Both
Buyers and Sellers Benefit from Inspections
by Joanne Perkins
A home inspection can offer assistance to a
seller who is trying to provide accurate
disclosure and a home inspection can assist a
buyer in understanding the condition of the
home.
The laws of many states allow the buyer and
seller a few days to complete the professional
property inspection process during a home sale
transaction. The results of the inspection can
impact your current negotiations and delaying
the process could have legal ramifications.
If a buyer delays the professional inspection
process, his refundable deposit money is put at
risk. Closing escrow without the benefit of a
professional inspection, the Buyer and Seller
will stand alone to defend and resolve
unforeseen problems in the home. These
situations are avoidable, in a practical and
legal sense, by completing the professional Home
Inspection process within the 10-15 day
contingency period.
The inspector
A professional inspector is third-party,
independent of the transaction, although
"strongly recommended" many times
throughout California Real Estate documentation.
S/he visually inspects and detects adverse
conditions in a home. S/he investigates,
operates and systematically identifies the major
systems and components of the home.
The inspector is addressing health and safety
issues, making recommendations and counselling on
repair options and maintenance. As a buyer, be
prepared to attend the inspection.
Professional inspectors will not perform or
offer to perform any repairs to a home,
eliminating potential for conflict of interest.
Health & safety concerns, adverse conditions
and required re-sale corrections are discussed
and documented by the inspector. Issues can be
anything from minor roof repairs to improper
venting causing carbon monoxide emission or a
fire hazard. A defective light switch to
structural failure. Sometimes issues suggest
maintenance, some require repair; all are health
and safety issues that a buyer wants to know
about.
An inspector is a trained generalist,
identifying and sorting through the multitude of
major systems and components, meeting state
required "physical condition
disclosure" requirements.
The Inspection Report
The inspector's report is an important tool
in Real Estate transactions. It is the only
document that details the product being bought
and sold. Once conditions are defined, it is up
to the buyer to decide if the current condition
of the home will meet his financial and family
needs. The buyer decides what is acceptable and
what isn't. Sellers are not required to make the
corrections, although re-negotiations are often
the result of facts documented at the
inspection. It is information needed to make
some educated business decisions.
"As is," a common yet unsettling
term used in Real Estate, expresses a sellers
unwillingness to be accountable for conditions
present in the home, customarily included in
non-owner occupied homes, repossessions or bank
owned properties. "What is?" should be
a buyer's first response when involved in an
"as is" transaction. An amateur roof
installation or improper wiring of the
electrical system will ultimately impact a
buyer's family budget. A property inspection
defines "what is" information needed
to determine if the sales price accounts for the
repair or replace costs the home will need.
"As is," a take it or leave it
mentality, is often flexible. Re-negotiations,
based on inspection facts, between motivated
buyers and sellers has proven to be successful.
Agreeable terms can usually be reached.
Inspections aren't just for buyers
Home sellers need a professional inspection and
report to protect themselves from liability of
future non-disclosure claims. A pre-listing
inspection also provides sellers with
appropriate condition information, used to price
and prepare their home for sale. When repairs
are needed, the seller can price-shop bids and
choose the contractor without feedback of a
potential buyer. The seller can disclosure
adverse conditions they decide not to repair,
offering them some relief of liabilities carried
in re-sale real estate transactions. The report
helps in marketing to potential buyers,
providing up-front information to determine if
maintaining this home will meet their financial
position.
The buyer's inspection
Once a buyer has an accepted and signed
purchase contract, his deposit money is
protected in escrow for approximately 10 days.
After that time, a buyer's deposit is at risk.
As an example, 5 days into escrow, the buyer
learns that the heating system needs some
repairs and is nearing the end of its useful
life. The buyer feels this condition is
unacceptable and brings his concerns to the
seller. If the seller is not willing to
re-negotiate, the buyer can have his deposit
returned to him from escrow and continue house
hunting. If the buyer learns of the heater
problem after the 11th day of escrow, the
deposit money becomes a factor. The seller and
Realtors now have a legal right to a portion or
all of the buyers deposit money as compensation
for lost-marketing momentum and costs. This
jeopardizes his deposit and eliminates leverage
the Buyer would have had the day before. It is
called a "contingency period" Loan
approval also needs to be accomplished during
the contingency period to protect a buyer's
deposit.
Home buyers and sellers can easily avoid
contractual timing obligations and escrow
complications that mandatory condition
disclosure can create. In some states, the
professional inspection process is done before
signing a sale or purchase contract. A buyer can
have their potential home professionally
inspected prior to signing an offer to buy.
Sellers can have a pre-listing inspection prior
to marketing their home for sale. Sign first,
ask questions later' offers no benefits to a
buyer or seller.
The Best Protection
An Inspector collects his fee at the time of
the inspection, purposely keeping himself out of
the transaction. A professional Inspector is
accountable for accurate condition disclosure.
Inspection Industry Standards of Practice have
evolved over time, clarifying the varied
expectations in Real Estate. There is logic and
experience to back the many disclaimers Industry
Standards include. An experienced inspector can
give you a tremendous amount of information.
Home Inspections are not intrusive or
technically exhaustive and should not be
considered a guarantee or warranty. It is the
best information and protection available at an
affordable cost. The Standards of Practice
of
the American Society of Home Inspectors (ASHI) (recognized by the Ontario Association of
Home Inspectors (OAHI)) define the standard of
care and expectations. The Home Inspection
process meets the mandatory condition disclosure
requirements of Real Estate.
Professional inspections are not mandatory,
but an inspection is the best information and
protection available at an affordable cost. Most
regions have adopted Standards
of Practice from the American Society of
Home Inspectors (ASHI.) These professional
standards are specifically designed to meet the
mandatory condition disclosure requirements for
all parties involved.
