10 Things Buyers Should Know About Home Inspections
So your offer was accepted and you’re going to be a homeowner! What’s the next step in the process? Before everything is all said and done, it’s usually advisable to get an inspection on the property you’re about to close on. Last week, we talked about home appraisals (which are often necessary for securing financing), and inspections are another, but optional, step in the process.
At first glance, property inspections can seem daunting, especially if you’ve never been through the process, so these are the things you need to know before you send the inspector out to view your new property. It will give you the ability to go into the transaction feeling more informed and better able to advocate for yourself.
Inspections are Optional
To those unfamiliar with real estate, it can seem like inspections are just what’s expected. In reality, it’s up to the buyer to decide which inspections they would like completed – if any at all. Generally speaking, inspections are a great idea. They give you an idea of a home’s problems before you buy it and most times will allow you to negotiate with the seller to cover the cost of some repairs. At their most basic level, inspections give you an idea of whether or not you’re equipped to handle this property or if you should move onto another that better suits your needs.
There are a few possible exceptions, such as condos and other living situations where the bulk of home maintenance is covered by an association. Before you decide to forgo an inspection, though, make sure you’re aware of your responsibility when it comes to fixing problems that arise when you own the property. You should also check with your bank to make sure they don’t require one as a condition of the mortgage (this isn’t unheard of, by the way).
Buyers Are Responsible for Inspections
Most first-time homebuyers don’t realize that they are responsible for the inspections. This means that, in order to get to the settlement table, they agree to hire the home inspector, have the inspections completed within a reasonable timeframe, and shoulder the cost. Remember to leave yourself sufficient time to pick an inspector and bring them out to view the property. A home inspection is not something you want to rush through last minute, so do yourself a favor and leave a little breathing room since you’ll likely be putting that timeframe in a binding legal document.
Financially, you need to budget for the cost of inspection services. While your initial reaction may be to balk at the price tag, paying truly is for your benefit as a buyer. To put it another way, the home inspector really works for you, not the seller. He or she is there to point out all the potential problems in the home. If the seller were to hire the inspector, there is a chance of the two working together to falsify the report. Since the seller has no impact on the inspector when you pay, you can be secure in the knowledge that your report is sincere.
The Inspector Must Be Certified
A home inspector and a contractor are not the same thing and, as we pointed out last week, inspectors are different from appraisers. Home inspectors are specifically trained on how to identify problems, even if those slight enough to be easily missed by others. Every country has its own home inspection standards that must be met, but the unifying requirement for a sale to be considered legitimate is that the home inspection must be done by a certified professional.
As for how to find a home inspector, your realtor is a great place to start. He or she probably has a few reliable contacts from past transactions. The Internet is always another option, but again, be sure to ask the inspector if they are certified and keep up with any continuing education credentials.
What Do Home Inspections Cover?
As a rule of thumb, think of a home inspection like a checkup at the doctor. Your doctor takes looks at several of your body’s individual components – reflexes, blood pressure, and medical history – to make an overall all determination of your health. Home inspectors work in very much the same way. Since every property is different, the specifics of what is checked during your home’s inspection may vary slightly. That being said, the American Society of Home Inspectors (ASHI) suggests that qualified inspectors will check the following areas:
- Foundation and basement
- Any additional structural components
- Interior plumbing systems
- Interior electrical systems
- Heating and cooling systems
- Condition of windows
- Condition of doors and door frames
- Condition of floors, walls, and ceilings
- The attic and any visible insulation
What Doesn’t An Inspection Cover?
It’s important to remember that no single inspection is going to cover every aspect of your new home. There are obviously going to be limits to what an inspector will or can feasibly check. To use the same doctor analogy, consider how some ailments require a referral to a specialist, who will give you a more in-depth examination. Just because something isn’t covered in a home inspection doesn’t mean that it can’t be inspected, though; you may just need to look into other sources. If there’s an aspect of your new property that gives you pause, do some research and ask your realtor about the possibility of getting it checked out so that you can go through the rest of the transaction with confidence.
Some areas that don’t often make the cut for home inspectors and may require another professional include:
- Inside the walls
- Roof or chimney repairs
- Septic tanks
- Wells, sheds, or additional structures separate from the main house
You as The Buyer Have Every Right to Attend Inspections
You as the buyer can and should attend the inspection. Most home inspectors recommend that buyers attend their property inspection, since they see it as an opportunity to thoroughly answer any questions that the buyers may have about the property’s condition. Most also will provide instructions on how to maintain the property after settlement. In return for their instructions, it’s your job to be respectful of the inspector’s time. We know that it’s difficult to remain unemotional when it comes to buying a home – especially if unforeseen complications keep popping up – but do your best to keep your cool. Try to keep questions brief and refrain from fixating on tiny details. There will be time to negotiate repairs later.
One more important note: The inspector is not responsible for making any repairs; their job is only to identify them. They also have their own workload and schedule (that has nothing to do with actual repairs), so don’t ask them to do any handy work. It’s better to ask them if they can recommend another professional.
You Can Request An Inspection Report
Coming out to view the property is only half of a home inspector’s job requirements. After their site visit, they are required to provide you with an official home inspection report, which details their findings in writing. It should include pictures of any damaged areas as well. If you’re working with a real estate agent, he or she should receive the report by default, but it’s a good idea to ask the inspector to also send it directly to you. Once you have it in hand, make two copies. Use one copy now and save the other in your legal records – just in case.
Read it over thoroughly before you sit down to negotiate repairs. Don’t hesitate to ask questions if there is a portion of the report that you don’t understand or is unclear. Highlight sections of the report that are most important to you in order to make it easier to refer back to them when you discuss repairs in the future.
Repairs After Inspections Are Negotiable
Unlike paying for the inspections themselves, who pays for the necessary repairs is up for discussion, depending on the nature of the repairs and the property deal itself. There are three typical outcomes to these negotiations: the seller can perform the repairs before settlement, the seller can credit you money for the repairs, or they can become your responsibility.
When it comes to those repairs, prioritize. If you send the sellers a long list of trivial repairs, they’ll probably become defensive and less willing to bear some of the cost (it’s also the home-buying equivalent of tire-kicking). However, if you focus on a few key points from the report, they will be more likely to assist you. One exception to this is if a home is being marketed “As Is”. In real estate terms, “as is” means that, for whatever reason, the seller is unwilling or unable to make repairs. These types of properties will feature have a lower sale price to compensate for the lack of negotiating room. If you bid on one, you may want to pad your budget to include potentially extensive repairs.
You Can Walk Away After Inspections
Let’s say that you get the inspection report back and it features something truly catastrophic like toxic mold or severe structural damage. Alternatively, let’s say that you and the seller have gone back and forth in negotiations and can’t seem to reach a satisfactory conclusion. What happens now?
Luckily, buyers have the upper hand in this scenario. As long as you respond to the seller within the inspection timeframe and have a legitimate reason (i.e. you found the repairs too extensive) you will likely be able to walk away from the transaction largely unscathed. Most times, the sellers will just keep your initial deposit as collateral. It’s a different story entirely if you decide you want to leave after signing off on the inspection negotiations. While you’ll still be able to terminate the transaction, you’ll likely suffer a much bigger loss and you could even face legal action. Take the time to make sure you feel comfortable with your end of the bargain before signing any binding documents.
Be Sure to Collect Paperwork for Completed Repairs
After you’ve made it through the inspection negotiations, both you and the seller will likely have a long list of repairs to complete and, yes, pay for. Both sides may be tempted to do the repairs themselves or to call in a friend-of-a-friend to do the work as a favor. Don’t go this route, or at least not for anything bigger than a leaky faucet.
Cutting corners at this stage could seriously harm the transaction. We honestly can’t stress that enough. Hire professionals to do the work and be sure to collect paperwork – repair estimates and invoices – as proof. Mortgage and title companies will ask for these documents at settlement. In the event that supporting documents cannot be produced, they would be within their rights not to grant you the deed to your new property. It’s also a good idea to keep the repair invoices after settlement as well. While no one wants to think about broken heaters and leaking pipes in connection to their new home, it can and does happen. An invoice could save you from having to pay for a follow up visit.
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– Get It Right Solutions