In a slow housing market, a report on a home’s condition can sometimes be the deciding factor on whether the home sale comes to fruition — or not.
“It’s pivotal,” said Realtor Ida Kelly, owner of Ida Kelly Realtors LLC. “The inspection may turn out to be the most important part of the transaction. I would guess if I talked to 50 Realtors and asked what causes the most problems today in negotiating a transaction, it’s the inspection — that, and the original offer.
“Still, we encourage buyers to get every inspection they can think of. We want them to know everything.”
A standard whole house inspection report typically covers the heating system, air conditioning system, interior plumbing and electrical systems, roof, attic and visible insulation, walls, ceilings, floors, windows, doors, foundation and structural components.
Evidence of mold, a leaky roof, or a shortage of insulation noted by an inspector might bring a home sale in progress to an abrupt halt — or it may open the door to negotiations about a price reduction or repairs, said Kelly.
In either case, the detailed report, often accompanied by photographs and descriptions, is usually enough to make both a seller and potential buyer nervous. Buyers worry that their dream home will have problems, while sellers hope that the discovery of an unknown problem won’t negatively impact the home’s selling price or give the buyer reason to pull out of the sales offer all together.
As for the inspectors, their job is simply to determine the condition of the home. The American Society of Home Inspectors emphasizes that an inspector “will not pass or fail a house,” but rather will describe its condition and indicate which components and systems may need major repair or replacement. Nor should an inspection be considered an appraisal of a home.
“We’re not there to nitpick the house or kill the deal, but to let buyers know exactly what they are purchasing,” said home inspector Joseph Lebron, owner of General Inspectors. “We present the information in a written report, and often don’t know what happens to the deal after that.”
Buyers are often encouraged to tour the home with the inspector — an opportunity to learn about the home’s condition and mechanical systems. A three-hour inspection of an average-size home might cost between $200 and $400, and generate more than 20 pages of details and photos.
Michael Smit,owner of the Albuquerque franchise of HouseMaster,said the current condition of a home is an inspector’s chief concern.
“Our report shouldn’t be considered a ‘repair list’,” he said. “The buyer or seller may choose to have all or none of the repairs done.”
“Everyone has a different comfort level,” added Lebron.
Some buyers, for example, may ask for a roof replacement simply because of the roof’s age, while others are not bothered by older roofs or mechanical systems still in good working order.
Lebron said a home’s safety is a paramount concern as he conducts an inspection. Is there a gas leak? Is there mold? Is the balcony structurally sound? Safety issues — and expensive problems that even the seller may not be aware of — are two of the main reasons that a home sale may fall apart after an inspection.
Smit offers an example: If a forced gas heating system’s ductwork is buried in the ground under the concrete slab, he performs a scoping procedure to ensure the ducts are not rusted or bringing dust into a home. Nearly 30 percent of homes with such underground ductwork show problems, Smit said, and the $15,000 to $30,000 repair price is often enough to kill a deal, especially with a glut of other homes on the market.
Some inspections focus primarily on a home’s mechanical systems — and offer warranties. A home’s cosmetic condition, i.e. paint, cabinets or carpets, are generally off the radar during inspections, added Lebron.
Nearly always, Lebron is hired by the buyer, his company generally chosen from a list of inspectors supplied by the buyer’s real estate agent. Increasingly, real estate agents also recommend “pre-sale” inspections for the sellers they represent as well. These pre-sale inspections give the sellers a heads-up concerning potential problems that may impact the price of the home if repairs are not made before the home is listed for sale.
An extended inspection might include checks for termite damage, wood rot or radon, blocked air ducts or sewer lines, Smit said.
Susan Nelson Anderson, a residential Realtor with Coldwell Banker Legacy, said a good Realtor can negotiate aggressively on the behalf of a client if an inspection reveals problems. If a client’s financial circumstances are stretched, for example, she may negotiate that the seller pay for a new roof. If a client has extra cash, she may instead negotiate a reduced home price that will enable the buyer to hire a roofer or repairman of his own choosing. Or, she may negotiate a deal in which the buyer and seller split the cost of the repairs.
In this economy of foreclosures and short sales, inspections often turn up problems resulting from distressed sellers deferring maintenance, added Anderson.
In the world of green homes certified under programs developed by the National Home Builders Association, Build Green NM, or LEED for Homes, third-party or independent inspectors hired by the builder play an increasing role in energy audits and green verification. Concentrating on insulation, weather stripping and advanced building techniques, these “green” verifiers rely on thermal imaging, and blower door and ductwork tests to show air leakage. Testing throughout construction of a home can add more than $1,000 to the price of a certified green home with all the accompanying paperwork, said builder Steve Hale,owner of Hale and Sun Construction and director of Build Green NM.
“These raters can also do an energy evaluation of existing homes if the owner is thinking of doing energy upgrades,” he said.
