You have your home inspection report. Now what?
When I complete my home inspection report, often I never hear back from my clients. I'd like to thing that this is because my reports are so clear and understandible, that there is no need for me to explain anything. However, the opposite may be true - clients may be so bewildered, overwhelmed and stressed out about buying their house, that they don't know what to do with the report when they get it. Recently, several clients have asked me what they should do with the results of my home inspection report, and I realized that they need help!
WHY ARE YOU GETTING A HOME INSPECTION?
You are spending hundreds of thousands, perhaps millions on your new home or investment property. You want to know that after the settlement day, there will not be any problems. Of course, there will be problems - even in new homes. So, the home inspection is really another layer of "assurance" that what you are buying is what you THINK you are buying. You don't want to be spending your post-settlement cash on shoring up foundations, new roof, rewiring your electrical system, etc. You want to spend your money on furnishings and accessories, right? So, the home inspection will tell you the condition of the structure, components and systems, to the best of the ability of your home insspector. It is a visual inspection, but good home inspectors can often spot things that would elude most people's eyes.
RESULTS OF THE HOME INSPECTION
The inspection is done. You now hopefully have a summary report, and a complete report. The summary is a gloss-over of the defects that your inspector believes are worthy of mention. Note that all home inspectors are human (its a requirement of the NJ licensing law!) and so each one will have their areas of expertise. Summary reports can be confusing because the specific areas are usually not addressed ("wood is peeling"). You need to refer to the complete report that will hopefully have annotated photos or a good explanation of which room has the problem or what part of the foundation needs attention.
INTERPRETING THE HOME INSPECTION REPORT
Here is where many buyers get confused. Is the defect really a problem? For example, saying a roof is "beyond its design life" does not tell you it has failed to keep water out. I have seen many roofs that are horrific looking, but are really doing their job quite well nonetheless. Home inspectors have to walk a fine line when reporting on defects. Good inspectors will consider the age of a building and may change their emphasis based on the home's age. Home inspectors cannot know when a roof will begin to leak, but they can tell if the roof is old. So how does this help you? Be sure to speak with the inspector to get calarifications - BEFORE contacting the seller. You may find that something thet looks onerous in the report is not so bad. Get a handle on what has failed, and the seriousness of it.
WHAT TO EXPECT THE SELLER TO HANDLE
In New Jersey, you can sell a home "as-is". However, even if this language is communicated to the buyer, most real estate contracts will permit the buyer to get a home inspection. The implication is that no home is really sold "as-is". So, you now have a list of defects - what do you do with it? Hand it over to your agent and say "seller needs to fix them all", or something more along the lines of a negotiation? I recommend the latter. Sellers will usually fix safety problems since once they are made aware of them, it can come back to haunt them later if they do not ("So, what you are saying, Mr. Jones, is that you knew the handrail was loose and yet YOU DID NOT REPAIR IT and my client fell and is now in a wheelchair???). They will also consider fixing structural problems, since these may not only kill your deal, but the next deal as well. The grey areas are non-safety issues where the problem will cause issues down the road such as a leaking valve, peeling paint, failed thermal seal in window, loose piece of siding, or old roof. Sellers can balk at doing these things.
NEGOTIATING WITH THE SELLER
As an experienced home seller and home buyer, I have been through the home inspection experience from both sides. I can say that the people who are most successful at getting the seller to concede on repairing things are those that do not shove a long list at the seller and say "fix them all". Sellers will put up resistance if you are being picayune. Consider those items that are really not important (you are going to renovate the kitchen, so why demand a new countertop?). Present your "wish list" to the seller in a clear, concise manner, since they are not obligated to fix everything you ask for. Things that would be readily evident to you when you saw the building before making the offer (gutters missing, siding blown off) generally should not appear on your list because a seller would have expected that your offering price was reflective if these things. Patch a drywall hole where the door knob hit it? Give the seller a break, do it yourself after you buy it.
WHEN THE SELLER RESPONDS
Do not expect that all of the items you ask for will be fixed. You need to think about what some of the items would cost you, and will you even do them if the seller does not(like replacing an old air conditioning unit before it fails). Remember that the seller will be reluctant to fix things that they believe are not a problem - believing that they have lived with these things, so why can't you?
BAILING OUT WITH THE HOME INSPECTION REPORT
OK, so you are getting cold feet on the home you are buying. What's a person to do? Sometimes, people use the inspection report as an excuse to cancel the real estate contract. As a home inspector, I fortunately have not had to play dealkiller, at least as far as I know. I really want the deal to go through, and do not want to get a reputation as a "deal killer". Deal-killing inspectors (1) have not spent enough time educating their clients, (2) like to use the fear-mongering words "danger", hazard", and alarming", and (3) are quick to report something as a defect because they don't take the time to investigate further. That's not to say that I have not reported serious problems. Its just that if handled right, almost all problems can be overcome.
SELLER AGREES TO REPAIR. NOW WHAT?
Once the seller agrees to correct a deficiency, you will need to have it verified. Some sellers are handy and can do some fixes themselves, but safety-related items and plumbing should be left to the experts. Handy homeowners can hide a problem just as easily as fix it, so juct becuse the problem is no longsr visible does not mean it has been correctly repaired. For example, drywall that is water damaged can be raplaced, but will it get damaged after the next heavy rain? And for big issues like structural repair, a permit will be required.
TAKE THE MONEY AND RUN?
Clients ask me whether it is better to have the seller fix the problem or get an allowance at the settlement table, or escrowing of funds. I say that it is better to have the seller get it fixed, because what looks like a nice cash offer for a new roof at settlement may not look so good when the roofer finds that you need six sheets of roof sheathing once he rips the old shingles off. Of course, I have also seen sellers give a generous payment or escrow more money than I would have for a repair. But, its more likely that the problem will cost more than the seller thinks, rather than less.
I hope this helps you. Remember, always get your inspector to clarify anything you are not sure of.
WHY ARE YOU GETTING A HOME INSPECTION?
You are spending hundreds of thousands, perhaps millions on your new home or investment property. You want to know that after the settlement day, there will not be any problems. Of course, there will be problems - even in new homes. So, the home inspection is really another layer of "assurance" that what you are buying is what you THINK you are buying. You don't want to be spending your post-settlement cash on shoring up foundations, new roof, rewiring your electrical system, etc. You want to spend your money on furnishings and accessories, right? So, the home inspection will tell you the condition of the structure, components and systems, to the best of the ability of your home insspector. It is a visual inspection, but good home inspectors can often spot things that would elude most people's eyes.
RESULTS OF THE HOME INSPECTION
The inspection is done. You now hopefully have a summary report, and a complete report. The summary is a gloss-over of the defects that your inspector believes are worthy of mention. Note that all home inspectors are human (its a requirement of the NJ licensing law!) and so each one will have their areas of expertise. Summary reports can be confusing because the specific areas are usually not addressed ("wood is peeling"). You need to refer to the complete report that will hopefully have annotated photos or a good explanation of which room has the problem or what part of the foundation needs attention.
INTERPRETING THE HOME INSPECTION REPORT
Here is where many buyers get confused. Is the defect really a problem? For example, saying a roof is "beyond its design life" does not tell you it has failed to keep water out. I have seen many roofs that are horrific looking, but are really doing their job quite well nonetheless. Home inspectors have to walk a fine line when reporting on defects. Good inspectors will consider the age of a building and may change their emphasis based on the home's age. Home inspectors cannot know when a roof will begin to leak, but they can tell if the roof is old. So how does this help you? Be sure to speak with the inspector to get calarifications - BEFORE contacting the seller. You may find that something thet looks onerous in the report is not so bad. Get a handle on what has failed, and the seriousness of it.
WHAT TO EXPECT THE SELLER TO HANDLE
In New Jersey, you can sell a home "as-is". However, even if this language is communicated to the buyer, most real estate contracts will permit the buyer to get a home inspection. The implication is that no home is really sold "as-is". So, you now have a list of defects - what do you do with it? Hand it over to your agent and say "seller needs to fix them all", or something more along the lines of a negotiation? I recommend the latter. Sellers will usually fix safety problems since once they are made aware of them, it can come back to haunt them later if they do not ("So, what you are saying, Mr. Jones, is that you knew the handrail was loose and yet YOU DID NOT REPAIR IT and my client fell and is now in a wheelchair???). They will also consider fixing structural problems, since these may not only kill your deal, but the next deal as well. The grey areas are non-safety issues where the problem will cause issues down the road such as a leaking valve, peeling paint, failed thermal seal in window, loose piece of siding, or old roof. Sellers can balk at doing these things.
NEGOTIATING WITH THE SELLER
As an experienced home seller and home buyer, I have been through the home inspection experience from both sides. I can say that the people who are most successful at getting the seller to concede on repairing things are those that do not shove a long list at the seller and say "fix them all". Sellers will put up resistance if you are being picayune. Consider those items that are really not important (you are going to renovate the kitchen, so why demand a new countertop?). Present your "wish list" to the seller in a clear, concise manner, since they are not obligated to fix everything you ask for. Things that would be readily evident to you when you saw the building before making the offer (gutters missing, siding blown off) generally should not appear on your list because a seller would have expected that your offering price was reflective if these things. Patch a drywall hole where the door knob hit it? Give the seller a break, do it yourself after you buy it.
WHEN THE SELLER RESPONDS
Do not expect that all of the items you ask for will be fixed. You need to think about what some of the items would cost you, and will you even do them if the seller does not(like replacing an old air conditioning unit before it fails). Remember that the seller will be reluctant to fix things that they believe are not a problem - believing that they have lived with these things, so why can't you?
BAILING OUT WITH THE HOME INSPECTION REPORT
OK, so you are getting cold feet on the home you are buying. What's a person to do? Sometimes, people use the inspection report as an excuse to cancel the real estate contract. As a home inspector, I fortunately have not had to play dealkiller, at least as far as I know. I really want the deal to go through, and do not want to get a reputation as a "deal killer". Deal-killing inspectors (1) have not spent enough time educating their clients, (2) like to use the fear-mongering words "danger", hazard", and alarming", and (3) are quick to report something as a defect because they don't take the time to investigate further. That's not to say that I have not reported serious problems. Its just that if handled right, almost all problems can be overcome.
SELLER AGREES TO REPAIR. NOW WHAT?
Once the seller agrees to correct a deficiency, you will need to have it verified. Some sellers are handy and can do some fixes themselves, but safety-related items and plumbing should be left to the experts. Handy homeowners can hide a problem just as easily as fix it, so juct becuse the problem is no longsr visible does not mean it has been correctly repaired. For example, drywall that is water damaged can be raplaced, but will it get damaged after the next heavy rain? And for big issues like structural repair, a permit will be required.
TAKE THE MONEY AND RUN?
Clients ask me whether it is better to have the seller fix the problem or get an allowance at the settlement table, or escrowing of funds. I say that it is better to have the seller get it fixed, because what looks like a nice cash offer for a new roof at settlement may not look so good when the roofer finds that you need six sheets of roof sheathing once he rips the old shingles off. Of course, I have also seen sellers give a generous payment or escrow more money than I would have for a repair. But, its more likely that the problem will cost more than the seller thinks, rather than less.
I hope this helps you. Remember, always get your inspector to clarify anything you are not sure of.
posted by Zack | 11:36 AM
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