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Home Inspection

A home inspection is a thorough visual examination of the home and property. One of the services I provide as part of my listing services is a pre-listing home inspection. This is done at my expense to help you get the home ready for the market — and equally important to maximize your sale price.  

A pre-listing home inspection serves a couple of purposes: 

1) It eliminates surprises by identifying issues that you can fix before a buyer knows about it. Once a buyer is involved, they may have their own (more expensive contractor). They often expand the scope of repairs needed to keep the deal together. At that point, the buyer has most of the leverage. By identifying issues in advance, you prevent this situation, get to choose whichever contractor you prefer, and minimize your overall costs. 

2) Addressing issues upfront also improves the overall impression of your home. Suppose Buyers identify deferred maintenance or problem areas. In that case, they will automatically deduct the value from your home (generally more value than is justified), thereby costing you equity. Also by addressing issues in advance, you eliminate potential red flags that put the buyer on notice, causing them to look more closely for other issues—ultimately saving you money.

Once we have the home under contract, most buyers will want to perform a home inspection. This is fully reasonable and should be anticipated. The inspection will serve as a contingency to the contract providing the buyer with a legitimate and legal reason to walk away from the deal if the home inspection does not meet their satisfaction. Of course, defining what satisfactory is or isn’t is always the challenge, and there is no single clear definition. This is why inspections are one of the leading reasons for potential sales to fall through. It underscores the need to be educated about the process to protect your interests as the seller.

A few key points to understand about a home inspection from the seller’s perspective:

  1.  The inspection is for the buyer’s benefit only; the seller gets nothing out of it. Thus, it is the buyer’s responsibility to pay for the service (unless otherwise negotiated in the contract).
  2.  The inspection WILL find issues. No home is perfect and it’s the inspector’s job to find issues – which, I can assure you, they will. However, the purpose of the inspection is not to have the seller fix or address every issue identified. Instead, the purpose is to determine if there are significant safety issues or major material deficiencies that alter the transaction’s financial dynamics, i.e., a roof that requires a $7,000 replacement changes the financial impact to the buyer.
  3.  Since we know with certainty the inspection will find issues, it is your benefit to have anything certain to be found and be fixed in advance. Don’t wait for the inspector to find it for a number of reasons: 1) it may raise red flags about other possible issues; 2) if the buyer asks for it to be fixed, they usually require a “licensed” contractor; this will cost more than if it’s something you can fix yourself; 3) if the issue is significant enough, they may simply decide to walk away from the deal. At a minimum, it will detract from your negotiating position and, at worst, potentially jeopardize the sale of your house.
  4.  Any requests that derive from the inspection results are negotiable. Simply because a buyer requests something does not require you to fix it. However, if you do not complete all buyer inspection requests, they do retain the right to void the contract and walk away. On the other hand, if you do everything requested, the buyer remains contractually bound to the deal. We will discuss your options at more length if/when this situation occurs but the key point is that all requests are negotiable. Still, there can also be risk involved in negotiating these types of items.
  5.  If the deal falls through due to an inspection issue, that issue MUST be disclosed to any future buyers. For example, if the inspector finds the HVAC is essentially on its last leg and needs replacing, but the seller refuses to do so, resulting in the deal falling through, this must be disclosed to future buyers. Meaning, it is generally in the seller’s best interest to work with the current buyer to resolve the issue rather than allowing the deal to fall apart.
  6.  The inspection typically occurs within a week of contract signing. It will likely take from 2 – 3 hours, depending on the home’s size and condition. It is recommended the buyer and their Realtor is present for the inspection. It is highly recommended that the seller and their Realtor NOT be there for two reasons: 
    1. To provide space for the buyer and inspector to speak freely; and 
    2. The seller and their Realtor MUST disclose anything material identified by the inspector to other future buyers if the deal falls through for any reason. In this type of scenario, plausible deniability is important.

 

 

Helpful Tip

Home inspections are for buyers; appraisals are for lenders. Lenders require appraisals on properties prior to loan approval to ensure the mortgage loan amount is not more than the value of the property.