Home inspections can be a big hurdle to clear and will worry many of the parties involved in the transaction until the due diligence period is over. A home inspection is an appraisal of the state of the house at the current time.
Home inspectors not only detect issues at homes but give buyers valuable information that can assist them with regular home maintenance. It is an educational process worth spending every minute with the inspector.
When purchasing a home, the buyer will pick a professional home inspector to examine the house.
The house inspection is a vital contingency, and it is fundamental that you don't skip it! Coming to visit the property is just 50% of a house inspector's work requirements.
After their site visit, they will give you an official house inspection report that sets out their findings in writing. Excellent home inspection reports will contain pictures that clearly identify any problems with the property. A house inspection can recognize issues in a house that trigger additional inspections.
For example, a level two inspection of the chimney or an inspection by a roofer. Buyers and sellers should both have a complete understanding of how home inspections work. The article at Maximum Real Estate Exposure provides excellent tips and advice.
What Issues Can Be Found in a Home Inspection Report?
When the home inspection is complete, the house inspector will give the purchaser and his real estate agent a home inspection report. Home inspection reports are generally subdivided by the major systems and components, comprising HVAC, electrical, plumbing, roof, windows, etc.
Both the interior and exterior are broken out for easy visualization. A lot of home inspectors take pictures highlighting trouble spots with red indicators or arrows. Outstanding home inspectors will be available after the home inspection to answer a buyer's questions.
Options For The Buyer After Finding Red Flags
Withdraw the Offer
After receiving the inspection report the homebuyer may decide that the issues and defects shown throughout the property are too severe, and may even cause them to reconsider if they still want to purchase the house. In real estate circles, these cases are also known as home inspection deal breakers. Typically these items include major structural or mechanical defects. For many buyers, these kinds of issues aren't something they want to deal with.
For some purchasers they feel like pulling out of the sale is their best option. In most real estate contracts, there is what's known as a "home inspection contingency" that allows you to escape the sale if you are not satisfied with the findings. In case the discoveries of the home inspection are not agreeable, you can withdraw from the transaction with no financial impact.
In other words, you will get any escrow funds back that was put down to bind the offer. Nonetheless, this may not be your best course of action if the seller is amenable to either make repairs or give you a concession to fix the problems.
It is possible that you can get the house at the cost you initially offered with everything settled. The choice of backing out is generally saved for extreme situations where taking care of an issue is complicated, not justified, or unprofitable.
The revelation that the house you've seen has unpleasant edges can be extremely disappointing. However, you ought not to let that get you down. First, you need to compose yourself. With a clear-headed viewpoint, you'll be able to figure out what should be done. Are the problems workable? Are they being blown out of proportion?
Is the inspector just doing what they need to cover themselves? Carefully read the house inspection report and note which parts of the home have been identified with problems by the inspector. Do your own independent research. No home is perfect. The next house you like might have many of the same issues.
The most widely recognized alternative for home buyers is to ask that the seller to fix the issues found during the inspection. In case this is the course you decide to travel, you can negotiate a fix and upkeep plan.
If the seller concurs, it is up to them to make either the required repairs or provide a credit for doing so. The seller can also reject any of the requests or negotiate a different credit as well. Home inspections are commonly a second round of negotiations in a real estate transaction.
Negotiate a Lower Cost
Rather than negotiating repairs or credits, you can also request that the seller lower the agreed-upon sale price. This is usually the best alternative if you are in a rush or would like to make the repairs yourself with your own hired contractors. Most sellers will want to get an estimate from a qualified contractor in order to determine an appropriate discount.
What a Seller Should Do After Finding Red Flags
The Decision of The Seller
When the seller gets the home inspection report with the items the buyer is requesting to be fixed, there will be some decisions that need to be made. Are the requests of the buyer reasonable or are they just looking to renegotiate? Some buyers, unfortunately, intentionally use the home inspection as a means of getting a better deal.
As a seller what you need to do is figure out what things should be dealt with or not. It should be noted that going back on the market without addressing these issues is NOT a good thing. It throws up red flags to the next buyers and their agents. You will be questioned up and down why the house is for sale again. Defects that are discovered during a home inspection need to be disclosed to all buyers moving forward.
This makes it imperative to understand there is a test of being reasonable. If most buyers are going to take issue with the problems identified by the inspector, then you need to address them.
You might decide to meet the buyer halfway on some items and others just say NO. It is usually in your best interests to offer the buyer a credit for repairs rather than doing the work for them. By giving them a credit you take off the table the possibility they will not be satisfied. With a credit, you're washing your hands-free of the issue.
Preparing For an Inspection Ahead of Time
Sometimes, sellers prevent unexpected issues by having their house inspected before being placed on the market. This might be right for you, especially if you have an older home. By doing so, you can either solve problems or inform purchasers about issues before they write an offer.
You are in a much better position when you know what problems exist in your home rather than being completely surprised. Smart home sellers understand the value of spending a little bit of money to potentially ward off a lot of heartburn that occurs later.
Being prepared for a buyer's home inspection is well worth the time and effort. It is almost a guarantee that you'll be surprised by what the home inspector finds. No house is perfect. There are imperfections in your home as well.
A home inspection is an integral part of the house purchasing process. Buyers are able to withdraw their offer if they don't like the findings. If the home inspector discovers a leak in the plumbing that resulted in mold growth, numerous purchasers might want to bail even if the seller fixed the issue.
These are the trials and tribulations of the home inspection process and why so many people hold their breath until it is completed. The bottom line is that both buyers and sellers should understand the inner workings of the home inspection process.