Congratulations! You just got that important phone call and found out that, “Yes, it’s going to happen!” You’re excited about your new addition! You’ll now have to get ready for the big day. Soon, you’ll hear the pitter-patter of little feet. Well, big feet actually. The General and Pest Inspectors’, to be exact, because you’re about to become … HOME OWNERS!
Your offer was accepted and now you’re on way to closing day. It’s exciting for sure. There’s so much to do to ensure you’re ready. You’re already thinking about what color you’re going to paint the walls and how you’ll arrange the furniture – and all of that good stuff is very likely going to happen but first, there’s a bit of a reality check. The home will need to be inspected during the Due Diligence period after the contract is signed by all parties.
This is the part where people get nervous. What if there’s something wrong with the house? What if it’s catastrophic? What if the crawlspace is infested with flying spiders? What if it’s built on an ancient burial ground?
The good news is that your inspectors are there to protect you. Typically, your agent will be able to provide information on a number of inspectors he/she has worked with but you’re under no obligation to choose any of them. You can get recommendations from friends and neighbors. The most important thing is to get a qualified and thorough professional.
The buyer pays the cost of a general inspection which can range from $400 to much more depending on the size of the home. That is a “sunk cost” meaning that, if you choose not to go through with the purchase of the home, you’ll be out-of-pocket for the inspection. Some lenders demand a general inspection. Some are more lenient and only require a pest inspection. Pest inspections usually hover around $100.
What does the General Inspector check for? He/she will check all the major systems – structural, HVAC, electrical, and plumbing. It’s worth noting that he/she will have a look at the roof but, if any bigger problems are suspected, a roof specialist might be recommended.
In short, the inspector will look at the following:
STRUCTURAL ELEMENTS: foundation, crawlspace, walls, ceilings, roof, floors, and attic beaming.
EXTERIOR: bricks, siding, grading, drainage, fences, driveway, windows, doors, outdoor electrical
PLUMBING: drains, faucets, tubs, toilets, sink, and pipes. (No well, septic tanks, or sewers.)
HVAC: water heaters, air conditioning systems, fireplaces, furnaces, ductwork
ELECTRICAL: electrical panel, circuit breakers, grounding, outlets
APPLIANCES: dishwasher, oven, garbage disposal and any other appliances being left for buyer
Within a few days, you’ll receive an Inspection Report on the home that will identify any “defects” or “concerns” that were uncovered. These items will be ranked a minor, moderate, or major concern and any of a higher order might be listed as a safety concern.
You can also have other inspections performed for asbestos, radon, mold/mildew, lead, chimney, roof, geological, swimming pool, and, of course, septic, well, sewer, or drainage. Your General Inspector will often suggest areas you may want to look at more closely.
Next, you’ll have to decide what is important. Are their deal-breakers? Is the roof in imminent need of replacement? That’s a big cost? Are you okay that the seals are broken on a couple of windows? Ultimately, you’ll have to consider what repairs or financial consideration you will ask for and whether or not you’ll be willing to walk away should the seller opt not to do everything you’re going to request. The rule of thumb in the industry is that if you ask for everything in the report to be addressed by the seller, you’ll likely end up in a more contentious situation than if you asked for only the items in the report that were listed as a moderate or major concern.
Your agent will then submit a repair request to the listing agent who will, in turn, present it to the sellers. I like to recommend to my buyer-clients that we ask for financial consideration in lieu of repairs. You might ask for the negotiated price of the home to be reduced by an amount or you may ask for additional closing costs. After all, I wouldn’t want a seller to feel rushed into making haphazard repairs before closing. Financial consideration in lieu of repairs will allow you to choose the contractor to ensure the repairs are made to your standards. Sellers tend to like that too because they don’t have to worry about finding contractors on short notice and they can focus on getting ready for closing.
Once everyone has agreed on the terms of the repair request and the Due Diligence period is over, you’re on your way to closing. If the buyer and seller can’t come to terms before the end of the Due Diligence period, you can ask for an extension or choose to walk away from the transaction “for any or no reason.”
If you walk away from the purchase, you forfeit any Due Diligence fee you’ve paid and, of course, the cost of the inspection but if the buyer and seller can’t come to terms on needed repairs, it may be your best choice. If you stay through to closing, any Due Diligence fee you’ve paid will be deducted from the buyer’s obligation at the closing table.
The home buying process can be confusing and intimidating without question. I hope that this, in some small part, helps to clarify how the inspection process works. Once you’re over that hump, you’ll start packing, arranging for a mover, and planning where all of your things will go. The odd hiccup might still happen but most of the time, it’s a smooth transition. You and your agent will do a final walk-thru to make sure everything looks good, you’ll sign some documents, the deed will be recorded, and you’ll take delivery of the keys. That pretty house with the fireplace and the fenced backyard with the garden? It’s YOUR *baby* now.
If you’re thinking about buying a home, I can help. I’ll take the mystery out of the process and tell you everything you need to know before you get started. Give me a call at 919-510-8530 or email me at [email protected] . I would love to meet you. I’ll even by the coffee!