Wednesday, March 14, 2012

We're Moving! (part 5A) Oh yeah, the Home Inspection

oops, forgot to have a little chat about the Home Inspection.

In this market, many sellers -- e.g. us -- would like to see and early "firm" offer.

Firm means without conditions.

A typical offer in a "normal" market will have one or both of these conditions: Financing and Inspection.
Both are what we call "loopholes you can drive a truck through".

We'll leave financing for now, but the issues aree very similar.

The standard wording of the Inspection clause gives the buyer a few days to arrange and conduct a home inspection with a licensed inspector and to receive a report to their satisfaction.  The intent of the condition is to identify significant maintenance and structural issues that the buyers were not aware of.

Unfortunately, if the "structural issue" is waking up in the middle of the night screaming "OMG ... What have we done?!?!?!", the clause can generally be used to get out of the deal.

In real estate school we are taught various "better" ways to write these clauses.  However, if you start signing back offers with such wording changes to the "normal" clause, the hair stands up on the neck of the other agent and/or their client as they wonder what you are trying to hide.

So, a Seller with multiple bids is probably silly to be tied up for several days over a clause that is a giant get-out free card.  And of course, a buyer -- unless planning a gut-reno -- is silly to buy without an inspection.

Two possible solutions: Permit/encourage potential buyers to drop a few hundred bucks doing their inspection before they submit an offer (in competition, where the odds are they will lose the deal as well as the inspection cost); or, provide a pre-inspection that any potential buyer is welcome to review.

The only minor problems with the second are: Seller pays; and some Buyers will not trust an Inspection paid for and provided for the Seller.

On the first point (Seller pays), our advice is "Suck it up ... it's going to help sell your house"
On the second, the best approach is to use a widely known and respected company.

To us, this used to mean Carson and Dunlop.  They are a little more expensive and, due to their size, it's hard to know which inspector you are going to get on a given day.  This is more important than you might imagine: you don't want sloppy, and you don't want a "fear-monger" who turns normal issues into deal-breakers.
But C&D are the guys everyone has heard of.  With cause. They literally "wrote the book" that many independent inspectors use, and they have trained a huge proportion of the independents.

Since this isn't the place, and we'd like to stay out of court, we won't go into detail about why we used Ken Haller for our pre-inspection.  Suffice to say, Ken is known and good and he lived up to his reputation:  the true issues were identified, clearly stated, but not overblown.  And he has the key qualification for an inspector: not afraid to go on the roof, and skinny enough to get into the attic!

Last point on inspections for now: Do it early.
You are very likely to get some surprises.  Doing the inspection several weeks ahead of listing gives you time to deal with some repairs.  You can then add your own notes to the report, even copies of repair invoices, etc.  You aren't drawing attention to problems; you are drawing attention to your efforts to present a quality home.

OK, this is really the last point.  For fun, start a timer at the beginning of an inspection and let us know how long it takes before he/she tells you to improve some grading!  Sometimes it's under a minute!


Palos Verdes property inspection said...

I want to hire home inspector as we have to face many problems while purchasing a new home. Please suggest me experienced and certified home inspector.

GordandLee Martin said...

The comment seems to be linked to a California inspection firm -- so I'm not sure if your name is Palos or not.
Anyway, hi and thanks for the comment. As noted, inspections can only do so much; and you want an inspector who is thorough but isn't trying to scare you unnecessarily. Here are two good ones to start with:
Robert Stork of FBI (First Building Inspections) 647-241-6460/416-410-5360
Ken Haller 416-465-8236
Good luck with your home search -- where are you looking?