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Austin Solomon | The Solomon Group – Coldwell Banker Action – (715) 212-4693
Hey everyone, it’s Austin Solomon with The Solomon Group at Coldwell Banker. Coming to you live today at The Real, Wausau Real Estate Show.
Thanks for tuning in to this week’s episode. Today we’re talking about home inspections. What do you need to know about them, how does it fit into the process of buying and selling a house? We’re going to cover all of that and more today. We’re going to do a deep dive in home inspections. I’m looking forward to debunking some of the myths and just talking about this topic.
So if you’re a buyer looking for a house, or if you’re selling a home, a lot of times you’re going to encounter a home inspection. What that is, is a home inspection is really an analysis of the home’s condition. The home inspector is hired by the buyer to inspect for safety hazards, things that are not functional or could be problematic now or in the future, structural soundness and much more. So really the inspector is going to be checking out all of the outlets, run the faucets and make sure there are no leaks, and inspect the attic, the roof, the mechanicals, your furnace and water heater. They’re going to do the best they can to create an analysis to report the condition of the home.
So how does this fit into the process of buying or selling? As a buyer, you have a home inspection contingency, and a contingency again is just a condition that has to be met in order to move forward with the purchase. And so a home inspection contingency is just you want to make sure the home is in a suitable condition before you purchase it. As a buyer, you are responsible for paying for the home inspector, unless otherwise negotiated. Most of the time a buyer would pay to have that done.
The home inspector would go to the house, they’d probably spend 2-5 hours at the house depending on the size and they are going to be documenting the home, the age of the mechanicals and as much as they can get, and they’re going to prepare a report.
With that report, if there are items that come up, the buyer and their agent could ask the seller to make corrections. Now, the seller doesn’t have to make any corrections to the house, they’re not required to. However, if there are some issues that come up that are major problems and the seller doesn’t want to fix them, then the buyer could back out. And how that would look is, you would basically give a notice to the seller saying, “hey, here are the things we’re concerned about, if you don’t fix it then we’re backing out.” That would be what we call a notice of defects. But in between that time frame we have a certain time, typically 15 – 18 days, to conduct a home inspection and before that time frame comes up, you’d have time to amend the offer to address any concerns or problems.
If it’s inspection day, what do you expect as a buyer? One of things we recommend and what’s nice is you can go to a summary of the home inspection with the inspector. So the inspector might be there for 3-4 hours and for the last half hour, you can join the inspector at the house where they can point out some of their findings, go through their summary report, it’s really valuable because you can learn a lot about the house. Maybe not even so much the defects or problems that it has, but just some helpful things to know as a homeowner, just super valuable. Like where is the shut off, how do things work, what light switches power what areas, all those different things the inspector found, they can summarize in that last 30-minutes, it’s very beneficial.
Ok, how do the negotiations work? Again, the seller is not required to fix anything. The buyer can propose the seller fixes certain items and it sometimes goes back and forth. One of the myths of a home inspection is the seller HAS TO fix items from the home inspection and they really don’t. They don’t have to do anything.
Sometimes even agents get this mixed up where a seller is not required to do anything from a home inspection. Obviously sometimes it’s in the seller’s best interest to address some of those items. That’s where a good agent can help them decide which things should we address, which things should we not. That’s why it’s helpful for that relationship to between, in this case, between the agent and the seller, where the seller can say, he what things realistically need to be fixed from this list? So even if things don’t work out with this buyer we can or these don’t become an issue in the future.
So again, things kind of go back and forth. Again, the seller is not required to do anything, but it’s in the best interest for everyone to be level headed in the negotiations and for there to be some compromise. The buyer is going to need to do some things on their own and the seller should do some of the bigger things, just working together to get that negotiated.
Another myth we hear is, “this home won’t pass a home inspection”. Really a home inspection is not a pass or fail kind of thing and most of the time the home inspector is going to find something. It’s actually very uncommon a home inspector doesn’t find at least 10 things that they would note on their home inspections.
So, if you’re paying them anywhere from $300 – $400+ to inspect the property, they are going to find something to note. So it’s not really like a pass or fail.
Another myth is that the bank requires a home inspection. That’s not the case. I think there has been only once where the bank with a special loan type actually required a home inspection. And that’s another thing too. Remember the bank is going to want to make sure the house is in decent shape and it’s worth at least what you’re paying for it. That’s why they send that appraiser out to assign a value to make sure the home is worth what you’re paying. The appraiser is the one who is going to be doing an inspection to make sure there is nothing majorly wrong with the house. A lot of times the bank won’t see the home inspection.
That brings me to another myth. Who sees the home inspection? Sometimes buyers think the city or municipality that the home is in will see the home inspection and that’s not necessarily the case. It’s really between the buyer and the seller, the agents and the inspector involved. That inspection report is really confidential to those parties. It’s not something that gets broadcasted to the municipal inspector, there really is no municipal inspector police that says, “Hey we have to, if there are items that need to be fixed for the municipality”.
If the municipality found out, they’d probably request it to be done but it’s not like that gets shared with them. So, a couple other things. Tips for buyers, obviously as a first time home buyer or even if you’ve bought a lot of houses, we always recommend you get the home inspected. There are cases if you’re an investor or you are really familiar with construction or are buying a property and really trying to get a good deal on it, maybe taking the house as is, not doing a home inspection isn’t a bad idea. But in most cases we recommend a home inspection.
So, here are some tips for buyers. #1 is schedule your home inspection right away. So you have this window to do the home inspection and if there are issues that come up, you want time to be able to negotiate.
A lot of times the home inspector is going to pick out some general concerns. If they see a concern, they might not know the full extent of what is going on.
A home inspector knows a lot about the house but they are not specialists in each area. So, for example if an inspector says, “hey this furnace just doesn’t seem right and how it’s functioning”. At that point it’d be great to have a follow-up inspection on where you could have a HVAC contractor come in and they are going to know what is going on with that furnace. That’s why a follow-up inspection can be very helpful and if you schedule your inspection right away you have time to do that. If you don’t, it gets a little bit more tricky.
That’s the second tip too. Don’t be afraid to have a follow-up inspection. If there is something on the report the inspector doesn’t really know, that’s where it’s great to have a contractor or someone qualified to come out and really look at it. A lot of times we find that specialist is able to hammer down on a fix and a lot of times it’s less of a problem or more of a problem than the inspector had thought.
Tip #3 is to go to that inspection summary. You can learn a lot about the house and get a good idea about what issues are there, and you can gauge from the home inspector what is the magnitude of this problem… is it something I should be worried about? Or is it something that I can address in the next year or two? So, going to that summary is very valuable.
#4 is for buyers. Have the proper expectation. No house is perfect. You’re not going to be looking for a perfect home inspection, because it’s just not going to happen most of the time.
You want to make sure there is nothing majorly wrong with the house that’s going to put you under when you move in, or be an immediate concern. A lot of times you have to have that proper expectation the sellers are not going to fix every little thing on the home inspection. A lot of the things that the inspector points out are really just for you to know. They are for your knowledge, but not necessarily something you need to negotiate. Yes, just having those proper expectations.
As a seller, here’s a tip too! Have the proper expectation. You may have lived in a home for 10 years and you may think, “hey I’ve never had any problems here, there are no issues”. There’s likely going to be some things that come up in the home inspection. A lot of people don’t like their home to be criticized, that’s very understandable, but have the expectation that they are likely going to find some stuff, even if you haven’t had any problems there, I’m probably going to end up doing some kind of repairs. That’s where you work with your agent to discuss – what’s reasonable here? What should we do? And what should we leave for the buyer to do?
And the second tip for a seller is you can do some work to prepare for a home inspection. This is going to probably be a separate episode in and of itself. Basically if you’re walking around your house and you notice, “hey, these outlets are missing a cover or this looks like it could use some caulk around the toilet or the tub…or there is some chipped paint around my windows”. Just those little maintenance items that you can do can minimize what that inspection report can look like.
Even if some of those maintenance items are taken care of, it’s a little bit less overwhelming for a buyer when there are few items that come up.
Alright, there is the podcast. Thanks for tuning into this week’s episode! I appreciate you guys. If you like the podcast and find it valuable, let me know. Give us a review on your favorite platform and I’m looking forward to doing more shows!
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Austin Solomon | The Solomon Group – Coldwell Banker Action – (715) 212-4693