During the Home Inspection period, which begins the day after your offer is accepted, and an executed contract has been received by both sides, you will have the opportunity to truly get a picture of how well the seller has maintained their home. The best home inspector walks the entire property, commenting on all exterior issues starting with the roof, gutters, downspouts, chimney, siding and the exterior grading of the property. Also the driveway, sidewalks and condition of landscaping is another factor they will consider, pointing out any flaws or needed repairs or updates.
In a seller’s market, it is less likely that sellers will accept your offer if it is contingent on the inspection and there are multiple offers, however, offers made with a non-contingent inspection do get consideration, and, sellers appear to be willing to make some repairs. In multiple offers, where my clients have paid over list price, and their inspection was non-contingent, the sellers still agreed to make some repairs.
In a more balanced market, where neither side dominates, or, in a Buyers’ market, where Buyers have more negotiating power, often sellers are willing to give back funds to the buyer in lieu of doing repairs. Conversely, if there is time, and you can afford to take the time get estimates, it is wise to find out what the work might actually cost and get an escrow set up by the lender or title company to pay contractors after closing if repairs cannot be completed by final walk through.
One of my 2020 clients has a new window and extensive exterior stucco repairs costing about $25,000 paid for by the seller after closing. An escrow fund was created for one and a half times the amount of the repairs, and the funds were held by the lender until the work was satisfactorily completed. Only then was the contractor paid. At that point the seller would have received back any funds not used to make the repairs.
Any repairs needed, such as chimney, roof, siding, etc might already be taken into consideration by the seller adopting a lower price point before listing. In this low inventory market, however, buyers are often overpaying for a property in need of expensive repairs, and, they get no consideration for the repairs because of non-contingent offers. I encourage my clients to pass on these types of properties unless they have deep pockets and plan to remain in the property until their home value, with repairs, catches up to appraisal value.
So, it’s very important to consider your cash flow and reserves in those situations. You don’t want to have to spend all your cash reserves doing the sellers’ deferred maintenance. You might need that money for other things, since you often need to replace or add items when moving.
On the interior, the ceilings and walls are checked for cracks that might be more than hairline cracks which can occur with typical settling over time. Are windows and doorways level? If not, that could be an indicator of potential structural issues. When a home inspector finds issues like severe structural settling, and you want to get to the source of this issue, the basement foundation and structural support is often the place to search.
Because many homes in the metro area are up to or over 100 years old, checking for structural foundation issues, temporary structural supports or repairs to the foundation is key, if the basement walls haven’t been finished, which would hide any potential issues from sight. Non-level flooring, crooked doorways and windows could be evidence of structural issues that were not repaired, allowing the home to settle inappropriately. Having a structural engineer examine the home for potential structural issues is wise if you are still interested in the home, or, if you wish to add onto the structure, and need to know if it will bear the weight of the additional square footage.
The additional structural inspection can cost up to or over $500 depending on how extensive a report is needed, however, if the home is desired by the Buyer, it is worth the additional funds to ascertain if the house needs costly repairs or not.
Some of my buyers had homes inspected to ensure they could build a second floor onto a garage, and verify that a structure was stable. Another Buyer was purchasing on a creek, and the house was on an elevation showing a fracture in the basement flooring. A structural engineer confirmed the crack in flooring was not an indicator of a structural issue, but, a torsion stress fracture from a 1964 tornado!
While your traditional home inspector cannot view through walls to check the condition of all the plumbing and wiring, they can check to see all sinks and drains are leak proof and they can check outlets to ensure there are no reverse polarity issues and point out where the seller might not have updated to GFCI or ‘ground fault interrupter circuits’ allowing the breaker to trip if the circuit is overloaded. These need to be installed within 6 feet of water, so, should be installed in the kitchen, bathrooms, laundry and often in the garage as well. A good home inspector will check every outlet in every room and let you know if any have issues.
The attic is another area that often can show signs of past or current issues, such as moisture problems, bathroom vents not connected to the roof when roofs were redone, rain water leakage or condensation issues, or pest intrusion as well as low insulation levels. If the seller has not checked their attic recently, it will be smart of the Buyer to get an accurate idea of what potentially might need to be done in the attic. Best case scenario is you could need to do nothing, or would be smart to add some additional insulation. Worst case is the attic is improperly vented or you have pest intrusion or insulation very low.
All Buyers want to understand the age and functionality of their HVAC and water heater. Is it appropriate for the size of the home, how old is the system, how much potential useful life does it have? All Buyers would love their new home to have new HVAC and water heater and roof so they don’t have to think about replacing those bigger ticket items for years to come, so, you will likely compete with other Buyers for homes that are completely updated in multiple offers.
One client was informed that a furnace was not functioning properly during inspection, so asked the seller for a furnace repair. Initially, the first repair estimate was for a replacement of the furnace, however, after getting a subsequent estimate from another contractor, the seller found the repair was possible and would cost one third of replacing the furnace. Of course, the seller opted for that repair versus replacement, and, the Buyer had to accept that instead of getting a new furnace. So, although the outcome is that the furnace worked at closing, there is no guarantee of how long it will keep working, and, it is wise to save some funds in case old systems stop working after you own the property. Also, be sure the furnace filters are changed regularly, sometimes that has been the only reason a furnace was cycling on and off a lot, and, changing the filter out made all the difference.
Another Client had the water heater fail a month after they purchased. Luckily, they had the seller purchase a home warranty at closing, so, for $150 in fees, they received a new water heater. Much cheaper than the $1200-$1600 price they might otherwise have paid.
Having a sewer line camera is essential unless the home you are intending to buy is newer. Older sewer lines can be clogged by tree and bush roots, and this can cause sewer backups. If there are other issues, a sewer camera will point them out.
One client found the sewer line did not have an interior access to check the line from inside the house, and, we then included in an amendment that the seller must create a sewer line access and verify with a sewer line camera video that there no issues in the line. A subsequent access was created in the front yard, and, the client then found out that the house’s sewer line did not connect to the city sewer. In the middle of Winter, the home owner had to pay for the city to excavate a spot in the street in front of the house to allow a repair. The repair was completed and the city came out again in the Spring to fix the street after all the work was completed. The client saved $10,000 in repairs on their home.
Another client moved to a city where the repairs were required to the sewer, but, sellers paid the Buyers the cost of doing those repairs in Seller paid closing costs reducing Buyers closing costs by the appropriate amount.
An additional inspection is to check the Radon gas levels in the home, Radon being a colorless odorless gas that causes lung cancer. The EPA, the State of Minnesota and others provide in-home test kits you set out and mail in for results. These are often 30-45 day long tests and you have to wait for the results for several weeks.
During a home inspection you don’t have the luxury of that kind of time, so you can get a 48 hour snap shot of the radon gas levels, and potentially use that as a way to get the seller to cover the cost, if radon remediation is required. The seller would have to report the radon test results to future potential buyers, as, it is a material fact, so, it might be worth it for the repairs to be done or funds to be paid toward the Buyers’ closing costs in lieu of repairs.
In any case, there is no substitute for a great home inspection, and you should walk away with a better understanding of how systems in your home should work and what types of home maintenance will be required by you to keep it up over time. The report should be something you can work off of to fix and smaller items you prefer to manage on your own, and, keep as a record for future.
Also, my home inspector provides a guide to the systems and maintenance items as a seasonal checklist to ensure my clients are prepared to cover all the bases needed to keep the home maintained well throughout the year. Photos of the issues mentioned will also be in the report with additional details and, allowing your agent access to the report will help to get sellers to make repairs.
Written by Claire Bastien for Buyers Real Estate Group
