Once you have a signed offer to buy a home; the question is – what the heck do we do next?
The inspection contingency is an integral part of the sales contract. Once the sales contract has been signed by both parties the first order of business is to get the property inspection done.
The inspection will help discover any “surprises” that may be lurking within the property. This is important as surprises equal money because they usually come in the form of needed repairs.
Most agents will schedule it for you since they have relationships with inspection companies. However, that doesn’t mean their “guy” is the best company with the best value – don’t be afraid to shop around.
Regardless of who sets up the inspection, we need to make sure of the following items
Timing of inspection
Generally there is a seven day window for inspection. You will need to have the inspection done before that window expires. Do not wait till day seven either. Based on what the inspector finds you want time to formulate a plan to present the seller.
For example – let’s say the AC condenser is 15 years old, which is near the end of its life expectancy. In this scenario it’s not uncommon for the buyer to request the seller purchase a one-year home warranty on the HVAC system
By doing this we are mitigating a potential large cost in the near-term. There is no quicker way to see your financial returns wrecked than by having to replace a big ticket item within the first year of owning a rental property.
Another example – and this was from personal experience. The shutoff valve for the water supply did not work on both toilets in the property. My inspector provided an estimate of the cost to a licensed plumber replace them. My agent then requested that cost be credited to me at closing.
The estimate was for $300 – so basically my inspector just paid for himself.
There are also scenarios where a major issue is discovered. Let’s say the roof has multiple leaks.
In a situation like this you can:
• Walk away from the deal as per your right with the inspection contingency
• Receive a closing credit for the amount to repair/replace the roof
• Have the seller agree to fix the roof before closing on the property
Cost of Inspection
Price will vary slightly depending on what state you live in and how many services you order. However, a basic inspection will cost $300-$500.
A basic inspection should cover the interior and exterior of the home and check everything from plumbing and electric to appliances and windows.
My inspector provides a 38 page report detailing every room. If anything from a leak in the ceiling to a broken electrical outlet exists, it will be in the report.
The report I get also provides an examination of the roof, providing a useful life estimate along with its condition.
This is the most important item in my opinion since it’s the largest expenditure when it comes to property maintenance.
Inspectors will also offer additional items such as:
• Lead/Radon VOCs-in-Well Water
• Well Water Quality
• Wood Destroying Organisms (WDO)/Termites
• Mold Sampling/Air or Surface Mold Sampling (Where Qualified)
• Septic Inspection
• Swimming Pool and Spa Inspection
• Asbestos and Lead Detection
You may or may not need these depending on the property type and area. I don’t know of anyone that has gotten radon gas checked.
However if you are buying a wood frame house than a termite inspection is certainly in order. Last thing we want to do is buy a house being held together by termites!
Items like mold inspection are situation specific. If on the general inspection your provider notices possible mold then you would want to get mold testing done. Buyer beware when it comes to mold, it can be remedied but at a cost.
(Success note: Be sure the roof, HVAC and major appliances are not at the end of their life expectancy. If so, factor those costs into your offer or have the seller update or procure warranties when applicable)
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