You found the house of your dreams! You have put in an offer and it was accepted. Now it’s time for the home inspection.
You ask, “Why do I need a home inspection? It costs so much!” I tell both my purchasers and my sellers that a home inspection is so that the purchaser knows what they are buying and to determine if there are any structural issues in the house. It is not to renegotiate the price – unless there are major issues.
Some things you should know generally about the inspection:
What if there are issues like a leaking toilet, broken window or a missing porch railing?
As a buyer, you can ask the seller to fix these issues, but know that they aren’t required to do so. You will review the inspection report with the real estate agent, and if a repair falls in one of those categories (plumbing, heating, electrical, appliances, etc.) the agent can ask the seller to make the repair.
Once you settle on what needs to be done, make sure your contract reflects everything. This is where using an attorney, along with your agent and broker, can give you an added layer of support.
We have a few options:
CAVEAT: If you are applying for an FHA loan, note that the lender’s appraiser may identify certain repairs which must be made prior to closing. Unless the seller agrees to make them, those repairs will be the purchaser’s responsibility. This happens in a relatively small number of sales, and are usually related to when something does not comply with Town Code, like a missing handrail or a broken step.
Sometimes a property will have an in-ground pool. For circumstances like buying a house in the winter and the in-ground pool isn’t able to be inspected, money is held in escrow until the pool is opened. A seller can also exclude the pool in the sale, so look for that in the contract.
Know your market.
If it’s a seller’s market, you might not want to push very hard on minor repair issues, but on the flip side, if it’s a buyer’s market, you have a better chance of getting what you want. What if you do the final walk-through and there are issues? Right before the closing, the purchaser does a final “walk-through” at the house. This is the purchaser’s opportunity to make sure the house is in the same condition as when they did their home inspection. If there is something broken or doesn’t work right, let me know immediately. Again, we have a couple of options.
First, the seller can get someone out to make the repairs or the purchaser will get some estimates to get the repairs made. Generally, the seller’s attorney will hold money in escrow to ensure that the repairs are made in a prompt, workmanlike manner. OR, if the repair is minor, and the parties can agree on a number, the parties can work out a credit to the purchaser at the closing table.
Here are some common contract provisions MOST important for you, the purchaser:
You ask, “Why do I need a home inspection? It costs so much!” I tell both my purchasers and my sellers that a home inspection is so that the purchaser knows what they are buying and to determine if there are any structural issues in the house. It is not to renegotiate the price – unless there are major issues.
Some things you should know generally about the inspection:
- Usually, properties are listed “as is.” Meaning the seller won’t do any updates to the home. Generally, though, most homes come with certain warranties and representations by the seller, meaning that the plumbing, heating, electric, appliances, in-ground sprinklers, in-ground pools (not usually an above ground pool) are in good working order, and the roof must be free of leaks. As I said before, the inspection is to determine if there are any structural issues with the house and to determine whether those items are in good working order.
What if there are issues like a leaking toilet, broken window or a missing porch railing?
As a buyer, you can ask the seller to fix these issues, but know that they aren’t required to do so. You will review the inspection report with the real estate agent, and if a repair falls in one of those categories (plumbing, heating, electrical, appliances, etc.) the agent can ask the seller to make the repair.
Once you settle on what needs to be done, make sure your contract reflects everything. This is where using an attorney, along with your agent and broker, can give you an added layer of support.
We have a few options:
- Repair Rider: If the repair hasn’t already been made by the time we go to contract, we craft a rider to the contract of sale which lists repairs to be made by the seller by the closing.
- Repair Credit: Often the seller does not want to be bothered, but will give you a repair credit at closing, which reasonably relates to the cost of the repairs.
CAVEAT: If you are applying for an FHA loan, note that the lender’s appraiser may identify certain repairs which must be made prior to closing. Unless the seller agrees to make them, those repairs will be the purchaser’s responsibility. This happens in a relatively small number of sales, and are usually related to when something does not comply with Town Code, like a missing handrail or a broken step.
Sometimes a property will have an in-ground pool. For circumstances like buying a house in the winter and the in-ground pool isn’t able to be inspected, money is held in escrow until the pool is opened. A seller can also exclude the pool in the sale, so look for that in the contract.
Know your market.
If it’s a seller’s market, you might not want to push very hard on minor repair issues, but on the flip side, if it’s a buyer’s market, you have a better chance of getting what you want. What if you do the final walk-through and there are issues? Right before the closing, the purchaser does a final “walk-through” at the house. This is the purchaser’s opportunity to make sure the house is in the same condition as when they did their home inspection. If there is something broken or doesn’t work right, let me know immediately. Again, we have a couple of options.
First, the seller can get someone out to make the repairs or the purchaser will get some estimates to get the repairs made. Generally, the seller’s attorney will hold money in escrow to ensure that the repairs are made in a prompt, workmanlike manner. OR, if the repair is minor, and the parties can agree on a number, the parties can work out a credit to the purchaser at the closing table.
Here are some common contract provisions MOST important for you, the purchaser:
Mortgage Contingency Clause
this means the contract is contingent upon you getting a mortgage commitment from a lender, within a certain period of time, usually 45 days. The mortgage commitment letter from the bank is a document stating that you have been approved to borrow a certain amount of money under certain conditions. If you can’t get the commitment within that period of time, or your mortgage application was denied, you have the right to cancel the contract and get your down payment back. (We can also generally ask for additional time if the lender just needs a little more time).
Post Closing Possession Clause
if you are buying a home and selling your current home, be careful committing to a closing date, as coordinating two at the same time is quite the task. This clause allows the seller’s attorney to hold money in escrow for usually 3-5 days, giving you time to actually move out of your current home and into your new home after closing. The tax adjustments will be done as of the date of possession, not the date of closing. The seller will pay for the purchaser’s interest on the mortgage, as well.
Buying a home can be a stressful process, but educating yourself ahead of time and having the support of professionals, like the staff at Sugarman Law, P.C., can ensure a successful and maybe even fun, experience!
Buying a home can be a stressful process, but educating yourself ahead of time and having the support of professionals, like the staff at Sugarman Law, P.C., can ensure a successful and maybe even fun, experience!
