Homebuyers are usually encouraged to hire a home inspector for the property they intend to buy. This is a good thing to do but not always necessary. If the home is being sold “as is” and many are these days, regardless of what you find the seller will not pay for repairs. For homes that do not have “as is” in the listing, you should do not expect that the seller will fix anything that your inspector finds. This is how the process works.
First, you sign a purchase contract and put down what is called earnest money or a deposit showing the seller that you want the property. The contract will probably contain a provision for an inspection of the property and a period in which it must be done. This does not mean that you have to actually inspect the property with a professional but most real estate agents will check that box to provide you with this opportunity.
After the contract is signed, you hire a home inspector (at your cost) who will present you with a report indicating anything that in their opinion should receive attention. As I mentioned above, do not get your hopes up that you simply send this over to the seller and magically fix everything. This rarely happens.
A word about termites. There should be a separate inspection for termites. Property inspectors will note their presence when they see them but they are not qualified to issue a termite report. Typically the seller orders and pays for the termite report during the selling process. More about this subject in another blog.
If you negotiated the seller down on their price by passing along offers and counteroffers, the seller may not be inclined to provide yet more concessions for the repair of items found in the inspection report. Most often when sellers agree to fix items, they are selling their homes at or near the listing price. The seller feels they are getting a fair price and can often be convinced to front the cost for repairs. Keep in mind that an inspection report will contain items that some would consider too minor to worry about.
A recent inspection report indicated some hairline cracks in the driveway. Just because this was listed does not mean that the hairline cracks are serious or need immediate attention. When you are asking the seller to repair a window or fix a garbage disposal, you should consider holding back on the simple items. Don’t be too greedy about your list of items. Remember that the property inspector to protect themselves leave nothing out. Just because they see something does not mean that it must be fixed immediately or at all.
Keep in mind that the seller is under no obligation to fix anything or to provide funds to repair anything (unless it is specified in the agreement). When you ask the seller to attend to some items, you are “hoping” that they feel obligated to do so and will agree. If the list is long, cut it down and propose to the seller that they fix items x and x, not all items. Another thing to think about is that repairs could delay closing because the request for the seller to repair items is a contingency on the loan. As long as the contingency is open the property can not close.
Considering how long it may take a contractor to repair or fix an item, you may be better of proposing that the seller provide funds in escrow so that you can make the repairs after closing. Since, COVID, materials are hard to get and contractors are delayed on repairs. Be reasonable about the request for funds or the items you want to be repaired, the seller can always say no.
At the point where the contractor responds with a “no” answer, you must decide if you want to continue with the purchase. At this point, you have paid for the inspection and are well into the buying process. Do you want to start over with another property or will you pass on any seller contribution and get the sale closed. Here is how I as a buyer would tackle the issue of inspection report repairs.
Go through the list and visit the property. Look at the list and compare it with the actual property. Can you fix the item yourself without any help? If yes, check that item off. Is the item a safety issue e.g. the garage door will not reopen when an obstacle is placed in its path? If so, you may want to keep that on for discussion. Perhaps the door can be adjusted which will fix the problem or the seller tells you that it is broken.
When you have finished the list you should have key items that are important such as major stains in the carpet that can be removed with cleaning. In some cases, sellers may agree to a carpet allowance. Go over the list with your real estate agent and discuss how to move forward. The real estate agent should send the inspection report to the selling agent and discuss with the selling agent the items you want to be repaired. No text messages, an actual voice call, or a meeting. This is where your agent can inform the selling agent that you are not asking for everything on the list to be addressed, just the important things.
Next, unless the item or items can be fixed immediately e.g. in the next two or three days, I would calculate the cost for repairs and ask for a credit in closing. This will allow you to take your time finding a good contractor to make the repairs. I have seen repairs made by sellers who are moving fast to get closing on schedule. Those repairs while they may look good may fail later because of the rushed job. An example is to repair shingles on a roof. If you are buying during a rainy time of year it may not be possible to get the shingles repaired before closing.
I mentioned above that there are times when a home inspection may not be necessary. If you are buying a new home, that home will be under warranty for at least one full year. Anything you see during your walk-through with the superintendent will be fixed quickly, perhaps before closing. After closing you will have time to use everything and report to the builder items that require correction. Even after the first year, some items are still under warranty e.g. appliances, roof, structure, etc.
Some real estate agents and property inspectors may argue with my statement above and say that all properties should be inspected. That is their opinion. What I am suggesting is that you need not spend the money to inspect a new home when there are remedies for issues. Some home inspectors will tell you about structural or code issues they have found with new builds. This is possible, if builders are throwing up homes fast, they may be using lower-skilled labor and their inspectors have failed to find the issue.
Some builders will repair items beyond the warranty if it’s a code violation or structural issue. It’s your call about using an inspector for a new home, I never have and I have bought many new homes. In California, attorneys start their class-action suits about midway into the completion of the developments. They find one person who found an issue and goes to court even when the issue is under warranty and the builder is willing to repair it. I just thought I would throw this in because if the issue is very serious down the road there are legal remedies.
Home inspectors are usually required by their state to be licensed. In Mississippi, you must be licensed with the state to inspect homes. If you are inspecting new homes there is a separate certification for that. Be sure you work with a licensed inspector if you wish to submit a report to the seller. You can feel free to have a knowledgeable friend walk the property for you and give advice and suggestions as long as they are not compensated for this. I often bring along one or more contractors I work with to walk a property with me before I make an offer to buy.
Sellers and seller agents should not recommend property inspectors to the buyer or buyer’s agent. Your listing agent can recommend a property inspector or you can find one on the state website. Some listing agents will provide the state website where you can locate one on your own. It’s a liability thing. No party to the transaction should use a property inspector that is related to anyone in the transaction. This may not be the law but conflict of interest should be avoided.
You can hire a home inspector to inspect a property before you make an offer if you believe there may be serious issues. At this point, the inspection results are usually not shared with the seller until you are ready to make an offer. Not many people do this in advance but it’s a good idea if you are an investor because you can write off the cost on taxes in the event you decide not to make an offer.
