With seven closings in the last two months, one picks up on the FAQs of clients. Several re-occurring questions come up concerning home inspections, closing procedures, walk troughs etc… I’ll start with the home inspection. There are many great consumer sites for purchasers and sellers that explain the “in’s and out’s” of home inspections, who to use, how much they are, and what they cover. I’m sure I’ll have some of those great sites linked here in a second or two (um, maybe should have thought of that already).
Remember, this is from the heart people. These are the things we talk about when dragging you all over the city looking for the Holy Grail of $300K condos in Lakeview. Still looking so we have lots of time for education.
I think we can all agree that inspections are a good idea (show of hands?). But, they are in no way a requirement when structuring a purchase offer contract. The home inspection can be waived, and I’ll tell you when this MIGHT be a good idea later.
Usually, a purchase offer for a re-sale condo unit or house will include a home inspection contingency. This basically means the buyer and seller will decide to proceed, or not to proceed, with the real estate transaction based on the results of the physical inspection of the home.
The home inspection usually commences during the attorney review period. So, the parties decide on a market price and closing terms, ship the contracts out to the attorney, cross their fingers during the inspection, and then haggle over the results before concluding attorney review. This can make or break a deal.
So, what makes or breaks a deal? A good REaltor of course! But seriously folks, depends on the parties involved (it always depends on the parties involved-this is why real estate transactions are soooo exciting). The buyer is usually in the right by asking that hazards and code violations be fixed. This can be leaky gas lines, missing banisters, or improper dryer venting. The buyer may also request repairs of material defects… but not so fast buddy, the buyer may not get these.
The point here is, the inspection contingency protects the buyer from the unknown and can break the deal. But, if the place is worth having, then the parties will agree to terms in which they can live with… and the buyer has a new home (well, as long as they get a silly mortgage).
So don’t freak out after the inspection, nothings perfect in this world.
SORT-OF NORMAL SITUATION
Okay, so you are going to buy shiny new construction or a “new-conversion”. In these cases, developers usually do not allow an inspection contingency in the purchase contract if the unit is purchased before its completion (pre-construction or mid-construction). This is logical considering one would like the unit finished before an inspection… and if you buy one of these units during construction, you most likely will close shortly after the unit is completed, or, “delivered”. The developer can not be expected to take the unit off market for months, maybe even a year or two, and then have you dump out.
Still with me? Well then, why even have a home inspection and how is the buyer protected?
The professional home inspector will help you complete a “punch-list” of items that the developer must repair/correct in a determined amount of time. Many items are warranted and must be repaired anyway…some are cosmetic, such as chips in tub porcelain and floor tiles, and should be corrected (considering the unit is new and not a re-sale).
This type of inspection is considered for your assistance during your “orientation”. I hated when developers’ sales people started using that term… orientation. It’s like Junior High or something.
If the place is a real dump even after conversion, your attorney will go to bat for you armed with an inspection report or two…this is rare because it should not even reach this point if your Realtors any good :-)
How do you assure all this inspecting will happen and in the correct time frame? That’s my job.
Home Inspection Tips for Consumers