Passing the inspection advances you to one step closer to closing the deal on your house.
In Every Inspection, There Are Stakes for Buyers and Sellers
Once the buyer has made the offer (and you’ve accepted), your home will get the once-over from the buyer’s home inspector. The inspection is usually a contingency of the offer, meaning the buyer can back out based on if serious problems discovered. The lender also expects an inspection to make sure it’s making a good investment. Makes sense, right?
During the home inspection, an inspector will examine the property for flaws. Based on the inspector’s report the buyer may give you a list of repair requests. Don’t want to be responsible for a repair? (Maybe it’s best if the buyer has the fix made by their own contractor anyway). This is where your agent will work to negotiate those requests.
Inspections don't need to be a big, scary deal. Your agent will help advise you about repairs you should consider before the inspection (a good agent should have made those recommendations to you even before you put the home on the market to help maximize your value). And if you’ve been maintaining your home all along, your fix list may be minimal.
Furthermore, when you orginally put the home on the market, you were required to disclose to buyers the home’s “material defects”, which includes anything you know about the home that can either have a significant impact on the market value of the property, or impair the safety of the house for occupants. Material defects tend to be big underlying problems like: foundation cracks, roof leaks, basement flooding, or termite infestation.
What a Home Inspection Covers Depends on the Home
Every home is different, so which items are checked during your property’s inspection may vary. But home inspectors typically look at the following areas during a basic inspection:
- Plumbing systems
- Electrical systems
- Kitchen appliances
- Heating, ventilating, and air conditioning (HVAC) equipment
- Doors and windows
- Attic insulation
- Foundation and basement
- Exterior (e.g., siding, paint, outdoor light fixtures)
- Grounds
Depending on the sales contract, the purchase may also be contingent on a roof inspection, radon inspection, or termite inspection.
So What Do You Need to Fix?
A home inspection report is by no means a to-do list of things that you must address. Many home repairs, including cosmetic issues and normal wear and tear, are negotiable. There are, however, three occasionally overlapping types of repairs that sellers are typically required to deal with after a home inspection:
1. Structural defects. This is any physical damage to the load-bearing elements of a home; these issues include a crack in the foundation, roof framing damage, and decaying floor boards.
2. Safety issues. Homes for sale have to meet certain safety standards. Depending on where you live, safety issues that you and the seller may have to address could include mold problems, wildlife infestation, or exposed electrical wiring.
3. Building code violations. Building code violations - such as the absence of smoke detectors, use of non-flame retardant roofing material, and use of lead paint after 1978 - must be addressed by the seller. Again, addressing these might take the form of a credit on the price.
Use This Checklist to Prepare for a Home Inspection
√ Get your paperwork in order. Transparency is key. Ideally, you’ll have summaries or invoices of renovations, maintenance, and repairs you’ve done on your home that you can provide to the home buyer. Create a file that collects this documentation and share it with the buyer.
√ Make sure your home is squeaky clean. Your home should be pristine when the inspector arrives — a good first impression will set a positive tone. Take time to declutter and clean the house.
√ Remove any obstacles that may block the inspector's access. Take measures to ensure the inspector has access to all facets of the property, including electrical panels, attic space, utlities and fireplaces. This may require temporarily moving clothing and other items that impede access.
√ Leave the utilities on. For the home inspector to test items such as the stove, dishwasher, furnace, and air conditioning system, the utilities must be connected regardless of whether the house is vacant. If the inspector cannot test these items, it could potentially push back your closing.
√ Fix minor problems ahead of time. Many cosmetic issues, like a broken light fixture or a scratch on the wall, are minor and easy to fix (and should have been done before your property was even listed) but they can make buyers more concerned about how well you’ve maintained other areas of the home. It’s best to take care of small problems yourself before the buyer’s inspection.
It’s a Good Idea to Do Your Own Inspection Before the Inspection
Some sellers choose to hire their own home inspector to check the property before their house is listed. This is called a “pre-listing inspection,” and it has several advantages:
It can give you time to fix deal breakers. Granted, a pre-inspection costs money - according to HomeAdvisor.com, a basic inspection is about $300 - $400, with condos and homes under 1,000 sq ft. costing as little as $200 and homes over 2,000 sq ft. running $500 or more. That said, it can enable you to address major issues that could cause a buyer to pull out of their offer. Big problems may include mold, water damage, or foundation cracks.
It can mean fewer surprises: Knowing what needs to be fixed in your home in advance will enable you to be upfront with buyers about any big pre-existing issues, which can give buyers peace of mind. You can also make it known to prospective buyers that consideration for those items has already been factored into the sales price.
It can speed up the negotiation process: Having a pre-listing inspection can help reduce, or even eliminate the time-consuming process of having back-and-forth negotiations. If you discover any material defects to the property in a pre-listing inspection, you are legally required to disclose them to buyers, even if you fix them. Also there’s no guarantee that the buyer’s own inspection won’t reveal things yours didn’t find.
The choice to do a pre-listing inspection is yours, but it never hurts to get a head start on repairs.
Be Aware of These Tried-and-True Tactics for Negotiating Repairs
When it comes to repairs, your agent will haggle with the buyer’s agent for you, though it’s ultimately your decision as to how you want to respond to the buyer’s home repair requests. Here are four time-tested negotiating techniques that your agent may deploy to protect your best interests, WITHOUT reducing the list price:
- Agree to make reasonable repairs. Unless your house is flawless, be prepared to receive repair requests from the buyer. You don’t have to offer to fix everything that buyer asks of you, but you should take responsibility for major issues.
- Offer a closing cost credit. Don’t want to deal with the hassle of making or ordering home repairs yourself? Ask your agent to offer the buyer a credit at closing for the estimated costs. This can also help you avoid complaints from the buyer over the quality of the workmanship, since you won’t be the one overseeing the repairs.
- Barter. One way to smooth things over with a buyer and keep the deal moving forward is to offer something of value that’s unrelated to the requested repairs. For example, if you know the buyer loves the new couch or bedroom set you bought, you could offer to leave it behind in exchange for making fewer repairs.
- Leverage the market. You may have more negotiating power depending on where you live. In a hot seller’s market, for instance, you might be in the position to ignore repairs, especially if you have other buyers eager to make an offer.
In conclusion, a home inspection may sound like a burdensome process, especially when you’re so close to your goal. But when you cross it off your list, you’re readier than ever to jump to the next level and into your life’s newest phase!
Thanks for taking time to read The Home Blog.
If you have any questions about home inspections or real estate in general, please contact (416) 577-8011.
If you want targeted real estate insight relevant to homeowners, renters and investors, you can subscribe to my "AROUND THE HOUSE " newsletter by dropping me a line at info@adrianoaldini.com.
