So you’ve done it. After months of searching for that perfect home and perhaps seeing a few offers get turned down, your offer has been accepted and, at long last, you are finally under contract for the perfect home-to-be. Congratulations! This is a momentous occasion, and you certainly have something to celebrate.
But you’re not quite at the closing table yet. Between now and the moment you sign on that dotted line and your agent hands you the keys, there are still a few hurdles to jump through, not the least of which is the inspection—and, yes, you should absolutely get a home inspection by a licensed inspector.
The option period (a.k.a. that period for which you pay a nominal fee so that you can do your due diligence) is probably the most stressful in the home-buying process, and this is true for buyers and sellers alike. This is understandable, perhaps particularly for the buyer. After all, you’ve likely already told your family and friends about the house. You’ve done numerous drive-bys on your way home from work (even though the property is not, in fact, on the way home from work by any stretch of the imagination). You’ve spent sleepless nights contemplating paint colors, and have already jotted down a guest list for your first dinner party.
And now…comes the inspection report. It’s long and redundant; there are things and jargon on it that you don’t quite understand; there are some terrifying photos of parts of the house that you hadn’t seen/noticed when you made your initial offer.
To add insult to injury, the inspector hasn’t mentioned the fabulous location, the calming color pallet, the open floor plan, or the super cute landscaping. What he has mentioned are a lot of “deficiencies,” “deformities,” “instances of decay” and, brace yourself, places where the “structural integrity appears to be seriously compromised.”
The dinner party you had been imagining now seems like a potentially deadly post-apocalyptic gathering. The faces of the select few who made it onto that guest list flash before you. You find it necessary to resist an urge to call them and tell them how sorry you are for ever having thought of inviting them into your temple of doom.
Before you cut and run or send your agent back to the negotiating table, here’s some advice:
Brace yourself: No house is perfect. Indeed, if houses had the capacity to act and to choose, there is not a single one of them that would willfully submit itself to such an exercise in self-loathing. After all, regardless of the age of the house, building inspectors are required to evaluate the house according to current standards for new construction. So, if you’re buying a remodel, the chances are good that the list of ‘flaws’ will be long (and the list of compliments non-existent). Remember: not every flaw is necessarily a deal breaker and/or necessarily cause for panic.
Look around and work with an agent who is doing so as well: Finding the house of your dreams is often like falling in love, as it can render you somewhat blind. Your heart starts to race; you begin to imagine your future there; your palms might sweat, etc. This is natural and, for us agents, nothing makes us happier than seeing our clients in such a state.
But, before you make your offer, please…get a grip. While you’re at it, re-read the listing and attached documents in their entirety, and take a good look around at the house. Does the water heater look like it’s on its last legs? Does the HVAC look ancient? Are there a lot of cracks in the walls and ceilings? Around the foundation? How recent does the electrical box look? Are the outlets grounded? Is there an electrical mast outside ? (if there’s not, then the electricity has most likely not been updated).
It’s easy to overlook or, even, willfully ignore these things as you imagine where you’re going to put the widescreen TV. An experienced agent, however, will sing the praises of the house while simultaneously noting its obvious deficiencies. Have a frank conversation with your agent before you make the offer, and make sure she’s being frank with you. What is likely to come up on the inspection report? Was the house priced with these things in mind? To what extent does you offer reflect the actual state of the house?
Obviously, until the actual inspection is done, you can’t answer these questions in their entirety. But there are things that are visible to the naked eye, were likely already figured into the asking price, and should absolutely be considered before you make your offer. Before you waste time or money, you should discuss these things with your agent. And, if you have any questions about the house, convey them to your agent so that she can get some answers.
Read the Seller’s Disclosure Carefully and, if there is one, the Pre-Inspection report. This seems like fairly obvious advice. However, you’d be surprised how often people don’t do this.
Think of it this way: If the seller has already told you that the HVAC unit needs to be replaced, has gotten an estimate on what that will run, and has factored that into the sales price, then that seller is also assuming that you have factored that into your offer. Is it then fair to go back later and ask the seller to reduce the sales price for the price of a new HVAC? If the seller has already disclosed that something is missing a valve, knob, or filter before you made your offer, is it then fair to have them run out and get a new one? What would you say if similar requests were made of you? (keep it PG-13, please).
Follow up/get estimates. A good building inspector is always willing to admit when assessing a particular issue is out of his league. There appears to be some significant settling in parts of the house? Something seems a little off with the leak test? Your inspector will most likely suggest that you do consult with a structural engineer or, in the case of the latter, a plumber to find out A) if something is really wrong and B) how much it will cost to correct it.
Follow this advice, get your estimates, and then go back to the negotiating table if need be. Guestimates and speculation are arbitrary, irritating, and ultimately a waste of everyone’s time. A good seller’s agent will push back against these immediately, likely with estimates that she has gotten on her own. As a buyer you need to do your homework. Extend the option period if you need to. When you’re ready, have your agent go back to the negotiating table with credible estimates in hand, and use these estimates as leverage on the sales price/repairs.
Be there for the inspection, or at least part of it. As mentioned above, inspectors have to write down everything they see that is not up to code. A good inspector will take the time to explain what will show up in the report. He will help you to distinguish between minor flaws that he is obliged to note on the report for liability reasons and major issues that you should address in further negotiations.
A good example of this is a past history of termites, which have an uncanny ability to freak out many first-time homebuyers. Most older homes (and, heck, even many newer ones) have had termites at some point in the past. This may or may not be a major issue. If they were caught early enough and treated, there’s probably not much cause for concern. A good inspector will tell you if the problem appears to have been nipped in the bud in a timely manner, if it needs to be further investigated, or if the paint seems to be the only thing that’s holding the structure together.
Choose your battles carefully: Whereas it is tempting to ask that the seller put the house in tip-top shape by attending to every item on the inspection report or to reduce the price for every little thing, this may not necessarily be way the way to go.
There are problems and then there are PROBLEMS. An AC unit in need of a new filter, a home missing attic insulation, or a stove missing an anti-tip device are NOT in the same category as a belly in a sewer line, major foundation issues, or extensive termite damage resulting from an active infestation. Keep this in mind as you decide what you want your agent to ask for.
This is not to say that you shouldn’t go back to the table if there is something really wrong with the house. What you don’t want to do, however, is jeopardize the deal over a minor point (i.e. an anti-tip device on a stove. Don’t laugh. It happens.).
Remember: Austin is a seller’s market at the moment. It’s quite possible that there are people itching to be in your position. If you make a lot unreasonable demands, the seller may—out of spite or frustration—decide to say no to all of your demands.
This leads me to my next point….
Keep it friendly because happy sellers can be assets. When you get that report, it is indeed tempting to write up a list of little things you would like to see fixed/cleaned/perfect before you move in. Try to resist this urge, as it often proves counter-productive.
Even if the seller is eager to sell and is thus ‘willing’ to oblige you on these requests, that does not necessarily mean that she is happy to do so. Put yourself in your seller’s shoes: your seller needs to prepare for a move, find another house, arrange to pay off her mortgage, and perhaps apply for another one. What she does not need to be doing is running around like a chicken without a head trying to satisfy your every desire.
If you ask the seller to clean out the gutters, power wash the exterior, change every filter in the house, get every single appliance serviced, have the driveway resealed, put on gutter guards, and buy anti-tip devices in bulk just to end the option period, there is no guarantee that that same seller is going to go out of her way to answer questions about the house down the line.
Want to know which circuit the microwave is on, or when the house was last treated for termites? How come the rosebush outside isn’t flowering as much this year as it did last year when the seller was tending to it? Anger the seller with unreasonable demands and there is no guarantee that she will answer these types of questions if and when they come up after you move in (and they will).
The point: If you can do the repairs yourself in a reasonable amount of time or pay a small amount of money to have someone else do it, then it may very well not be worth injecting additional stress into the transaction. Happy sellers can be a treasure trove of great information, about the home and the neighborhood. Keeping your demands reasonable and the transaction friendly is the best way to insure that you’ll have access to this information down the line.