Many purchase agreements fall apart based on home inspection reports. Home inspections are often scary for both the buyer and the seller. It’s not only about learning the problems that a house has but also the expectations of the buyer and seller - most frequently the buyer. Of course, both buyers and sellers hope to see a report that is free of any defects but that never happens. This is one time that it can be confidently stated “that never happens”. Every house, from newly built to historic landmarks, have a ‘to do’ list. Sometimes minor issues and sometimes major issues.
What’s important is how severe the problems are and how the buyer and seller are willing to deal with them. Some buyers will demand that every little item on the report be brought up to satisfactory standards. Other buyers are willing to accept major deficiencies such as a heating system that is expected to fail in five years or less. Naturally, sellers don’t want to invest any more money than necessary into a house they will no longer own. Sellers want to close the deal “as-is” or as close to as-is that is reasonably possible.
In today’s market, the seller often has the upper hand when multiple offers are on the table. But that doesn’t mean a buyer should accept a home inspection revealing serious defects. The buyer needs a plan for how any serious deficiencies will be quickly corrected and paid for before or after the deal is completed.
A home inspector should go into every part of the house and garage where there is reasonable access. Including the basement, crawl space, and attic. He or she should check the electrical and plumbing systems, evaluate the structure including the foundation and framing, inspect the roofing and siding, search for defects and hazards and much more.
Know your lender’s requirements. Even when a buyer is prequalified, home inspections and appraisals can stop the lender from financing the deal. Some mortgage lenders require that certain safety issues, such as high radon levels, a decayed roof, or dangerous structural defects, be addressed before they’ll give you a loan. If one or more of these is suspected, it may be necessary for the potential buyer to bring in an expert for further inspection and/or diagnoses.
Still, even the most qualified inspector can’t see through walls or multiple layers of old roofs. There is good reason that most states require sellers to complete and sign a full disclosure of known defects. These can be problems with their property that a standard inspection can’t reasonably be expected to reveal. Homebuyers should be wary of sellers who disclaim knowledge of the home’s condition. That’s a red flag. Sellers have a legal and ethical responsibility to disclose all known non-visible defects before the home goes on the market. These can include:
Everything is upgradable, fixable, or replaceable. The buyer just needs to have a list of what those issues are. There are a few starkly frightening home inspection terms that seem to be in everyone’s vocabulary: mold, radon, and asbestos. But these too can almost always be repaired. What’s important is that buyers understand the repair process, cost, and time needed.
One thing you should worry about is water. It doesn’t have to be a deal breaker but it’s important to correct any water related issues before the deal closes - or at least immediately afterward. Of special importance are issues such as puddles and leaky ceilings. And give special attention to the basement. Addressing water problems in the basement can be an expensive and difficult proposition. A wet basement can be hard to fix.
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Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.