How Does The Home Inspection Process Work?

home-inspection-2After you negotiate the price and terms of your contract to buy real estate, you have the right to inspect the property.

You hire an inspector to “check under the hood” of the property. This will cost between $200 and $500. The inspector produces a report with everything he/she finds. Inspectors go through the house with a fine-toothed comb, so they find lots of stuff, big and small. You and your agent look through the report and determine what you can’t live with, such as unsafe radon levels in the basement, for instance. If there’s more than you can handle, you have the option of terminating the contract.

If you want to move forward, you submit an Inspection Objection document to the seller with all the issues you want fixed before you purchase the house. How much should you ask for? While everyone has their own negotiating style, I prefer to ask for a reasonable number of items, rather than everything in the report. No house is perfect, even brand new ones, so it’s not logical for the seller to fix everything. Instead, look for safety issues, items that should be expected to work, and things not working due to neglected maintenance.

Inspection Objection items are negotiable, so you and the seller will debate what will be fixed: all, some, or none. To me, this is the advantage of asking for a reasonable number of items; you are more likely to get what you want if you are reasonable.

After you and the seller agree on what will be fixed, one of the agents prepares an Inspection Resolution, which you and the seller sign. This binds the seller to address the items on the Resolution.

The last step is to verify the work was done. You can hire the inspector to re-inspect the property. You can ask for reciepts to show the work was done. You can also walk-through the property yourself.

Inspections are a necesarry part of home buying (and home selling) process to ensure that peace of mind when you take over your new home.

For a list of qualified inspectors, please contact Gary Clark. 

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Due Diligence: Do It Before or After Making an Offer?

A while back I found a great house for a client. Even though he wanted to buy the house, my client had a few concerns about it. Before he made an offer, he wanted to check out his concerns.

“That’s a great idea,” I told him. “You want to ‘check under the hood’ before you buy a house. That’s called due diligence. The thing is, you need to be under contract before you can do any due diligence on a house.”

My client was a little confused. “How do I know I want to buy it if I don’t check it out first?” he asked.

I explained that the purpose of the contract is to negotiate a price and other terms, based on the fair market value of the property and the condition as you see it. After a finalizing the contract, you have the right to conduct your due dilligence: inspections, appraisals, and title work.

If your inspector discovers unsafe radon levels in the basement, for instance, you ask the seller to fix the problem before you purchase the house. If an appraiser says your house is worth less than you offered, you can ask for a lower price. The same goes if the title company finds problems with the deed; you can have them cleared up.

Real estate contracts include dates by which you have to complete your due diligence steps. They are called objection dates because they allow you to cancel or amend the contract if you object to something. Think of them as “get out” dates.

It’s important to complete your due diligence prior to the objection dates because your Earnest Money is at risk. If you object to something after the dates pass, you could lose your Earnest Money. Good real estate agents track the dates and keep you out of trouble.

After learning all of this, my client decided to submit an offer on the house, and he got it under contract. He completed his due diligence, which did not reveal any material issues. The sale went forward and he’s living happily in his new home.