Home Inspections–What You Should Know
The buyer’s home inspection is one of the many steps involved in selling a home, that by its nature, pits buyer against seller. No seller wants to be faced with a lengthy, and often, expensive list of repairs. No buyer wants to purchase a potential money pit.
Sellers should be prepared for the news that in a buyer’s market, buyers clearly ask for more repairs than they would have ask for a couple of years ago. Sellers need to understand that it is critical to separate the emotional or insulting nature of an inspection report from the transaction itself. And, although objectivity is a difficult task to master, seller’s should always be calm, never angry, when responding to the buyer.
Seller’s need remind themselves that the inspector works for the buyer. It is the inspector’s job to document a large list of items that may cost the buyer money down the road. This doesn’t mean the inspector thinks your home is a piece of trash or that you don’t maintain it. They are simply noting items about your home that may need attention.
So, what should the seller do after they receive a list of repair requests? Although state laws regarding inspections and repairs differ slightly, most sellers have three options.
- You can accept the entire repair request list.
- You can decline the entire repair request list.
- You can agree to part of the repair request list.
Each of the three options have a potential effect on the transaction.
If you accept the entire repair list, the deal moves forward and proceeds ultimately to the closing table. Keep in mind you have to make the requested repairs and the buyer will do a walk thru before closing to make sure the repairs are acceptable. Don’t try to save a little money by doing the work yourself, if you aren’t confident in the outcome of the job.
If you decline to make any repairs on the list, the buyer can accept the house in “as is” condition. Or, they can cancel the contract and get their earnest money refunded.
If you agree to fix some, but not all, items on the list, the buyer can cancel the contract and get their earnest money back. Or, accept the repairs you have agreed to do and proceed to closing.
Note: As a general rule, repair request negotiations are one-time affairs. They do not go back and forth with an offer and counter offer. Repair requests do not involve other terms of the contract such as price, closing date, etc.
Tomorrow, I will address what items on a repair list are reasonable requests and which should be declined. If you have an specific issues, please leave a comment in section below.
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Tags: buyers inspection, home inspections, home inspector, house condition, inspection report, requested home repairs
September 10th, 2008 at 11:09 pm
Sellers may want to do their own inspection first. Advantages:
The seller can choose a certified InterNACHI inspector to inspect the home properly before the buyer’s inspector arrives.
The seller can schedule the inspections at the seller’s convenience.
It might alert the seller of any items of immediate personal concern, such as radon gas or active termite infestation.
The seller can assist the inspector during the inspection, something normally not done during a buyer’s inspection.
The seller can have the inspector correct any misstatements in the inspection report before it is generated.
The report can help the seller realistically price the home if problems exist.
The report can help the seller substantiate a higher asking price if problems don’t exist or have been corrected.
A seller inspection reveals problems ahead of time which:
might make the home show better.
gives the seller time to make repairs and shop for competitive contractors.
permits the seller to attach repair estimates or paid invoices to the inspection report.
removes over-inflated buyer procured estimates from the negotiation table.
The report might alert the seller to any immediate safety issues found, before agents and visitors tour the home.
The report provides a third-party, unbiased opinion to offer to potential buyers.
A seller inspection permits a clean home inspection report hosted on http://www.FetchReport.com to be used as a marketing tool.
Move In Certified yard signs attract potential buyers.
A seller inspection is the ultimate gesture in forthrightness on the part of the seller.
The report might relieve a prospective buyer’s unfounded suspicions, before they walk away.
A seller inspection lightens negotiations and 11th-hour renegotiations.
The report might encourage the buyer to waive the inspection contingency.
The deal is less likely to fall apart the way they often do when a buyer’s inspection unexpectedly reveals a problem, last minute.
The report provides full-disclosure protection from future legal claims.
Nick Gromicko
Founder
InterNACHI
non-profit trade association
http://www.nachi.org
September 11th, 2008 at 2:13 pm
Thanks for the excellent explanation of post inspection issues and how the seller responds.
As a flat fee MLS Broker who has helped lots of sellers, I don’t generally do not recommend sellers getting their own inspection to give to buyers. I think buyers are too skeptical of those reports, for obvious reasons.
A more important topic is who actually performs the repairs. Time and time again, I see inspection issues that should be solved by the seller either reducing the price or providing a repair allowance for the buyer (if an allowance is allowed by the buyer’s mortgage lender).
The heart of the problem with inspection repairs is the seller doesn’t have the motivation to do anything other than get the item taken care of as quickly and easily as possible. The buyer wants it done in a high quality manner, with quality supplies, permit pulled by licensed, bonded contractor who provides a solid warranty and more.
The best solution is for the buyer and seller to negotiate a dollar value of the repairs for the buyer to complete after closing, with contractors/products they know, select, and trust. This avoids so many issues.
Sellers don’t need to panic, either, if the buyer gets unreasonable. If you have MLS exposure, you have much higher probability that a “replacement buyer” could be found. As a flat fee MLS Broker, I have seen seller after seller walk out of closing with checks that are $8,000 higher on average, and it is not uncommon for sellers to save two to three times that amount.
Thanks.
Albert Hepp
BuySelf Realty, Inc.
My blog: FlatFeeCoach.com
FlatFeeMLSListing.com