If you’re in a home negotiation, whether you’re the buyer or seller you better watch out for the home inspection grinch. To the buyer, the grinch is a kindly and informed fellow who will uncover all of the home’s secrets and to the seller, the grinch is a nosey picky guy who when he uncovers all of your home’s secrets will tell the buyer. Whichever grinch you see he is a necessary evil to the purchase transaction.
Home inspections have become standard operating procedure for both single-family homes and condos all over the country. Generally, a seller is entitled to a home inspection within a specified number of days after both parties have signed the purchase of sale agreement and/or contract of sale. The number of days is determined by the culture of the region and the availability of inspectors in that region.
Inspectors are looking for defects in major systems like electrical, plumbing and heating and air conditioning. In Florida in particular, inspectors are very sensitive to mold and mildew and may use a moisture meter looking for damp areas behind walls from a plumbing leak. They will also check for water pressure in toilets, tubs and dishwashers, as well as the condition of appliances and outdated wiring.
If an inspection comes back with legitimate problems, the buyer and seller should come to an agreement and time frame for repairs. If they fail to do so, the contract is voided, the buyer gets their earnest money back and everyone walks away.
Some buyers will waive the contingency of inspection in an effort to make their offer more appealing, however, they may still have an inspection. This means that in theory if an inspector finds a problem the buyer cannot walk away from the contract and will forfeit their earnest money. But, as we all know, anything can be litigated, tying the house up in court while the buyer tries to get his money back or renegotiates a new price. The point is, be careful with a buyer who removes the inspection contingency as a strategy.
As a seller, there are a couple of ways to keep the real estate grinch away from your door. One is to have your own home inspection prior to putting your home on the market. This will give you a heads up on any problems you may not know about or may not think are serious. An inspection is also a useful tool to provide your broker with to pass on to potential buyers along with other disclosure documents. Buyers will likely still want their own inspection, but it will give them a nice warm feeling about the home and you as a seller.
Another positive to present to buyers is a gift of a home warranty that covers certain repairs to appliances, plumbing, electrical systems and heating and air conditioning units. Warranties are typically for a year and will cost about $700 for the average single-family home. According to the National Association of Realtors, only 17% of all sellers offer a home warranty as an incentive to potential buyers. Again, buyers will get a nice warm feeling about the transaction and it will also make your home stand out among others. Home warranties included in the sale should not, however, remove the home inspection from the buyer’s list of due diligence items.
Even though the inventory of homes is way down, sellers should still attempt to provide quality disclosure about their property and remedy serious issues. It’s the ethical thing to do and it’s the best way to keep the Grinch from stealing your real estate transaction.
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