Whole House Inspections
In almost every case, a buyer has the home they are buying inspected by a professional inspector. The inspector’s job is to go through the home, on top of the home and under the home, checking for problems, and furnishes the purchaser with a report of all of the defects found. This report should not only include a list of any defects, but pictures of the defects and an estimated cost to remedy the defects. The cost to remedy is a key part of the inspection.
If the seller refuses to make the requested repairs, the buyer can request to be released from the contract, get their deposit back and begin the search anew.
The buyer (and agent) can then go back to the seller with a list of defects they wish to have remedied or receive a credit to repair. If the seller refuses, the buyer can request to be released from the contract, get their deposit back and begin the search anew.
That was the simple version…
The reality is that every inspection is different and outcomes differ greatly depending on the defects found, the type of loan, the personalities of the buyer and seller (ok, and agent) and the number and seriousness of the defects.
No home is perfect and even new houses need inspections. Don’t expect perfection and remember that nothing is time-proof …
Here are common items that cause ‘interpretation’ issues:
- Rotten Wood – Where does ‘rot’ officially begin and when does it end? This is especially true on wood siding
- Older Big Ticket Items (HVAC, Water Heater, Roof) – If it on its last leg but working, is that defective? Hard to say…
- Building Code – Building codes change and over time, what was once allowable is no longer. Older neighborhoods have this in spades…
- Poor Workmanship – ‘My brother’s cousin finished the 3rd floor…’
Additionally, the cost to remedy the repairs always causes some conflict. The inspectors always estimate high (or put it in a range) and thus the sellers always complain that the cost to remedy the broken doorbell is 4 times as high as it should be. The inspector is really giving a cost to cure that is published in some type of matrix by some type of inspectors guidebook and it is designed to cover the inspector’s rear end. But I digress…
Tips About Inspections
A few things to note/remember about inspections:
- You have a finite time period to get the inspection done so get it done early. If defects are found, you need to figure out if you are going to proceed or not because the other tasks that need to be done before closing (appraisal, survey or title insurance) cost money and take time. If you are not going to by the home, you don’t want to spend money on house specific costs.
- Many inspectors now suggest that specialists come in to look at specific items like HVAC or old roofs. Make sure to also allow time to get these inspections done if they are needed.
- The seller can either remedy the items that are defective or credit you the cost for you to remedy the items. Know which items you want the seller to fix and which ones you want to take a monetary credit for. This is a big deal.
- Lenders do not like to see language about repairs to be done after closing so if you are going to receive a credit, make sure to take the credit in the form of closing cost or other item NOT labelled as ‘repair credit.’
- Know you inspector. Suburban inspectors are less versed in older city properties. Similarly, an inspector who works older properties may not be as versed in the country building codes.
At the end of the day, the inspection process is a small renegotiation between buyer and seller and in 90% or more of the cases, inspection items get addressed and the deal stays together. But each year, every agent has several deals that end up blowing up due to the inspection. It is part of our industry