How to handle the home inspection
One of the biggest hurdles in the sales process these days seems to be navigating through the due diligence period and the home inspection. When you receive an offer on your home, or present an offer to a seller, there will be an included due diligence period. This period of time, generally 7-14 days will allow the buyer to do any necessary inspections. Should the inspection find anything wrong that was not previously disclosed, the buyer is allowed to ask for necessary repairs, monetary concessions, or even terminate the transaction and be returned any earnest money deposit.
As a seller, it is best to list your home with all necessary repairs completed, and in move-in condition. In some cases, a pre-listing home inspection is done, to find and address all these concerns prior to listing. In most cases the homeowner does their best job of addressing any concerns they see prior to listing, but there may be underlying concerns.
Buyers will most likely use their due diligence period to obtain a private home inspection, which may include termite inspection, mold, and sometimes radon testing. Mold and radon are issues that most likely will require remediation by the seller, or have the payment of remediation negotiated into the sales price, sometimes done after closing.
Other items that may come up in home inspection that usually need to be addressed are safety, and hidden defects, such as wood rot that may not have been visible, leaking plumbing fixtures, leaking roof, or structural issues.
Wear and tear is a term used to define minor defects that come from normal use and age of a home. A 15-20 year old home may have problems such as foggy or even cracked window glass, out-dated appliances, and mechanical components (plumbing & HVAC) that are described as beyond their useful life. Many of these items are typical in an older home.
Deferred maintenance is described as maintenance that is generally done on a routine basis but has not been done, causing excess damage to a home. Siding that hasn’t been painted, turns into wood rot around windows and doors. Clogged gutters can over flow and cause soffit and fascia to rot, and even cause foundation issues. Over the first several years, a home can settle and cause surface cracks in drywall.
Buyers and sellers each look at these items differently, as would be expected. The key to a successful negotiation is to understand where each side is coming from. What is seen as a common issue that can be over looked by one party may be a deal breaker for the other.
As a buyer, try and look at the overall value of the home, the already agreed upon price vs comparable homes in the market, and evaluate your inspection report findings accordingly. Asking the seller for excessive, unreasonable, or cosmetic repairs can cause the deal to fall through.
Sellers should disclose as much as they are able to up front, to avoid surprises during inspection time. A home that is priced completely, but has major underlying issues will see a large price reduction or repair list during due diligence. Sellers and their agents should carefully review an amendment to address concerns prior to responding to allow for a complete evaluation of the requests and their associated costs. Many times what starts as a large list of issues can be settled upon amicably among both parties.
July 8, 2019
How to Handle the Home Inspection
by Jimmy Humrich