Sorry for the long title there, folks. I am feeling nostalgic for old school cartoons.
So, we have gotten through the home search and past the negotiations. What’s next? Home inspections. Here in South Carolina, we have a seller’s disclosure that allows sellers to tell us of any defects there may be with the home they’re selling, however, you never actually know what you’re getting into until after the home inspection is complete.
There are different schools of thought on when you should perform your home inspection. There was actually a blog posted to our Allen Tate blog giving a very good argument for going through the inspection period before you even make an offer on the house. This way you are able to make an educated decision for whether or not to purchase based on not only price but also the quality of home you’re getting. If you have the money to do it, I agree completely!
Traditionally, however, home inspections come after negotiations and sometimes even after the appraisal of the home. Before I go any further I should fill you in on what an appraisal is. If you are purchasing your home and you are having to finance it (USDA, FHA, Conventional, VA), your lender will order an appraisal or property valuation on the house. An appraiser comes to the house, evaluates it and then compares it to houses like the property you’re purchasing in the same general area. From there, they provide the appraisal to the lender to show them how much the house is worth. If you purchased the house for under the price it is appraised, congratulations you got a deal on the house. If the price comes in even, congratulations, you got a house. If the price of the appraisal comes in under the contract price of the house, there are several options. The seller can choose to sell the house to you at the new appraised value, because that’s only as much as your bank will lend on. If the contract was based on a satisfactory appraisal and the seller refuses to sell at the new appraised price, you can actually break free from the contract with no penalty. Or you and the seller can agree to go through with the sale at the original contract price, provided you (the buyer) have money to bring to closing. In this last instance, chance’s are the seller owes more on the house than what it appraised for and they do not have enough money put back to bring to closing.
Sometimes home inspections are completed before the appraisal. As long as it is within the time period set aside for inspections and repairs on the contract, you are in the clear. If you are working with an agent, they should have a timeline to work off of to help you schedule home inspection. Home inspectors do a visual on the surface inspection of the house, the attic, and the crawl space. Home inspectors do not pull up carpets or break down walls, however. When you are having your home inspected, keep in mind that the inspector is trained to find anything he can on the surface that could be an issue, and if you pay attention to the inspection report, it could hint at additional problems below the surface. That’s when you can hire additional specialists such as HVAC contractors or mold remediation specialists to evaluate what lies beneath.
When I bought my home, I actually waived the right to an inspection. It was a foreclosed condo with a warranty in place, and the systems were in working order at the time of purchase. The actual structure and roof were covered by the Home Owner’s Association. I already knew I was going to have to put a good bit of money into the repairs but the truth is I got pretty lucky. I should have taken the option of having the house inspected because it could have saved me some money in the long run. The roof was replaced in 2010 by my HOA, but I had to finally break down and buy a new HVAC system this past Summer after 3 Summers of shelling out about $1500 and 3 freezing winters. If I had gotten my home inspection when I should have, I would have saved some serious cash that could have gone into my home renovation fund. So this time I am being proactive. Before I put my house on the market, I am going to have the property pre-inspected and remedied of any issues. That way I can take the time to get price quotes and quality work done on my house instead of rushing with it just to close on time.
So what repairs does the seller make? In truth, it’s up to you and your Realtor to go through the report the inspector will provide you, and have the issues that could be potentially hazardous (electrical, plumbing, roof, foundation) fixed by the seller. You can ask for cosmetic repairs to be made, however, the seller may not have those issues covered. Keep in mind that you are not buying a new house. There are going to be repairs that you will have to make eventually on the home yourself. But that’s the beauty of being a homeowner. Once you own a home, it becomes your responsibility to keep it in good condition.