Purchasing a home is a big deal! I think we all understand that fact. There’s so much that goes into it – not only is there the home search process itself (which can be overwhelming sometimes!), but also the financing process and the due diligence process of the purchase contract too. One of the major steps in the home purchase process is conducting the home inspection. As a home-buyer or seller in the Denver metro real estate market, here are 5 things you should know:
1. Buyers have the right to do any inspections they’d like. In section 10 of the purchase contract, you’ll find the rights of the buyer as they pertain to the inspection. When it comes to which inspections a buyer can do, there are no limitations specified. However, buyers aren’t allowed to do anything that would cause damage to the home. At the same time, any inspections buyers choose to do are at their own expense. When I’m working with my clients, I typically recommend three inspections be done immediately after going under contract: a general home inspection, a radon test, and a sewer scope. These will provide you a great overview of the condition of the property and help you decide on any additional inspections you may want to do or ask the seller to do (mold, asbestos, structural, etc).
2. Buyers have the right to object. A question I’m often asked about purchasing a home is what happens if we find issues with the home during the inspection. Well, the good news is that you have a few options. One – you can actually just terminate the contract (as long as you do it within the agreed upon contract timelines). Two – you can just ignore the issue and move on with the purchase (assuming it’s not something that might affect the ability to get a loan or habitability). The third option is usually the best route to take which is submitting what we call an Inspection Objection. This is an official notice to the sellers of any issues that a buyer would like them to address and correct. The contract says you have the right to submit an objection based on your review in your “sole subjective discretion”.
3. The seller can’t cancel the contract. The other concern I usually hear has to do with the seller’s response to the objection. Most people don’t want the seller to get mad and cancel the contract. The good news – the seller can’t cancel the contract just because you submitted an objection. In fact, as the buyer you are essentially in control of how the situation plays out with respect to the contract cancelling. More on that next.
4. You can create an Inspection Resolution. When a buyer submits an Inspection Objection, the clock starts ticking so to speak to come to an agreement on what the seller will actually do to take care of the issues brought up. This agreement is called an Inspection Resolution. To keep the contract alive and moving forward, both the buyers and sellers need to sign an Inspection Resolution prior to the deadline on the contract. Although the seller can’t cancel the contract unilaterally, the seller doesn’t have to agree to do anything with regards to your inspection objection. Let’s say the seller doesn’t agree to do anything on a buyer’s list of concerns (worst case). The buyer then has two options. One – the buyer can let the Inspection Resolution deadline expire and the contract automatically cancels. Two – the buyer can do a secondary signing on your original Inspection Objection which withdraws the objection and keeps the contact moving forward.
5. Sellers pay attention. Waiting for a buyer to do their inspections and to receive an “objection” can be one of the most stressful times of the home sale process! As you’ve noticed, the inspection process is for the benefit of the buyer. The good news is that there isn’t really a “pass” or “fail” result from an inspection. It’s really designed to provide the buyer a sense of the condition of the home and to point out issues that may be a safety/health concern. Of course, each inspector has their own biases and checklists and “hot buttons”. What are some of the items that typically come up that are usually hot buttons for people? Based on my experience, I’d say that dirty/old/broken HVAC systems, sewer line cracks/bellies/clogs, roof damage, high radon levels, aluminum electrical wiring, wet basements/crawl spaces, leaky pipes, and structural issues are issues that can’t be ignored. This is by no means all inclusive, but it at least gives you an idea. If you as a future home-seller are aware of issues in the home, it’s a good idea to get those repairs completed asap!
The inspection process is an incredibly important element of the home purchase/sale process. As a buyer, make sure you make the most of it so that you feel solid in your investment and home! If you have questions about this topic or any others, please contact me. I’ll be happy to discuss with you.