Home Inspections: A Crucial Element to Homebuying
by
Peter Mark Heintzelman, Esq.
2000 Copyrighted, all rights reserved
How many times in our lives do we spend the kind of money we do when we purchase our home? Plan, as part of your expenditure, to have the house inspected by a professional home inspector. It is too easy, given the emotional involvement of a typical homebuyer, not to "see" problems that may be evident only to the experienced home inspector's eye.
How to Find a Home Inspector
Hiring the right home inspector is just as important as having the home inspection done. Home inspectors have different degrees of experience and know how. Anyone can advertise in the paper or phone book, so buyer beware. It may not be wise to seek a referral to a home inspector from your seller or the selling realtor; who may have motivations to send you not to the best inspector, but to an inspector not likely to "flunk" a property. Word of mouth, from other recent buyers, or a referral from your realtor or attorney, is probably the best source to discover competent inspectors in your local area.
How Much Do Home Inspectors Charge?
Home inspectors have as wide range of fees as do attorneys! So, shop around, but don't forget to ask what you get for your buck. Home inspections in the Worcester County area can range in expense from $150 to $300, not including tack on costs for other inspections, such as wood boring insect infestation inspections, radon testing, or lead paint inspections, to mention a few. Depending upon your mortgage lender, some forms of testing may be a requirement of a mortgage loan, so check with your mortgage officer if you need to submit any home inspection/insect infestation inspections, or the like, so as to consolidate your efforts and economize your expenses.
The Home Inspection Contingency in the Offer to Purchase
Before signing an offer to purchase, among other things, buyers should carefully read the home inspection "escape valves." In otherwords, a buyer wants to reserve the right to cancel the purchase if the home inspection is unsatisfactory. Many buyers innocently waive that right, by either failing to include in the Offer to Purchase a home inspection contingency clause, or otherwise failing to comply with the clause's requirements. For example, many boilerplate home inspection contingency clauses say that, if a buyer wants to terminate the deal because the home inspection showed material or other defects, usually the buyer is deemed to have waived their rights to cancel, unless they have provided the Seller and/or Seller's broker, written notice of buyer's election to cancel the offer to purchase. Often a copy of the home inspection itself must be included with the notice of cancellation, depending upon the specific language in the written offer form. In addition, such written notice usually must be received by the Seller and/or Seller's broker by a date certain. So, be careful to CALENDAR the notification date (and other dates in the Offer to Purchase and subsequent Purchase and Sales Agreement, for that matter!) into your own calendar book, so as not to inadvertently waive your right to cancel and get your deposit monies back should the home inspection go poorly. Do not rely upon someone else to cover you on these issues; often buyers and their attorneys don't link up until well after a home inspection contingency date has come and gone.
Another change to consider making to the boilerplate home inspection contingency clause often included in the broker's standard Offer to Purchase form, deal with the degree of dissatisfaction the buyer must have before being entitled to cancel the deal because of a bad home inspection result(s). In other words, many boilerplate Offer forms have a home inspection contingency clause which reads something like "and in the event the home inspection reveals material defects in the premises, then only in such circumstances may the buyer cancel the deal. I prefer, representing a buyer, to delete the language "material defects" and insert language which specifically reserves the buyers rights to cancel if the home inspection "proves unsatisfactory to the buyer", a much broader and protective phrase for buyers: why get caught up having to distinguish between material and nonmaterial defects.
Negotiating repairs/improvements/closing costs credits as a result of discovered defects.
No one is happy when the home inspection goes poorly. At the same time, if you are purchasing a home other than new construction, there are going to typically be issues with the house disclosed by the home inspection. Sellers want Buyers to realize the home inspection is to determine to "take it or leave it". Often, I mean often, Sellers already think they are selling the house for less than its worth and in its "as is" condition, and that a Buyer seeking to get the Seller to do preclosing repairs or otherwise concede a closing cost credit for repairs, is merely a Buyer trying to nickel and dime the Seller, and tempers may fly.
Buyers, often told by their home inspectors that "this should be fixed now or real soon", seem to think that the Seller should take care of those matters; matters the Sellers may not think are something in need of repair, "after all, we have lived with these conditions." Remembering that home inspectors are not only trying to do a good thorough inspection for you, the Buyer, but the home inspector is also covering their liability risks; liability risks that arise if the home inspector does not point out conditions found during the home inspection. In otherwords, a home inspector is often over thorough and detailed so the Buyer won't later sue the home inspector!
Many buyers, upon completion of the home inspection, find themselves often negotiating for repairs or credits from the sellers through communications with the realtors.. One must be careful, however, to preserve a Buyers' rights to formally cancel the purchase, if such negotiations prove unsatisfactory to the Buyer.
Depending upon the specific language in the Offer to Purchase home inspection
contingency clause (Again, be VERY CAREFUL to read the specific language of the home inspection contingency clause in YOUR contract, as language does vary) , a Buyer may be required, within the time limits set forth in the Offer, to send a written notice to the Seller and/or Seller's realtor as follows:
"Dear Seller and Seller's Realtor:
Please find enclosed a full copy of the recent home inspection we, the Buyers, have had conducted upon the property at _______________, Worcester, MA.
Due to the unsatisfactory results of the home inspection, we respectfully notify you of our election, under the home inspection contingency clause of the offer to purchase, to cancel the offer and receive the prompt return of our deposit monies.
However, we would still like to explore with the Seller a mutually satisfactory resolution of the home inspections, either by having the Sellers repair, at Seller's expense, and in a good and workmanlike manner, before the closing date, the following repairs/improvements: x,y and z, or otherwise receive a closing cost credit from the Sellers in the amount of $__________.
Please advise. Very truly yours, The Buyers"
Thereafter, if negotiations with the Seller and/or through the realtor to address those issues does not pan out favorable to the Buyer, the Buyer will have formally and properly reserved their rights to a return of their deposit and a legal escape from the contractual obligation to purchase evidenced by an accepted Offer to Purchase.
Buyers should seriously contemplate whether or not to send such written notice of cancellation, because the Seller may elect not to do any repairs or give a Buyer a closing cost credit. The Seller may just elect to accept the cancellation notice and return the deposit, and the Buyer may not be able to restore the deal or negotiate further with the disgruntled Seller. The Seller may well, then, be within their legal rights to enter into contracts to sell the premises to another buyer. So, Buyers should seriously consider these consequences, particularly given this years very pro-Seller real estate market, where there are a lot of prospective buyers for the same house.
MultiFamily and other rental property home inspections
Purchasers of multifamily and other rental properties have other concerns not present when buying an owner-occupied single family dwelling. For example, look to discover if any "electric crossmetering" exists. In Massachusetts, under the state sanitary code, a landlord must pay for common area lighting in multifamily properties, with some, but not typically all, common area lighting being able to be transferred to the tenant's electric meter, but only if specified in a written rental agreement. Certain lighting and electric usages in a multi-family, however, such as basement lights, attic lights, exterior common porch lights, flood lights, garage lights, are basically not transferrable to a multifamily dwelling tenant, even if it is in writing. Violations of these regulations may expose an unsuspecting landlord to tenant's damage claims which can equal the tenant actually damages, or sometimes damages equivalent to three month's rent, together with attorney fees! Because of these laws and regulations, then, a purchaser of a 3 decker really wants the home inspection to reveal 4 electric meters; one meter being the landlord's meter for common area electric usages. Look also to verify that hard wire smoke detector systems are on a landlord's meter.
The state sanitary code also requires landlords to pay for hot water heater rentals; such charges are not transferrable to the tenants, even with a written tenancy agreement. So, have your home inspector check if the heater is a rental, or otherwise check with the utility company.
More sophisticated rental property investors will also take a copy of the state sanitary code with them to the home inspection, because a landlord's obligations are to keep the premises in compliance with the minimum standards of habitability as promulgated in the state sanitary code. Wouldn't you rather verify the premises comply with code before you are the owner, when often, as a result of an eviction for nonpayment of rent, the tenant may call the code department to do an inspection and come up with a list of substandard conditions, which may cause you to incur unexpected repair expenses during a period when tenants are not paying rent; not a pleasant time for landlords. Not to mention, code violations are often the basis upon which an eviction judge may award the tenants monetary damages against the landlord for "bad conditions."
Such buyers of multifamily properties are also wise to verify by inspection the existence or not of lead paint at the premises. In Massachusetts, if any of the occupants in a residential property are under the age of 6 years of age, the owner/landlord has the affirmative duty to investigate if the premises comply with the lead law or not, and if not, to delead at the landlord's expense. Such deleading expenses can be in the thousands of dollars, not to mention a landlord's obligation, if compelled by the board of health, to pay for the temporary relocation of the tenants to like kind facilities (like an efficiency motel room) during the deleading process (when lead paint exposure is often at its peak). Lead inspections can be significantly more expensive than a home inspection, but the money spent on such inspections is a lot less worse than the risk and consequences of renting leaded apartments.
In summary, every buyer should have premises inspected before purchase, by a qualified and competent home inspector. Be careful how you find an inspector. Attend the inspection yourself to observe the inspector's findings. Get a written copy of the home inspection report, preferably on the spot after the inspection is concluded. Be careful to read your home inspection clause in your offer to purchase, and calendar your dates to protect your interests, should written notice of cancellation be required because of a poor home inspection. The relatively little amount of money spent for a good professional home inspection, can save you thousands and thousands of dollars in unexpected repairs or improvements.
