accomplishes something important. There are limits to what you can do with this type of visit,” he warns of walkthroughs, “but having a less expensive option may prevent some boards from doing nothing.”