We’ve all heard the expression ‘let the buyer beware’, and no where is that more true than in the purchase of a home. Whether purchasing a brand new home in the suburbs, a downtown high-rise condo, or a 100 year-old lake side cottage, a home inspection by a trained professional will not only provide a clear picture of the condition of the property, but could save you thousands of dollars.
What is a Home Inspection?
A home inspection is a detailed examination of a residence and the immediate exterior area that identifies both health and safety concerns and system or structural problems that might require repair or replacement. The report is usually broken down into categories such as electrical, plumbing, roof, HVAC, foundation, etc. Within each category, the items inspected are identified and commented on by the inspector. So for instance, when examining a furnace, the inspector may note that it is only 10 years old and functioning properly, but he might also note that it should be serviced. He would then make the recommendation in his report that servicing take place.
It should be noted that most home inspectors are generalists, and often suggest further evaluation by a licensed contractor in a specialized area. Most home inspectors do not climb up on your roof to inspect every valley, nor do they test wells or attempt to explain cracked walls. Their job is to report any anomaly that might, in the worst case, be a symptom of a larger problem, such as water stains in the attic.
The length of time required to complete the inspection will vary according to the type of home, the size, and the age. These factors will also help determine the price. A 20 -30 year old, 2000 square ft. home with three bedrooms, two baths will probably take about 2.5 – 3 hours to inspect and condo inspections are generally completed in a shorter inspection period. If ordering a home inspection as a buyer it is recommended that you be present, along with your agent, so that the most important findings can be discussed with the inspector. It is also somewhat easier if the seller is not present and all rooms are accessible.
How to Choose a Home Inspector
Many home inspectors come from some type of background in the trades, or are licensed contractors. It is also desirable that they have specific training from an accredited inspection training program and are members of one of the professional inspection organizations. In Massachusetts licensing is required.
It is also a good idea to inquire about the format of the report itself. For any item that an inspector comments on, it is useful if there is an accompanying photo included in the report that specifically identifies the problem. Without a photo, you may be scratching your head a month from now asking, ”Which pipe is he referring to?” Hand written reports are becoming a thing of the past. A well organized report created through a computer generated software program that is saved as a pdf is the new industry standard. This is a report that is legible and can be easily saved for future reference or sent to the listing agent or a contractor for comments or quotes.
If you’re unsure about where to begin your search for an inspector, ask your agent for one or more recommendations.
What Does the Seller Have to Repair?
Unless you are purchasing a brand new home with a builder’s warranty, the answer is, not much. If you are purchasing with a VA or FHA loan, there may be some items that your lender will require to be in working order prior to close of escrow. That being said however, it isn’t always the responsibility of the seller to fix those items and repairs may be a matter of negotiation.
One thing to keep in mind when you first see the inspection report is that no home is perfect, especially a re-sale home, and over time the number of flaws generally increases. The inspection report is not a laundry list to hand to the seller with a request to repair everything. Rather it is a reference guide that provides a broad picture of the condition of your home and helps you prioritize repairs and improvements.
The process of determining what to ask the seller to repair should start with what you are paying for the home and how many repairs are necessary. If you are paying top dollar for the home you are in a better position to expect the seller to make repairs or cover the costs of repairs. On the other hand, if you got a steal of a deal on the home, or purchased a foreclosure or REO it is unlikely that repairs will be made or a credit provided.
Another thing to consider is whether or not you had knowledge of the needed repair prior to writing your offer. If it is obvious to even an untrained eye that the roof needs to be replaced that should have been taken into account when writing your offer and it is unlikely the seller will cover that cost. However, if as a result of the home inspection you discover that the entire HVAC system is inoperable, that is likely not something you knew prior to writing an offer. That would be an expensive repair and one that you might ask the seller to make, or provide as a credit.
Repairs are negotiable, but when asking for seller repairs or credits it is in everyone’s best interests to be reasonable. Ask for the big ticket repairs if appropriate and just figure that you’ll take care of the smaller items like a broken outlet cover or a torn window screen.
A home inspection is always important for even an experienced investor. Not everything is immediately apparent on a walk through. Think of it this way: A home inspection is rather like being able to fast forward in a marriage by five years and learn all about your spouse before the wedding day! Certainly not an opportunity to be missed.
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Great Article by Bill Nickerson….Be prepared as a Buyer!
In Today’s Real Estate Market, it is more important than ever to have a Pre-Qualification in hand when shopping for a home that has been prepared by a reputable Lender, Bank or Credit Union.
A mortgage loan pre-qualification is an estimate of how much house you can afford and how much money a lender would be willing to loan you. The best time to get pre-qualified is right before you start looking at homes. This way you can focus on looking at houses that are within your price range. By providing a loan officer with your income, assets, debts, and a potential down payment amount, he would then be able to give you a ballpark figure of how much he thinks you could afford to pay for a monthly mortgage. Your Credit is reviewed and your loan is submitted through an Automated Underwriting Service (AUS). There is no cost to this service and no commitment is required. This estimate is a helpful tool to you in figuring out if buying a home is a viable option, and if so, what your price range would probably be. A pre-qualification is to give you a range of home prices and in no way is a commitment to lend on a home. The time frame for this is less than 24 hours.
Getting pre-approved means that you have a tentative written commitment from a lender for mortgage funding. In the pre-approval process, you provide a loan officer with actual documentation of your income, assets, and debts. The Loan Officer is submitting this as if it is an actual loan and a property has been identified. This will be reviewed by the lenders underwriting team. The lender will run a credit check and verify all your employment and financial information. Once the final approval comes in, the lender will give you a letter of commitment stating how much money the bank is willing to loan you for a home purchase. Having a certified pre-approval in hand when you start house hunting lets real estate agents and sellers know you are serious about buying when they see you have your mortgage funding in place. By having your funding in place, it becomes an extreme advantage over other buyers when it comes to negotiating your home purchase as your offer will stand above the rest and you will be able to close in a much shorter time period. The timeframe for a Pre-Approval can take up to 5 Business Days.
It is important to note that a pre-approval and a pre-commitment is still subject to further review as any loan is. As variables change in lending or in the borrowers financial picture, additional items may be required. In addition to the financial commitment, the lender will also need to verify the property appraisal and title search.
Pre-Qualification is an estimate of a price range of what you can afford by verifying credit, income and running your loan through an Automated Underwriting System such as Fannie Mae or FHA as well as others. Pre-Approval is a verified commitment from the bank stating how much money it will loan you. Make sure your Pre-Approval is an actual commitment from the bank as opposed to a Loan Officer just doing a quick credit check.
Buying a home is very exciting. However, nothing can be a bigger disappointment than finding out that your loan is denied before you are about to close your transaction! You’re a week away from having the keys to your new home and your loan officer calls to let you know that your loan was denied […]