So you bought a house…now what? During the first five business days after you sign the sales contract, several things will most likely take place:
Earnest money check will be deposited.
Attorney will review the contract and possibly recommend changes.
If you need a mortgage, you will apply with a lender.
An inspection will be performed on the property.
Why do we need to inspect?
Inspections are a great way for buyers to learn about their new home. It is also a thorough way to see what you actually bought and if there are any defects in the major components of the property. The language in the contract I use says that “minor repairs and routine maintenance items do not constitute defects .” In a perfect world, sellers would have their homes professionally inspected prior to listing and provide the report to prospective purchasers (and fix everything that was noted!) Even if this were common practice, buyers should still hire their own inspector.
Where do I find an inspector?
Most buyers hire an inspector that has been referred to them by their broker, attorney or family and friends. You can look online for an inspector. If you use this resource, check the referrals and any ratings prior to hiring them. Due to the time constraint, inspectors are typically available within the specified time period (5 business days). It is advisable to ask the inspector what their fee is in advance. This will be based on the size of the property. Inspectors expect to paid at the time of service and usually accept credit cards, checks and cash.
It is best if you speak with the inspector to find a time that you both can meet for the inspection. An appointment must be scheduled and confirmed by the seller. The selling agent will access the property and usually be there for all or most of the inspection.
How long is the inspection?
This depends on several things: How big is the property? Is it unique (Very old? High-tech systems?) Does the inspector provide the report on site? Most inspections take 2-4 hours. If you cannot be present, I can be there and you can speak with the inspector at your convenience.
Should I consider additional inspections?
A home inspector typically does not perform radon, environmental (mold), lead-based paint or wood destroying insect (termite) inspections. It has been my experience that more than half of buyers do a radon test. They usually only do the other inspections if the home inspector feels they are warranted or their lender requires them.
If you wish to perform a radon test on the property, you need to make arrangements for this separately unless your inspector is also qualified to conduct radon tests. Radon test monitors need to remain the property for a minimum of 48 hours with the doors and windows closed as much as possible. There are fewer radon test companies than there are inspectors so you should call them as soon as you know you want to perform a radon test to get on their schedule.
Who attends the inspection?
Inspections are most commonly attended by the inspector, the buyer(s) and the selling agent. Sellers and/or the listing agent are not typically present for the entire inspection. They may be present at some point to introduce themselves, answer questions or provide access to areas of the property that are not easily detectable. If you intend to bring (or invite) anyone else to the inspection, let your agent know in advance. I have seen buyers invite friends, family, contractors, etc. to the inspection without notifying anyone. This creates an awkward situation for all parties. We must conduct ourselves with courtesy towards the sellers. It is still their home and additional attendees should be cleared by them.
What do I do at the inspection?
Most buyers will watch the inspector (but not get in their way!) and ask any questions they may have. You will have a better understanding of what the report says if you see things first-hand. Please be mindful that most inspectors conduct 3-7 inspections a day and are on a schedule. A good inspector will explain things well and be available for questions that may arise during the negotiation process.
When do I get the report?
The inspectors I like will provide a written report with photos at the time of inspection. Some inspectors will prepare this report within 24-48 hours of the inspection and send it via email. I like when the inspector sends the inspection summary via email to the selling agent, the buyers’ attorney and any other parties who have requested it before leaving the property.
What should I do with the report?
READ THE ENTIRE REPORT. It’s important to know what you are getting! Then decide…
Are their defects that you feel the seller should address prior to closing?
Do you want the seller to repair/replace the item or provide a credit to you at closing?
Here are a few guidelines I like to use when determining how to handle the inspection results:
If the seller does not take care of this problem, will they need to disclose it to subsequent buyers? (i.e. code violation, leak, crack in foundation, mold)
Is this something you simply cannot accept?
Is this a cosmetic issue? Does it affect habitability?
If an appliance or system is functioning but clearly nearing the end of its useful life, it is not considered a defect per the contract. However, you may not have been aware of this when negotiating the price. You may want to request that the seller provide a home warranty (see below) that will be effective the first year you own the house OR request a credit to offset the cost of replacement in the near future.
How do I proceed?
Once you know what, if anything, you want the seller to address, you need to let your attorney and your agent know. Your attorney will send a letter to the seller’s attorney with your requests and a copy of the inspection report with photos, if available. It is a good idea to let your agent know what you will be requesting so they can contact the other agent, if appropriate, to discuss the findings or to give them fair warning! It is not uncommon to work out the details before the attorneys communicate.
A few things to keep in mind at this phase of the process:
The sooner you can let the seller know your position, the better. They are anxious to know what you found. (How would you feel if strangers were looking at every nook & cranny of your personal space? They may need to finalize their plans & delays could hinder the process.)
Asking for the seller to address everything on the summary list is usually a losing strategy. No property is 100% perfect. The most successful inspection negotiations I have seen will include the entire list of deficiencies with the buyer requesting a portion of them be addressed. The seller can see that you didn’t ask for every little thing to be fixed and they will feel more charitable about taking care of the ones you did request.
Credit or repair/replacement?
If you are buying a home where it is apparent that the seller has done a great job of maintaining it, you may want them to take care of the defects prior to closing.
If you are buying a home that shows signs of neglect or it is obvious that the seller is not very conscientious about maintenance, you may want to request a credit and take care of it yourself after closing.
Time constraints can impact seller actions. If the seller is already working in another state, has vacated, or is just busy packing, the odds of them overseeing repairs are slim.
The cost to fix some defects may require contractors to prepare estimates. If this is the case, you can propose that you and/or they get estimates to determine a fair credit amount.
One thing to keep in mind is that, if the seller is in charge of a repair or replacement, they may choose to be as economical as possible. Your attorney can use language that makes it clear how you want to handle such situations. If minor repairs are needed and a handyman can get them done at an hourly rate, it should be fine as long as you get a receipt with the handyman’s contact information.
There are two major home warranty providers in our area: American Home Shield (AHS) and Home Warranty of America (HWA). Both are very specific regarding what they cover. Both have different levels of coverage and offer additional coverages that can be purchased (well & septic, washer/dryer/refrigerator, etc.) They require a service fee for all claims and you should not assume they cover 100% replacement/repair. Both companies have websites that you can visit. While sellers may offer a warranty as a marketing tool or agree to purchase one for their buyer, buyers can purchase their own warranty, too. I have friends (who are not moving) who have these warranties on their homes and swear by them. I can put you in touch with representatives from both companies at your request.
What if the Seller won’t do anything?
I have seen this happen. The Seller may be a relocation company or a bank and they refuse to do anything based on their policies. The Seller may feel they gave all the concessions they could during contract negotiations and they are willing to look for another buyer instead of further reducing their bottom line. The Seller may not have the resources to do anything. In these situations, the Buyer needs to decide if they can accept the property in its current condition and proceed to closing. (The old “Risk vs. Benefit” analysis! I can help you with this.)
The most common response is compromise. If the Buyers are reasonable, Sellers usually agree to take care of a few or all of the issues and/or offer a credit. I have seen every possible variation. If there is a defect that will continue to escalate between now and closing causing further damage, it is important to have it taken care of immediately. (i.e. Ice damming on a roof, water intrusion, gas leaks)
Don’t get stressed out about your inspection! The good news is that whatever happens, there is a strong possibility that I have seen it and dealt with it before. We will figure out the best solution and get the job done. If it is apparent that we need to get out of a bad situation, we will. We will work together to protect your interest and see that this story has a happy ending!