Every Buyer of a house should have the house inspected so as to know of it’s current condition.
This inspection is important because most Home Inspectors are very good at finding “Latent Deficiencies” . . . Things the untrained eye cannot see.
Home ownership is much less fun and more expensive for a new owner if these issues are not discovered prior to closing on the house.
After all, some Home Sellers might not be as scrupulous as we give credit. The house might be a pig wearing fabulous, eye catching lip gloss.
So for sure: “Buyer BEWARE!”
While the Seller has an obligation to disclose all known defects, it is the Buyer’s responsibility to satisfy herself of the overall condition of the house.
This scenario sets up a fascinating process REALTORS lovingly call “The Home Inspection and Resolution.”
(Below is how we do it in Tennessee – Other States may differ)
Typically as part of the purchase & Sale Agreement, the Buyer and Seller agree to a number of days after Binding Agreement Date for the Buyer to perform any and all diligence (Inspections, Home Owner Association Rules, Zoning, Flood Plane, Schools, etc).
The Buyer can hire a “Certified Home Inspector” (Must be licensed in the state of Tennessee) and any other specialists (HVAC, Mold/Radon, Structural Engineer) during this period and can submit a proposal for the Seller to repair or replace the deficiencies discovered. The Buyer’s other options are to accept the property without any repairs, or terminate the contract.
Delivery of this proposal kicks off the “Resolution period” as agreed in the Purchase and Sale Agreement (Usually @ 5 days). It is during this period of time when the Buyer and Seller negotiate to find agreement.
Of course, the Seller may want to do some diligence by bringing in specialists for 2nd opinions just for confirmation that the noted deficiency actually IS broken. In Tennessee if this resolution period expires, and Buyer and Seller have not reached agreement, the contract automatically TERMINATES. Termination can be avoided by mutual agreement to amend the contract to extend the number of days for resolution IN WRITING.
This process seems to be getting increasingly UGLY . . . and I’ve been studying the complicated deals to decipher WHY?
Below are my observations, and most of them center around “abuse” of the process . . . That is – Using the Home Inspection as leverage for some purpose other than to negotiate repairs.
Most of the “Reasons” center around some Buyers and Sellers either misunderstanding or taking advantage . . . subsequently abandoning the intent of the inspection and resolution process which really boils down to reducing liability for ALL parties after the closing.
So . . . What it’s NOT:
- It’s NOT intended to be used to renegotiate the original deal. Some Buyers will know about issues prior to submitting an offer and then use THOSE issues as leverage to reduce the price or demand money in lieu of repairs . . . If you know of issues, take them under consideration during the initial negotiation.
- It’s NOT intended to create a platform for the Buyer to Demand the Seller to bring all systems up to current code requirements. As long as things were installed per the code at time of installation, they are off limits. Code requirements are constantly changing, and it is not reasonable for a Buyer to expect a Seller to do this . . . Unless it is a valid “Safety Issue.”
- It’s NOT intended to require the Seller to fix aesthetic issues like paint color or antiquated fixtures etc. If things ain’t broken, no requirement to replace them.
- It is NOT intended for things that can be fixed to be required to be replaced
It IS intended to provide a true representation of the current condition of the house and all of the systems such that the Buyer can be aware of potential future expenses for maintenance or replacement.
and it is totally reasonable for a Buyer to require broken things to be fixed at Sellers’ expense.
I see LOTS of deals crashing these days as a result of the Home Inspection, and I believe the root cause is unrealistic expectations of Buyers or Sellers or BOTH, and it is up to us REALTORS to “manage” these expectations as much as possible.
After all – Let’s not forget that the inspection is happening because the Buyer wants to buy the house and the seller wants to sell the house . . .
Don’t let the process deny them . . .
I said it.