We’d all like to buy the perfect home. Unfortunately, it doesn’t exist. Even new homes have defects. That’s why it’s important to have any home you buy inspected by qualified professionals-even if it’s brand new.
You’ll undoubtedly discover defects during your inspections. In fact, you should hope that any significant defects are uncovered before you remove your inspection contingency from the purchase contract. It’s far worse to be surprised after closing by unanticipated repair expenses.
Armed with a complete assessment of the current condition of the property, you can make an informed decision about whether to purchase the property in its present condition. Or, you may want to renegotiate the terms of your contract with the seller. If defects are incurable, you may want to withdraw from the contract altogether.
Your purchase contract should set guidelines for how inspection defects are to be handled. For example, the seller may have had a “termite” inspection completed before marketing the property. If so, the contract might specify which party-buyer or seller-will pay for the required corrective work.
Not all inspection contingencies are the same. Some specify that the buyers have the unilateral right to approve or disapprove inspections. In this case, if the buyers disapprove the inspections, the contract may be cancelable at the buyer’s option.
House Hunting Tip: Even if your contract allows you to withdraw due to inspections, carefully consider before electing this option. You will already have spent considerable time, effort and money finding and inspecting the property. If the defects are correctable, it’s usually worthwhile to try negotiating an agreement with the sellers rather than starting the process over again.
Some inspection contingencies provide for buyers to give the sellers the opportunity to correct defects, rather than just walk away from the deal. In this case, the terms of the contract often become subject to further negotiation.
Before asking a seller for inspection-related concessions, make a list of the significant defects you discovered during your inspections. Then find out how much it will cost to repair these defects. When you make your request, put it in writing and include a copy of your cost accounting list along with the reports and estimates on which you’re basing your request.
You may find the seller is not willing to negotiating over items that were disclosed to you before you made an offer to purchase the property. It still may be worthwhile to point out the cost of the previously disclosed items in addition to the newly discovered defects which alter the amount you can reasonably pay for the property.
Sellers are wise to consider any reasonable proposal from a well-qualified buyer. If the inspection-related defects are significant, they are likely to be a concern to other buyers. Depending on the law in your state regarding seller disclosures, you may have to provide copies of the buyer’s reports to future buyers who are interested in the property.
There are several ways in which sellers can participate in buyers’ repair requests. They can have the work done by closing, if time permits. Often contractors will accept payment at closing.
Or they can credit money to buyers as long as the credit is called a credit for buyers’ nonrecurring closing costs. Lenders usually limit the amount of such a credit to 3 percent of the purchase price or equal to the actual amount of the non-recurring closing costs, whichever is less.
The Closing: Some lenders will allow money from the seller to be held in an escrow or trust account so work can be completed after closing.
An issue of Consumer Reports® has a relevant investigation of defects in homes. Importantly, the article gives excellent advice regarding how home buyers can take steps to avoid trouble.
The Consumer Reports® article states “Be proactive. Consumers should never buy a house without first hiring a real-estate attorney and a home-inspection engineer.”
It is important for home buyers to understand that the credentials of home inspectors vary widely, some are licensed engineers, some are non-engineers, some claim to be professional home inspectors, some claim to be certified, some claim membership in a home inspector group. Some certifications can be obtained by almost anybody, a high school diploma is not a requirement and certifications can even be obtained by joining a trade group.
The Consumer Reports® article states “Hire a qualified home inspector. Preferably, the inspector should be an engineer or architect.”
If you have questions about why you should hire a qualified home inspector, contact us. We’ll provide you with complete details.
After you find a that “perfect home”, the next step is to ensure the house is in top condition with a home inspection. Once the buyer and seller have settled on price, it’s the last safeguard for the buyer to know the soon-to-be-purchased home is really worth the money. But a home inspection is never a guarantee that your new home is going to be in perfect working order.
There are certain things a home inspector will check, and some things he/she won’t. For some things, you need to hire an expert to check out those parts of the home that may not be covererd by a home inspection report.
- Heating, Ventilation and Air Conditioning
Heating, ventilation and air conditioning systems (HVAC) are one of the top problems home inspectors can miss because the technicians may be reluctant to run the air conditioning in extreme cold, or to check the heat in blistering heat. The inspectors do this because they do not want to do damage by running the unit too long in adverse conditions or they do not want to be held responsible for repairs if it breaks a few days after the new homeowner moves in.
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When the home inspection report is issued, it usually contains a disclaimer that relieves inspectors of this liability. To cover any glitches with your heating and cooling systems down the road, it is recommended that you have the system checked by a licensed specialist separate from the home inspection.
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. - Roof Leaks
The number-one culprit to slip through a home inspection is roof leaks. That’s because most home inspectors don’t physically access the roof to check on its condition. Instead, inspectors generally examine the roof from ground level with binoculars, or when possible, they’ll look out higher level windows to get a view of roofing below. Inspectors will note torn or missing shingles and nail pops that may or may not be indicative of a full-fledged problem. To guarantee that you are buying a house with a durable roof, you should consider hiring a licensed roofing contractor to provide a full evaluation of its condition.
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. - Faulty Appliances
Part of a home inspection is checking that all major appliances are functioning properly. This is the second most likely flaw to be overlooked in a home inspection. To confirm that all appliances are in working order, a technician will run them through one or two cycles to make sure there’s no trouble, such as a leaking refrigerator or a smoking dryer.
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However, the check is only a neutral source confirming that the appliances work, not an internal or technical diagnostic of the appliance. That means an appliance could work fine the day the inspector tests it, and flare-up on move-in day when the seller has already been absolved of any responsibility.
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. - Damaged Siding and Windows
Many real estate contracts are structured so that major systems, such as electric and plumbing, are reviewed and obligate the seller to fix any deficiencies to complete the sale. But other imperfections that fall outside of the contract’s purview may go unrepaired. For example, damaged siding or old windows that the seller is not required to fix, but that could develop into a much bigger problem later.
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. - Under the Carpet
Inspectors look for evidence of significant wear that are in plain view, but the things that can’t be seen pose a risk. It is recommended that you shadow an inspector to have them look at concerns you have about the house and probing what is under some moldy carpet or is lurking behind paneling. Buyers can seek sellers’ permission to remove superficial facades for the inspector to take a deeper look.
If the home inspection report indicates there may be a problem with your dream home, the process doesn’t end there. Next, it’s up to you to hire specialists – whether it’s a roofing contractor or an air conditioning technician – to fully investigate the problem at hand. It may run you a few hundred dollars upfront, but that could be peanuts compared to the thousands of dollars unreported or unresolved problems could costs after the sale has been finalized.