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Real Estate Insights from Real Estate Insiders

What Happens After the Home Inspection?"

Any legitimate real estate contract should contain an inspection clause. This is because the home inspection is an essential part of a real estate transaction. It’s the buyer's chance to get inside the house and take a look at what they are buying.

A certified home inspector should perform the inspection. Certified Inspectors are trained to look at the overall condition of your home and its related systems. While there are more specialized inspections you can perform later, it's always best to start with a general home inspection.

Although the home inspection isn't a bulletproof guarantee of what you are buying, it is about as good as you're going to get when it comes to learning about your new home’s condition. It's important to remember that the inspector is limited to inspecting what they can access and see. They can't damage the property during the inspection process, which means they can't look behind walls or under the flooring.

One of the most common complaints we hear about home inspectors is that they missed a particular thing. In most of these cases, discovering the problem would have required tearing apart something like sheetrock or flooring.

Because of these limitations, the inspector looks for telltale signs and clues that might indicate more significant problems. If this is the case in many instances, they will advise you to seek further evaluation by a specialized professional, someone like a structural engineer or Plumbing company. 

Dealing with The Inspection Results

Once the inspection is complete, you should receive a detailed report outlining the inspector’s findings.

It’s important to review this report with the inspector. This activity will help put things into perspective. The Inspector should explain any problems and how serious they are, and what the solutions are.

If there are severe problems outside of the inspector’s scope of expertise, they should be able to refer you to a specialist. This is often the case with issues related to the foundation of the property.

Foundation issues can run the gamut from normal settling requiring little to no attention to severe problems costing tens of thousands of dollars. If your inspection finds problems with the foundation, most wise home inspectors won’t give you an opinion on foundation issues. Instead, they will advise you to seek further evaluation from a structural engineer.

This goes for issues relating to other big systems like electrical and plumbing as well. You need to get a realistic sense of what repairs will cost before you get any further into the transaction.

At this stage, you should have a good sense of what is a big deal and what is not. It’s best to start getting bids or estimates for anything you want to see repaired or replaced on the property. Once these numbers are in place, you can begin to put together a list of what, if anything, you are willing to take care of and what you would like the seller to be responsible for.

Sellers Responsibility

It’s important to note that the Seller’s only real duty when it comes to property condition is to disclose any problems they are aware of. In many cases, the seller is more surprised than the buyer to learn about a home inspection’s negative findings.

Additionally, the seller has no obligation to fix any problems discovered during the inspection. On the other hand, the buyer has no responsibility to proceed with the transaction if there are problems the seller is unwilling to take care of.

Negotiating After the Home Inspection

Any repairs you want the seller to take care of become part of the negotiations and

Negotiating After the Home Inspection can be difficult. From the seller’s standpoint, they have already negotiated the price and terms, and now the buyer is coming back and asking for more.

Ideally, the homeowner should have made repairs or priced the cost of any repairs into their listing price before putting the home on the market. This is seldom the case, so the buyer is usually left to figure out how to proceed.

Suppose the market is a strong seller’s market. In that case, the home buyer will need to consider their options for finding another property before placing a laundry list of inspection items on the seller’s repair list.

If there are problems with the property, the buyer can request the seller handle any issues. For example, if the inspection reveals, there is a problem with the electrical panel. The buyer can ask the owner to have the problem evaluated by a licensed Electrician and then to proceed with any repairs the electrician recommends. 

At this point, the Seller has a choice to make; they can:

  • Agree to take care of the problem. In this case, the buyer is still under contract, and the transaction moves forward
  • Refuse to Address The Problem. If this happens, the ball moves into the buyer’s court, and they can choose to proceed with the transaction accepting the condition or terminate the contract.
  • Alternate Resolution - In this scenario, the seller proposes an alternative resolution. This may involve things like
  • Only doing certain items on the list.
  • Splitting the cost of repairs
  • Taking a cash credit for the repairs
  • Any other ideas you can think of. I have seen sellers leave furniture instead of inspection items or things like tractors and snow blowers.

Either way, if the buyer and seller cannot reach an agreement, the buyer moves on with their earnest money intact and the seller goes back on the market and starts the entire sales process over again.

Risks For Sellers

Negotiating after the home inspection for home sellers can be difficult, but it’s worth the time and energy. If they can’t come to some sort of resolution with the buyers, the buyers can terminate to contract, at which point the home goes back on the market, and the sales process starts over.

Additionally, once the sellers are aware of any existing property issues, they need to disclose this new information to any new prospects. This means they will either need to fix the problem, drop their price, or wait for a buyer willing to accept the property in its current condition.

Risks For Buyers

As far as the home buyers are concerned, buyers should weigh the cost of any repairs the seller is unwilling to take responsibility for against the cost and aggravation of getting back out and looking at homes. In many cases, unless the repairs exceed your cash reserves or pose a health and safety threat, you may be better off moving forward with the transaction and handling the repairs yourself.

In Conclusion

There is risk involved on both sides of any real estate transaction, and the inspection acts as a powerful equalizer. Negotiating through the details may be the most challenging part of any real estate transaction. It is crucial to keep emotions in check and look for compromise on both sides of the deal. While it’s not always possible, the goal should be a win-win for both sides.